Chapter02 - Chapter 2 Systems Design Job-Order Costing...

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Chapter 2 Systems Design: Job-Order Costing Multiple Choice 15.  Which of the following industries would be most likely to use a process costing system? C) Oil refinery 16. A process cost system is employed in those situations where: B) where manufacturing involves a single, homogeneous product that flows evenly through the production process on a continuous basis. 17. Emco Company uses direct labor cost as a basis for computing its predetermined overhead rate. In computing the predetermined overhead rate for last year, the company misclassified a portion of direct labor cost as indirect labor. The effect of this misclassification will be to: B) overstate the predetermined overhead rate. 18. Which of the following entries would record correctly the application of overhead cost? D) D Above 19. The operations of Kalispell Company resulted in overapplied overhead for the month just completed. Which of the following journal entries can be correct if Kalispell allocates underapplied or overapplied overhead among accounts? D) D Above 20. Which of the following entries would record correctly the monthly salaries earned by the top management of a manufacturing company? Brewer, Introduction to Managerial Accounting, 3/e 54
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B) B Above 21. The journal entry to record applying overhead during the production process is: D) D Above 22. When manufacturing overhead is applied to production, it is added to: C) the Work in Process account. 23. Which of the following statements is true? D) Statements I, II, and III are all true. 24. On the Schedule of Cost of Goods Manufactured, the final Cost of Goods Manufactured figure represents: D) the amount of cost of goods completed during the current year whether they were started before or during the current year. 25. Under a job-order costing system, the dollar amount transferred from Work in Process to Finished Goods is the sum of the costs charged to all jobs: D) completed during the period. 26. If a company applies overhead to production on the basis of a predetermined rate, a debit balance in the Manufacturing Overhead account at the end of the period means that: A) actual overhead cost was greater than the amount charged to production. 27. Overapplied overhead means that: B) the applied overhead cost was greater than the actual overhead cost. Brewer, Introduction to Managerial Accounting, 3/e 55
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28. A job order cost system uses a predetermined overhead rate based on estimated activity and estimated manufacturing overhead cost. At the end of the year, underapplied overhead might be explained by which of the following situations? C) C Above 29. Departmental overhead rates are generally preferred to plant-wide overhead rates when: A) the activities of the various departments in the plant are not homogeneous.
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