Chapter 3 Systems Design Job-Order Costing

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

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Chapter 3 Systems Design: Job-Order Costing Garrison, Managerial Accounting, 12th Edition 71 True/False Questions 1. Process costing is used in those situations where many different products or services are produced each period to customer specifications. Answer: False Level: Easy LO: 1 2. The basic approach in job-order costing is to accumulate costs in a particular operation or department for an entire period (month, quarter, year) and then to divide this total by the number of units produced during the period. Answer: False Level: Easy LO: 1 3. If a company uses predetermined overhead rates, actual manufacturing overhead costs of a period will be recorded in the Manufacturing Overhead account, but they will not be recorded on the job cost sheets for the period. Answer: True Level: Medium LO: 2 4. In a job-order cost system, indirect labor is assigned to a job by using the labor time ticket as a source document. Answer: False Level: Medium LO: 2 5. The formula for computing the predetermined overhead rate is: Estimated total units in base ÷ Estimated total manufacturing costs Answer: False Level: Easy LO: 3 6. The fact that one department may be labor intensive while another department is machine intensive may explain in part the existence of multiple predetermined overhead rates in larger companies. Answer: True Level: Easy LO: 3 7. If a company closes any under- or overapplied overhead to the Cost of Goods Sold account, then Cost of Goods Sold will be credited if manufacturing overhead is overapplied for the period. Answer: True Level: Medium LO: 4,8
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Chapter 3 Systems Design: Job-Order Costing 72 Garrison, Managerial Accounting, 12th Edition 8. The following entry would be used to record the transfer of material from the storeroom to production if 80% of the material was direct material and 20% was indirect material: Work in Process . ............................ 40,000 Manufacturing Overhead . .............. 10,000 Raw Material . ....................... 50,000 Answer: True Level: Easy LO: 4 9. If a job is not completed at the end of the year, then no manufacturing overhead cost should be applied to that job. Answer: False Level: Medium LO: 5 10. When raw materials are purchased, they are recorded as an expense. Answer: False Level: Medium LO: 7 11. In a job-order cost system, depreciation on factory equipment should be charged directly to the Work in Process account. Answer: False Level: Medium LO: 7 12. The entire difference between the actual manufacturing overhead cost for a period and the applied manufacturing overhead cost is typically closed to the Work In Process account. Answer: False Level: Easy LO: 8 13. If the actual manufacturing overhead costs for a period exceed the manufacturing overhead costs applied, then overhead would be considered to be overapplied. Answer: False
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This note was uploaded on 01/23/2012 for the course ADMS 2510 taught by Professor Beavis during the Fall '08 term at York University.

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

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