Accounting Chapter 17 – Job Order Costing
job order cost system.
client cost system.
department cost system.
process cost system
Feedback: Process cost systems provide product costs for each manufacturing department or process.
determine the accuracy of the financial statements.
measure, record, and report product costs.
determine how much each customer will be billed for shipping on purchases.
determine taxes to be paid.
Feedback: The purpose of a cost accounting system is to measure, record, and report product costs.
a custom sailboat factory.
an oil refinery.
a pencil factory.
an ice cream factory
Feedback: A sailboat is unique or customized in nature for the customer and therefore would most likely be accounted for under a job costing system. Process cost systems are often used by companies that manufacture units of a product that are indistinguishable from each other and are manufactured using a continuous production process.
The entire balance is charged back to work in process inventory.
Applied costs are higher than actual costs.
Actual costs are higher than applied costs.
The balance should be carried over from year to year.
Feedback: When the factory overhead account ends with a credit balance, the applied amounts charged to individual jobs were higher than actual expenses. The overapplied amount will be credited to cost of goods sold.
Feedback: $90,000/9,000 = $10. The formula for the predetermined factory overhead rate is:
Estimated total factory overhead costs
Estimated activity base
Feedback: The predetermined overhead rate = $35,000/5,000 = $7. Multiply the predetermined overhead rate by actual hours: $7 × 4,980 = $34,860. Compare actual to applied: $34,700 – $34,860 = $160 overapplied.
None of these choices are correct.
job cost sheets
Feedback: For direct materials, the quantities and amounts from the materials requisitions are posted to the job cost sheets. In a job order costing system, job cost sheets make up the work in process ledger.
estimate factory overhead costs.
determine period costs.
reconcile bank records with book records.
Feedback: The job order cost system can be used to evaluate an organization’s cost performance.
establish security policies.
charge patients with services provided.
evaluate quality care.
evaluate a patient’s progress.
Feedback: A job order cost system can be used for a professional service business. In such cases, the customer, client, or patient can be viewed as a job for which costs are accumulated and reported. A job order cost accounting system may be useful for decision making about hospital services that require accumulating and recording service costs by patient.
the fruits used in baking are out of season.
the oven is malfunctioning.
a new baker has been hired who is not familiar with the ingredients.
cakes are being sold at a special rate during the month.
Feedback: Job cost sheets can be used to help investigate comparisons to expected costs, leading to the development of possible reasons for increased costs and further evaluation by management. Management might then look at selling prices (special rates).
work in process.
cost of services.
Feedback: Materials and supplies are normally very low and are included in overhead costs
cost of services provided account.
nothing at all and write them off as uncollectible.
the department using the supplies and include them in overhead costs
Feedback: The cost of any materials or supplies used in rendering services for a client is normally small and included as part of the overhead.
Debit Salaries Payable and credit Work in Process for $68,000.
Debit Work in Process and credit Salaries Payable for $68,000.
Debit Work in Process and credit Firm Overhead for $68,000.
Debit Salaries Expense and credit Cost of Services for $68,000
Feedback: Correct. 200 hrs × $340 per hour = $68,000
Work in Process 68,000
Salaries Payable 68,000
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