Managerial Accounting Questions

1.	Under a job order cost system, costs are assigned to each job or to each batch of goods. A. True B. False

2.

Which one of the following statements is correct? A. Companies that produce many different products or services are more likely to use process costing systems. B. Process costing systems use periodic inventory systems. C. Process costing systems assign costs to departments or processes for a time period. D. Production is continuous when job-order costing is used to ensure that adequate quantities are on hand.

3.

Which one of the following is a characteristic that job-order cost systems and process cost systems have in common? A. Both systems are used for custom made, unique products. B. They both use perpetual inventory systems. C. Both systems assign costs to specific jobs. D. The objective is to determine the efficiency of production.

4.	Cost accounting involves the measuring, recording, and reporting of A. product costs. B. future costs. C. manufacturing processes. D. managerial accounting decisions.

5.	The two major steps in the job order cost flow are 1) accumulating the manufacturing costs incurred and 2) assigning the accumulated costs to the work done. A. True B. False

6.	Which one of the following transactions causes the Manufacturing Overhead account to be debited in a job order cost accounting system? A. Completed products during the period. B. Used indirect materials. C. Purchased raw materials on account. D. Incurred direct labor.

7.	Which one of the following causes the work in process account to increase in a job order cost accounting system? A. Incurred and paid indirect labor. B. Completed products during the period. C. Requisitioned direct materials from the storeroom. D. Incurred direct labor.

8.	In accumulating raw materials costs, the cost of raw materials purchased in a perpetual system is debited to A. Raw Materials Purchases. B. Raw Materials Inventory. C. Purchases. D. Work in Process.

9.	Requisitions for direct materials are posted monthly to the individual job cost sheets. A. True B. False

10.

Which one of the following correctly describes a document used in recording job cost sheet information? A. An invoice from a supplier for receipt of raw materials for jobs. B. A purchase order to order raw materials from suppliers. C. Paychecks for workers who assemble products. D. A materials requisition to request materials from the company warehouse.

11.	Sound Company reported the following amounts for May: How much is the cost of direct materials used in production? A. $258,100. B. $254,000. C. $257,200. D. $254,100.

12.	Raw materials are assigned to a job when A. the job is sold. B. the materials are purchased. C. the materials are received from the vendor. D. the materials are issued by the materials storeroom.

13.	In recording the issuance of raw materials in a job order cost system, it would be incorrect to A. debit Work in Process Inventory. B. debit Finished Goods Inventory. C. debit Manufacturing Overhead. D. credit Raw Materials Inventory.

14.

The entry when direct factory labor is assigned to jobs is a debit to A. Work in Process Inventory and a credit to Factory Labor. B. Manufacturing Overhead and a credit to Factory Labor. C. Factory Labor and a credit to Manufacturing Overhead. D. Factory Labor and a credit to Work in Process Inventory.

15.	The predetermined overhead rate is based on the relationship between actual annual overhead costs and expected annual operating activity. A. True B. False

16.

Dougan, Inc. allocates overhead based on a predetermined overhead rate of $2.40 per direct labor hour. Employees are paid $12.00 per hour. Job 24 requires 4.2 pounds of direct materials at a cost of $15.00 per pound. Employees worked a total of 17.5 hours to complete the job. Actual manufacturing overhead costs totaled $80,000 for the year for the company. How much is the cost of Job 24? A. $315. B. $777. C. $273. D. $105.

17.

Why do companies, using job order costing to estimate manufacturing overhead costs, allocate them to individual jobs and products? A. Manufacturing overhead is a period cost, not a job or product cost. B. It is more accurate to estimate costs. C. It enables the company to determine the approximate cost of each job as it gets completed. D. The actual overhead costs are not determinable.

18.

The source documents for assigning costs to job cost sheets are A. invoices, time tickets, and the predetermined overhead rate. B. materials requisition slips, time tickets, and the actual overhead costs. C. materials requisition slips, payroll register, and the predetermined overhead rate. D. materials requisition slips, time tickets, and the predetermined overhead rate.

19.	The formula for computing the predetermined manufacturing overhead rate is estimated annual overhead costs divided by an expected annual operating activity, expressed as A. direct labor cost. B. direct labor hours. C. machine hours. D. any of these.

20.

In Crawford Company, the predetermined overhead rate is 80% of direct labor cost. During the month, $210,000 of factory labor costs are incurred, of which $180,000 is direct labor and $30,000 is indirect labor. Actual overhead incurred was $200,000. The amount of overhead debited to Work in Process Inventory should be A. $120,000. B. $144,000. C. $168,000. D. $160,000.

21.	Finished Goods Inventory is a control account that controls individual finished goods records in a finished goods subsidiary ledger. A. True B. False

22.

During June, McDougal, Inc. produced a job consisting of 100 widgets with a job cost of $2,200. Which of the following is one effect that occurs when the company sells half of the products for $1,300? A. Work in Process Inventory decreases. B. Finished Goods Inventory increases. C. Raw Materials inventory decreases. D. Cost of Goods Sold increases.

23.	Which account is credited when a job is completed? A. Work in Process Inventory. B. Finished Goods Inventory. C. Cost of Goods Sold. D. Sales Revenue.

24.

In Mynex Company, Job No. 26 is completed at a cost of $4,500 and later sold for $7,000 cash. A correct entry is A. debit Finished Goods Inventory $7,000 and credit Work in Process Inventory $7,000. B. debit Cost of Goods Sold $7,000 and credit Finished Goods Inventory $7,000. C. debit Finished Goods Inventory $4,500 and credit Work in Process Inventory $4,500. D. debit Accounts Receivable $7,000 and credit Sales $7,000.

25.

At the end of an accounting period, a company using a job costing system prepares the cost of goods manufactured A. from the job cost sheet. B. from the Work in Process Inventory account. C. by adding direct materials used, direct labor incurred, and manufacturing overhead incurred. D. from the Cost of Goods Sold account.

26.	Underapplied overhead means that the overhead assigned to work in process is less than the overhead incurred. A. True B. False

27.

Walker Company applies manufacturing overhead based on direct labor hours. Information concerning manufacturing overhead and labor for the year is as follows: How much is over or underapplied overhead at year end? A. $6,100 underapplied. B. $7,262 underapplied. C. $5,200 overapplied. D. $11,300 underapplied.

28.	Salinas Company applies manufacturing overhead based on direct labor hours. Information concerning manufacturing overhead and labor for May follows: How much is over or underapplied overhead at May 31? A. $4,000 overapplied. B. $8,600 underapplied. C. $4,600 underapplied. D. $12,363 overapplied.

29.

At the end of the year a company has a $1,200 debit balance in Manufacturing Overhead. If this amount is considered immaterial, the company will A. make an adjusting entry by debiting Manufacturing Overhead Applied for $1,200 and crediting Manufacturing Overhead for $1,200. B. make an adjusting entry by debiting Manufacturing Overhead Expense for $1,200 and crediting Manufacturing Overhead for $1,200. C. make an adjusting entry by debiting Cost of Goods Sold for $1,200 and crediting Manufacturing Overhead for $1,200. D. make no adjusting entry because differences between actual overhead and the amount applied are a normal part of job costing and will average out over the next year.

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