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Chapter 002, Systems Design: Job-Order Costing True / False Questions 1. Job-order costing is used in manufacturing companies and process costing is used in service companies. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 1 Level: Easy 2. A flour manufacturer is more likely to use process costing than job-order costing whereas a manufacturer of customized leather jackets is more likely to use job-order costing than process costing. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 1 Level: Easy 3. Normally a job cost sheet is not prepared for a job until after the job has been completed. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 2 Level: Medium 4. Job cost sheets contain entries for actual direct material, actual direct labor, and actual manufacturing overhead cost incurred in completing a job. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 2 Level: Easy 2-1 Chapter 002, Systems Design: Job-Order Costing 5. Multiple departmental overhead rates generally provide more accurate product costs than a single plant-wide overhead rate. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 3 Level: Easy 6. If direct labor-hours is used as the allocation base in a job-order costing system, but overhead costs are not caused by direct-labor-hours, then jobs with high direct labor requirements will tend to be overcosted relative to jobs with low direct labor requirements. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 3 Level: Easy 7. The journal entry for cost of goods manufactured includes only the costs of units that are finished. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 4 Level: Medium 2-2 Chapter 002, Systems Design: Job-Order Costing 8. The following entry would be used to record depreciation on manufacturing equipment: FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 4 Level: Medium 9. Including manufacturing overhead costs in product costs ensures that each product will earn a profit. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 5 Level: Medium 10. A debit balance in the Manufacturing Overhead account at year end means that overhead was underapplied. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 7 Learning Objective: 8 Level: Medium 11. Nonmanufacturing costs are expensed as incurred, rather than going into the Work in Process account. ... View Full Document

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