ACC 560 Week 3 Quiz 2, Chapter 2 – Job Order Costing True-False Statements

| March 14, 2016

1. Cost accounting is primarily concerned with accumulating information about product costs.
2. A job order cost system is most appropriate when a large volume of uniform products are produced.
3. A process cost accounting system is appropriate for similar products that are continuously mass produced.
4. The perpetual inventory method cannot be used in a job order cost system.
5. A job order cost system and a process cost system are two alternative methods for valuing inventories.
6. A job order cost system identifies costs with a particular job rather than with a set time period.
7. A company may use either a job order cost system or a process cost system, but not both.
8. Raw Materials Inventory, Factory Labor, and Manufacturing Overhead are all control accounts in the general ledger when a job order cost accounting system is used.
9. Accumulating and assigning manufacturing costs are two important activities in a job order cost system.
10. Recording the acquisition of raw materials is a part of accumulating manufacturing costs.
11. Manufacturing costs are generally incurred in one period and recorded in a subsequent period.
12. The Purchases account is credited for all raw materials purchase returns and allowances.
13. When raw materials are received, there is no effort at this point to associate the cost of materials with specific jobs.
14. When raw materials are purchased, the Work in Process Inventory account is debited.
15. Factory labor should be assigned to selling and administrative expenses on a proportionate basis.
16. Fringe benefits and payroll taxes associated with factory workers should be accumulated as a part of Factory Labor.
17. Job order cost sheets constitute the subsidiary ledger of the control account Work In Process Inventory.
18. In a job order cost system, each entry to the Work In Process Inventory account should be accompanied by a posting to one or more job cost sheets.
19. Direct materials requisitioned from the storeroom should be charged to the Work In Process Inventory account and the job cost sheets for the individual jobs on which the materials were used.
20. Manufacturing overhead is the only product cost that can be assigned to jobs as soon as the cost is incurred.
21. There should be a separate job cost sheet for each job.
22. Actual manufacturing overhead costs are assigned to each job by tracing each overhead cost to a specific job.
23. The formula for the predetermined overhead rate is estimated annual overhead costs divided by an expected annual operating activity.
24. Actual manufacturing overhead costs should be charged to the Work in Process Inventory account as they are incurred.
25. A good system of internal control requires that the job order cost sheet be destroyed as soon as the job is complete.
26. Finished Goods Inventory is charged for the cost of jobs completed during a period.
27. When goods are sold, the Cost of Goods Sold account is debited and Work in Process Inventory account is credited.
28. Total manufacturing costs for a period consists of the costs of direct materials used, the cost of direct labor incurred, and the manufacturing overhead applied during the period.
29. Over applied overhead means that actual manufacturing overhead costs were greater than the manufacturing overhead costs applied to jobs.
30. At the end of the year, the accountant credits the amount of the overapplied overhead to Cost of Goods Sold.
31. A cost accounting system consists of manufacturing cost accounts that are fully integrated into the general ledger of a company.
32. The cost of raw materials purchased is credited to Raw Materials Inventory when materials are received.
33. Requisitions for direct materials are posted daily to the individual job cost sheets.
34. The predetermined overhead rate is based on the relationship between estimated annual overhead costs and expected annual operating activity expressed in terms of a common activity base.
35. At the end of the year, under applied overhead is usually credited to Cost of Goods Sold.
Multiple Choice Questions
36. Which of the following is one of the components of cost accounting?
37. A major purpose of cost accounting is to
38. The two basic types of cost accounting systems are
39. A process cost system would most likely be used by a company that makes
40. Which of the following would be accounted for using a job order cost system?
41. Process costing is used when
42. Process costing is not used when
43. An important feature of a job order cost system is that each job
44. As of December 31, 2013, Stand Still Industries had $2,500 of raw materials inventory. At the beginning of 2013, there was $2,000 of materials on hand. During the year, the company purchased $325,000 of materials; however, it paid for only $312,500. How much inventory was requisitioned for use on jobs during 2013?
45. The flow of costs in a job order cost system
46. In a job order cost accounting system, the Raw Materials Inventory account is
47. When a job is completed and all costs have been accumulated on a job cost sheet, the journal entry that should be made is
48. The two major steps in the flow of costs are
49. The Raw Materials Inventory account is

50. Records of individual items of raw materials would not be maintained

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