1. 1 K 7. 2 K 13. 3 C 19. 4 K 25. 5 C

CHAPTER 2

Job-Order Costing for Manufacturing and Service Companies Summary of Questions by Objectives and Bloom’s Taxonomy

Item LO BT Item LO BT Item LO BT Item LO BT Item LO BT True-False Statements

1. 1 K 7. 2 K 13. 3 C 19. 4 K 25. 5 C

2. 1 K 8. 2 K 14. 3 C 20. 4 K 26. 6 K

3. 1 K 9. 2,5 K 15. 2 K 21. 4 K 27. 6 K

4. 1 K 10. 2 K 16. 2,3 K 22. 5 K 28. 7 K

5. 1 K 11. 2 K 17. 4 K 23. 5 C 29. 7 K

6. 1 K 12. 3 K 18. 4 K 24. 5 C

Multiple Choice Questions

30. 1 K 55. 2,3 AP 80. 4 AP 105. 4,5 AP 130. 5 AP

31. 1 K 56. 2,3 AP 81. 5,6 AP 106. 4,5 AP 131. 5 AP

32. 1 C 57. 2,3 AP 82. 4,6 AP 107. 4,5 AP 132. 5 AP

33. 1 C 58. 2,3 AP 83. 5 AP 108. 4 AP 133. 5 AP

34. 1 C 59. 2,3 AP 84. 4 K 109. 4,5 AP 134. 5 AP

35. 1 C 60. 2,3 AP 85. 2,4 K 110. 4 AP 135. 5 AP

36. 1 C 61. 2,3 AP 86. 4 K 111. 5 AP 136. 5 AP

37. 1 K 62. 2,3 AP 87. 4 C 112. 4 AP 137. 5 AP

38. 1 C 63. 2,3 AP 88. 4,5 K 113. 4 AP 138. 5 AP

39. 1 C 64. 2,3 AP 89. 4,5 K 114. 5 AP 139. 5 AP

40. 2 K 65. 3 C 90. 2,4 K 115. 5 C 140. 5 AP

41. 2 K 66. 3 C 91. 4 K 116. 5 C 141. 5 AP

42. 2 K 67. 3 K 92. 5 K 117. 5 AP 142. 5 AP

43. 2 C 68. 2 K 93. 4,5 AP 118. 5 AP 143. 6 K

44. 2 K 69. 4 K 94. 5 K 119. 5 K 144. 7 K

45. 2 AP 70. 2 AP 95. 5 K 120. 5 C 145. 7 C

46. 2 AP 71. 2 AP 96. 4,5 K 121. 5 C 146. 7 K

47. 2,5 AP 72. 2 AP 97. 4,5 K 122. 5 C 147. 7 K

48. 2,3 AP 73. 4 AP 98. 4,5 K 123. 5 AP 148. 7 K

49. 2,3 AP 74. 2,4,6 AP 99. 4,5 AP 124. 5 AP 149. 7 K

50. 2,3 AP 75. 5 AP 100. 4,5 AP 125. 5 AP 150. 7 C

51. 2,3 AP 76. 2 AP 101. 5 AP 126. 5 AP

52. 2,3 AP 77. 4 AP 102. 5 AP 127. 5 AP

53. 2,3 AP 78. 4 AP 103. 4,5 AP 128. 5 AP

54. 2,3 AP 79. 4 AP 104. 4,5 AP 129. 5 AP

Matching

151. 1-7 K

Exercises

152. 1,2 AP 155. 4 AP 158. 4,5 AP 161. 4,5 AP 164. 5 AP

153. 1,2 AP 156. 4 AP 159. 5 AP 162. 4,5 AP 165. 5 AP

154. 3 K 157. 4 AP 160. 4,5,6 AP 163. 5 AP 166. 5,6 AP

Challenge Exercises

167. 1,2 AP 168. 1,5 AP 169. 4,5,6 AP

Short-Answer Essays

170. 1 C 172. 1 K 174. 5 C 176. 7 C 178. 5 C

171. 1 K 173. 3 K 175. 4 C 177. 7 C

Managerial Accounting 6th Edition Jiambalvo Test Bank Visit TestBankDeal.com to get complete for all chapters

Test Bank to accompany Jiambalvo Managerial Accounting, 6 th Edition 2-2

TRUE-FALSE STATEMENTS

• All costs other than direct materials, direct labor, indirect materials, and indirect labor are

classified as period costs.

• The wages of a factory machine maintenance worker are classified as direct labor.

• Insurance on factory equipment is a part of manufacturing overhead.

• Sales commissions are considered a product cost.

• Period costs are identified with accounting periods rather than with goods produced.

• Rent of the office building for the sales staff is a period cost.

• Raw Materials Inventory, Work in Process Inventory, and Cost of Goods Sold will appear on a

company’s balance sheet.

• Cost of Goods Manufactured appears on the balance sheet.

• Overhead is related ideally to production using an allocation base.

• Indirect labor is added directly to the Work in Process account in a job-order costing system.

• Direct labor costs are traced to each job.

• Process costing systems are generally used by companies that produce large quantities of

identical items.

• A company that builds custom homes would likely use a process costing system.

• A company that designs advertising campaigns for other companies would likely use job-order

costing.

• In a job-order costing system, the Finished Goods account includes the cost of all jobs

completed and sold during an accounting period.

• In a job-order costing system, the Cost of Goods Sold account consists of costs transferred

out of the Finished Goods account.

• A job cost sheet is a form used to accumulate costs of a particular job in a job-order costing

system.

• When overhead is applied to jobs, Manufacturing Overhead is debited and Work in Process is

credited.

• In a job-order costing system, the Cost of Goods Manufactured account is increased and the

Finished Goods account is decreased when a job is completed.

• In a job-order costing system, Work in Process is debited and Finished Goods is credited

when a job is sold.

Chapter 2 Job-Order Costing for Manufacturing and Service Companies 2-3

• Increases in overhead costs should be driven by increases in the overhead allocation base.

• Underapplied overhead occurs when actual overhead is greater than the amount of overhead

applied to jobs.

• If the amount of over- or under-applied overhead is material, the amount should be closed to

Work in Process.

• If the amount of overapplied overhead is not material, the amount should be closed to Cost of

Goods Sold.

• If overhead is underapplied, closing it to Cost of Goods Sold will increase income.

• Job-order costing is often used by service companies, such as lawyers who need to

determine the cost of lawsuit or consultants who need to determine the cost of an engagement.

• Because H&R Block provides no materials when it completes a tax return for a client, it does

not assign overhead costs to each tax return client.

• The use of computer-controlled manufacturing systems has had a significant effect on the

composition of product costs.

• One goal of just-in-time systems is to minimize inventory levels.

Answers to True-False

1 F 7 F 13 F 19 F 25 F

2 F 8 F 14 T 20 F 26 T

3 T 9 T 15 F 21 T 27 F

4 F 10 F 16 T 22 T 28 T

5 T 11 T 17 T 23 F 29 T

6 T 12 T 18 F 24 T

Test Bank to accompany Jiambalvo Managerial Accounting, 6 th Edition 2-4

MULTIPLE CHOICE

• Which of the following is not a reason for companies to know the cost of their products?
• The company must set appropriate prices for the products.
• The salary of the company president is based on the cost of the product.
• The cost of the product is used in the calculation of profit when the product is sold.
• The management of the company needs to assess the reasonableness of the costs

incurred in purchasing or manufacturing the products.

• Which of the following is a manufacturing cost?
• Cost of supplies used by sales personnel
• Indirect factory labor
• Product advertising costs
• Administrative expenses

• Which of the following is an example of a manufacturing overhead cost?
• Wages paid to security personnel at the corporate office building
• The cost of electricity used to run the oven in which Domino’s bakes it pizzas
• Cost of shipping product to customers
• The salary of the president of the company

• Which of the following is a manufacturing cost?
• Indirect materials
• Advertising expense
• Depreciation of the office equipment used by the sales staff
• Salary of clerical workers

• Westerhouse manufactures refrigerators. Which of the following items is most likely

considered an indirect material cost for Westerhouse?

• Supplies used by the factory janitor
• Gasoline costs for trucks used to deliver products to customers
• Glass shelves for the refrigerators
• Refrigerator motors

• Which of the following costs is not part of manufacturing overhead?
• Electricity for the factory
• Depreciation of factory equipment
• Salaries for the production supervisors
• Health insurance for sales staff

• Which of the following costs is part of manufacturing overhead?
• Indirect labor
• Direct labor
• Salaries for the accounting personnel
• Wages for the janitorial staff for the sales offices

• Product costs
• are also called period costs.
• are considered an asset until the finished goods are sold.
• become an expense in the period the costs are incurred.
• All of these answer choices are correct.