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Managerial Accounting
Introduction to Managerial Accounting
Jeannie M. Folk
Ray H. Garrison
Eric Noreen
Systems Design: Job-Order Costing

Multiple Choice Quiz



1

Which of the following statements is (are) true?
A)Companies that product many different products or services are more likely to use job-order costing systems than process costing systems.
B)Job-order costing systems are used by service firms and process costing systems are used by manufacturers.
C)Costs are traced to departments and then allocated to units of product when job-order costing is used.
D)All of the above.
2

The Linkage Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead rate is based on labor cost in Dept. A and on machine hours in Dept. B. At the beginning of the year, the company made the following estimates:
  Dept A Dept B
Direct labor cost $15,000 $20,000
Manufacturing overhead 30,000 25,000
Direct labor hours 12,000 16,000
Machine hours 1,000 5,000
What predetermined overhead rates would be used in Dept A and Dept B, respectively?
A)$15 and 110%
B)50% and $5.00
C)50% and $8.00
D)200% and $5.00
3

Hoyt Company has the following estimated costs for next year:
Direct materials $30,000
Direct labor 110,000
Sales commissions 150,000
Salary of production supervisor 70,000
Indirect materials 10,000
Advertising expense 22,000
Rent on factory equipment 32,000
Hoyt estimates that 20,000 direct labor and 32,000 machine hours will be worked during the year. If overhead is applied on the basis of machine hours, the overhead rate per hour will be:
A)$3.50.
B)$6.94.
C)$7.63.
D)$8.56.
4

In a job-order cost system, indirect labor costs would be recorded as a debit to:
A)Raw Materials.
B)Work in Process.
C)Manufacturing Overhead.
D)Finished Goods.
5

In a job order cost system, the use of direct materials would be recorded as a debit to:
A)Work in Process inventory.
B)Finished Goods inventory.
C)Manufacturing Overhead.
D)Raw Materials inventory.
6

Glenn Company's predetermined overhead rate is based on direct labor costs. The company's Work in Process inventory account has a balance of $1,200, which relates to the one job that was not complete at the end of an accounting period. The related job cost sheet includes total charges of $200 for direct materials and $500 for direct labor. The company's predetermined overhead rate, as a percentage of direct labor costs, must be:
A)17%.
B)40%.
C)50%.
D)100%.
7

Penn Company uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. At the beginning of the year, the company estimated manufacturing overhead would be $100,000 and direct labor hours would be 10,000. The actual figures for the year were $110,000 for manufacturing overhead and 10,500 direct labor hours. The cost records for the year will show:
A)overapplied overhead of $10,000.
B)underapplied overhead of $10,000.
C)underapplied overhead of $5,000.
D)overapplied overhead of $5,000.
8

Serit Company's predetermined overhead rate is based on direct labor hours. At the beginning of the current year, the company estimated that its manufacturing overhead would total $220,000 during the year. During the year, the company incurred $200,000 in actual manufacturing overhead costs. The Manufacturing Overhead account showed that overhead was overapplied by $8,000 during the year. If the predetermined overhead rate was $20.00 per direct labor hour, how many hours were worked during the year?
A)9,600 hours
B)10,000 hours
C)10,400 hours
D)11,000 hours
9

Artsy Sportswear manufactures a specialty line of silk-screened T-shirts. The company uses a job-order costing system. During May, the following costs were incurred on Job PS4: direct materials $27,400 and direct labor $9,600. In addition, selling and shipping costs of $14,000 were incurred on the job. Manufacturing overhead was applied at the rate of $25 per machine-hour and Job PS4 required 160 machine-hours. If Job PS4 consisted of 5,000 shirts, the cost of goods sold per shirt was:
A)$7.40
B)$8.20
C)$11.00
D)$25.00
10

Under Eastern Company's job-order costing system, manufacturing overhead is applied to Work in Process inventory using a predetermined overhead rate. During May, Eastern's transactions included the following:
Direct labor cost incurred $214,000
Direct materials issued to production 180,000
Indirect materials issued to production 16,000
Manufacturing overhead cost applied 226,000
Manufacturing overhead cost incurred 250,000

Eastern Company had no beginning or ending inventories in May. What was the cost of goods manufactured for May?

A)$604,000
B)$620,000
C)$644,000
D)$660,000




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