Chapter 03 - Chapter 3 Systems Design: Job-Order Costing...

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Unformatted text preview: Chapter 3 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. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 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. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy 3. Normally a job cost sheet is not prepared for a job until after the job has been completed. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 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. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy 5. Multiple departmental overhead rates generally provide more accurate product costs than a single plant-wide overhead rate. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 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. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Easy Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 3-7 Chapter 3 Systems Design: Job-Order Costing 7. The journal entry for cost of goods manufactured includes only the costs of units that are finished. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium 8. The following entry would be used to record depreciation on manufacturing equipment: Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium 9. Including manufacturing overhead costs in product costs ensures that each product will earn a profit. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 5 Level: Medium 10. A debit balance in the Manufacturing Overhead account at year end means that overhead was underapplied. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 7,8 Level: Medium 11. Nonmanufacturing costs are expensed as incurred, rather than going into the Work in Process account....
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Chapter 03 - Chapter 3 Systems Design: Job-Order Costing...

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