True False Questions

2-1 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.Chapter 02 Job Order Costing

True / False Questions

• Process costing is used when all of the products produced are unique.

True False

• A marketing consulting firm would most likely use process costing.

True False

• A law firm would most likely use job order 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

Managerial Accounting 2nd Edition Whitecotton Test Bank Visit TestBankDeal.com to get complete for all chapters

2-2 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

• 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

• Direct labor costs are recorded using labor time tickets.

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

• A predetermined overhead rate is calculated by dividing estimated total manufacturing overhead

cost by estimated units in the allocation base.

True False

• The predetermined overhead rate is estimated at the end of the period and used to assign

manufacturing overhead to jobs that were completed during the period.

True False

• Allocation base and cost driver are two terms that can often be used interchangably.

True False

2-3 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

• The Raw Materials Inventory account shows the cost of only direct materials purchased during the

period.

True False

• Indirect materials are recorded directly on the job cost sheet.

True False

• Labor that can be traced to a specific job is 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

• When goods are completed, a debit is made to Work in Process Inventory and a credit is made to

Finished Goods Inventory.

True False

• The total manufacturing cost for a job is based on the amount of applied overhead using the

predetermined overhead rate.

True False

• Actual manufacturing overhead costs are debited to the Manufacturing Overhead account.

True False

2-4 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

• Commissions expense and advertising expense are included as part of manufacturing overhead

and treated as a product cost.

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

• To eliminate underapplied overhead at the end of the year, Manufacturing Overhead would be

credited and Cost of Goods Sold would be debited.

True False

• The total amount of cost assigned to jobs that were completed during the year is the cost of

goods sold.

True False