Chapter 003, Systems Design: Job-Order Costing

| October 3, 2018

1. Job-order costing would be more likely to be used than process
costing in situations where many different products or services are produced
each period to customer specifications. True False

2. In a job-order costing system, costs are traced to departments and
then allocated to units of product using an average process.
True False

3. Job-order costing is used in those situations where units of a
product are homogeneous, such as in the manufacture of sugar.
True False

4. Job-order costing is usually not used in service organizations
such as hospitals and law firms.
True False

5. The three cost categories appearing on a job cost sheet are:
selling expense, manufacturing expense, and administrative expense.
True False

6. The labor time ticket contains the details of how much time an
employee takes on each task throughout the day.
True False

7. In order to improve the accuracy of unit costs, most companies
recompute the predetermined overhead rate each month.
True False

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Chapter 003, Systems Design: Job-Order Costing

8. Use of a single, plantwide overhead rate is generally appropriate
only for very large manufacturing companies.
True False

9. Predetermined overhead rates are based on actual cost and activity
data.

True False

10. The following journal entry would be made to apply overhead
cost to jobs in a job-order costing system:

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True False

11. When completed goods are sold, the transaction is recorded as a
debit to Cost of Goods Sold and a credit to Work in Process.
True False

12. When the predetermined overhead rate is based on direct
labor-hours, the amount of overhead applied to a job is proportional to the
amount of actual direct labor-hours incurred on the job.
True False

13. Actual manufacturing overhead costs are traced to specific jobs.

True False

14. A credit balance in the
Manufacturing Overhead account at the end of the year means that overhead was
underapplied.

True False

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Chapter 003, Systems Design: Job-Order Costing

15. The sum of all amounts transferred from the Work in Process
account and into the Finished Goods account represents the Cost of Goods
Manufactured for the period. True False

16. The most common accounting treatment of underapplied manufacturing
overhead is to transfer it to the Manufacturing Overhead control account.
True False

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