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Exam 19: Job Order Costing

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Question 51

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Which of the following is not a characteristic of a job order costing system?

A) It accumulates cost for each department within the factory.
B) It provides a separate record for the cost of each quantity of product that passes through the factory.
C) It is best suited for industries that manufacture custom goods.
D) It uses only one work in process account.

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Question 52

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The job order costing system is not used by service organizations.

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Question 53

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A receiving report is prepared when purchased materials are first received by the manufacturing department.

Job order cost systems can be used to compare unit costs of similar jobs to determine if costs are staying within expected ranges.

Define and discuss the two main types of cost accounting systems for manufacturing operations. What are their similarities and differences?

Use the information below for Adams Company to answer the questions that follow. ​ Adams Company is a manufacturing company that has worked on several production jobs during the first quarter of the year. Below is a list of all the jobs for the quarter: ​ ​ Jobs 356, 357, 358, and 359 were completed. Jobs 356 and 357 were sold at a profit of $500 on each job. -What is the balance of Sales for Adams Company at the end of the first quarter?

Technics Inc., a manufacturing company, utilizes job order costing. Each division establishes its own estimates regarding overhead, which are as follows:​​ If Division A allocates overhead on the basis of machine hours and Division B allocates overhead as a percentage of direct labor costs, what would the predetermined overhead rate be for each division?

List the accounts used in the cost flow for (a) a manufacturer and (b) a service provider.

Match each of the following phrases with the term (a-g) that it most closely describes. -A system that uses a different overhead rate for each activity

The materials requisition serves as the source document for debiting the accounts in the materials ledger.

A manufacturing business reports just two types of inventory on its balance sheet: work in process inventory and finished goods inventory.

Match each of the following phrases with the term (a-g) that it most closely describes. -Typically used by companies that make custom products

The following is a list of costs incurred by several business organizations:​ (a) Telephone cable for a tel ephone company (b) Membership fees for a health club for executives (c) Salary of the director of internal auditing (d) Long-distance telephone bill for calls made by salespersons (e) Carrying cases for a manufacturer of video camcorders (f) Cotton for a textile manufacturer of blue jeans (g) Bandages for the emergency room of a hospital (h) Cost of company holiday party (i) Electricity used to operate factory machinery (j) State unemployment compensation taxes for factory workers (k) Gloves for factory machine operators (1) Fees paid for lawn service for office grounds (m) Salary of secretary to vice president of finance (n) Salary of secretary to vice president of marketing (o) Production supervisor's salary (p) Engine oil for manufacturer and distributor of motorcycles (q) Oil lubricants for factory plant and equipment (t) Cost of a radio commercial (s) Depreciation on factory equipment (t) Wages of checkout clerk in company-owned retail outlet (u) Maintenance and repair costs for factory equipment (v) Depreciation on office equipment (w) Bonuses paid to salespersons (x) Insurance on factory building (y) Training for accounting personnel on use of microcomputer (z) Steel for a construction contractor Classify each of the preceding costs as product costs or period costs. For those costs classified as product costs, indicate whether the product cost is a direct materials cost, direct labor cost, or factory overhead cost. For those costs classified as period costs, indicate whether the period cost is a selling expense or an administrative expense. Use the following tabular headings for preparing your answer. Place an X in the appropriate column.

Match the costs that follow to the type of product cost (a-c) or designate as not a product cost (d) . -Wood

If factory overhead applied exceeds the actual costs, overhead is said to be underapplied.

Use the information below for Adams Company to answer the questions that follow. ​ Adams Company is a manufacturing company that has worked on several production jobs during the first quarter of the year. Below is a list of all the jobs for the quarter: ​ ​ Jobs 356, 357, 358, and 359 were completed. Jobs 356 and 357 were sold at a profit of $500 on each job. -What is the ending balance of Finished Goods for Adams Company at the end of the first quarter?

Factory overhead is applied to production using a predetermined overhead rate.

A difference in quantity of materials used on two comparable jobs may be caused by

Crain Company budgeted 35,000 direct labor hours and incurred 40,000 direct labor hours. It incurred $780,000 of overhead and estimated overhead was $735,000.? What is Crain's predetermined overhead rate? Was overhead over- or underapplied for the year? By how much?

Which of the following would not be found in the accounting system of a service provider?