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2-1 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Chapter 02 Job Order Costing
True / False Questions
- A marketing consulting firm would most likely use process costing.
True False
- When job order costing is used, costs are accumulated on a job cost sheet.
True False
- Process costing averages the total cost of the process over the number of units produced.
True False
- Source documents are used to assign all manufacturing costs to jobs.
True False
- A materials requisition form is used to authorize the purchase of direct materials.
True False
- A job cost sheet will record the direct materials and direct labor used by the job but not the
manufacturing overhead applied.
True False
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2-2 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- A predetermined overhead rate is calculated by dividing estimated total manufacturing overhead
cost by estimated total cost driver.
True False
- Indirect materials are recorded directly on the job cost sheet.
True False
- When manufacturing overhead is applied to a job, a credit is made to the Work in Process
account.
True False
- The total manufacturing cost for a job is based on the amount of applied overhead using the
predetermined overhead rate.
True False
- If there is a debit balance in the Manufacturing Overhead account at the end of the period,
overhead was underapplied.
True False
- The most common method for disposing of the balance in Manufacturing Overhead is to make a
direct adjustment to Cost of Goods Sold.
True False
- To eliminate underapplied overhead at the end of the year, Manufacturing Overhead would be
debited and Cost of Goods Sold would be credited.
True False
2-3 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- The total amount of cost assigned to jobs that were completed during the year is the cost of
goods sold.
True False
- In a service firm, the cost associated with time that employees spend on training, paperwork, and
supervision is considered part of manufacturing overhead.
True False
Multiple Choice Questions
- Which of the following types of firms would most likely use process costing?
- Superior Auto Body & Repair
- Crammond Custom Cabinets
- Sunshine Soft Drinks
- Jackson & Taylor Tax Service
- Which of the following types of firms would most likely use job order costing?
- Happy-Oh Cereal Company
- Huey, Lewey & Dewie, Attorneys
- SoooSweet Beverage
- C-5 Cement Company
2-4 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- Which of the following is a characteristic of a manufacturing environment that would use job order
costing?
- Standardized production process
- Continuous manufacturing
- Homogenous products
- Differentiated products
- Which of the following statements is correct?
- Companies must choose to use either job order costing or process costing; there is no overlap
between the two systems.
- Companies always use job order costing unless it is prohibitively expensive.
- Companies always use process costing unless it is prohibitively expensive.
- Companies often provide products and services that have both common and unique
characteristics, so they may use a blend of job order and process costing.
- The cost of materials used on a specific job is first captured on which source document?
- Cost driver sheet
- Materials requisition form
- Labor time ticket
- Process cost sheet
- The source document that captures how much time a worker has spent on various jobs during the
period is a:
- cost driver sheet.
- materials requisition form.
- labor time ticket.
- job cost sheet.
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