CHAPTER 2

JOB ORDER COSTING

SUMMARY OF QUESTIONS BY LEARNING OBJECTIVES AND BLOOM’S

TAXONOMY
Item LO BT Item LO BT Item LO BT Item LO BT Item LO BT
True-False Statements
1. 1 K 8. 1 K 15. 1 K 22. 3 C 29. 5 C
2. 1 C 9. 1 C 16. 1 K 23. 3 K 30. 5 C
3. 1 C 10. 1 C 17. 2 K 24. 3 C 31. 1 C
4. 1 C 11. 1 C 18. 2 K 25. 4 C 32. 1 K
5. 1 C 12. 1 C 19. 2 C 26. 4 K 33. 2 K
6. 1 K 13. 1 K 20. 2 C 27. 4 K 34. 3 K
7. 1 C 14. 1 C 21. 2 K 28. 4 K 35. 5 K
Multiple Choice Questions
36. 1 K 59. 2 C 82. 3 AP 105. 4 C 128. 5 C
37. 1 K 60. 1 C 83. 3 AP 106. 4 AP 129. 5 C
38. 1 K 61. 2 K 84. 3 AP 107. 4 C 130. 5 K
39. 1 C 62. 2 K 85. 3 AP 108. 4 C 131. 5 C
40. 1 C 63. 2 AP 86. 3 AP 109. 4 C 132. 5 AP
41. 1 C 64. 2 K 87. 3 AP 110. 4 C 133. 5 C
42. 1 C 65. 2 C 88. 3 AP 111. 4 AP 134. 5 C
43. 1 C 66. 2 K 89. 3 C 112. 4 AP 135. 5 C
44. 1 AP 67. 2 K 90. 3 K 113. 4 AP 136. 5 C
45. 1 K 68. 2 K 91. 3 C 114. 4 C 137. 5 C
46. 1 K 69. 2 C 92. 3 C 115. 4 C 138. 5 C
47. 1 C 70. 2 C 93. 3 K 116. 4 AP 139. 5 C
48. 1 K 71. 2 K 94. 3 AP 117. 4 AP 140. 5 C
st
49. 1 C 72. 2 K 95. 3 C 118. 4 AP 141. 1 K
50. 1 C 73. 2 C 96. 3 K 119. 4 AP 142. 1 K
st
51. 1 C 74. 2 C 97. 3 AP 120. 4 AP 143. 1 K
52. 1 K 75. 2 K 98. 3 AP 121. 4 AP 144. 2 K
st
53. 1 C 76. 2 AP 99. 3 AP 122. 4 AP 145. 2 K
54. 1 K 77. 2 AP 100. 3 AP 123. 4 AP 146. 3 AP
st
55. 1 K 78. 2 AP 101. 3 AP 124. 5 AP 147. 3 K
56. 1 AP 79. 2 AP 102. 4 AP 125. 5 AP 148. 5 C
st
57. 1 K 80. 2 AP 103. 4 C 126. 5 AP 149. 5 K
58. 2 K 81. 3 AP 104. 4 C 127. 5 C 150. 5 K
Brief Exercises
151 1 AP 153. 2 AP 155. 3,5 AP 157. 4 AP 159. 5 AP
152 1 AP 154. 2 AP 156. 3 AP 158. 5 AP 160. 5 AP
st
This question also appears in a self-test at the student companion website.

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2-2 Test Bank for Managerial Accounting, Seventh Edition

SUMMARY OF QUESTIONS BY LEARNING OBJECTIVES AND BLOOM’S

TAXONOMY
Exercises
161. 1 AP 167. 1–4 AP 173. 1–5 AP 179. 2,4 AP 185. 4,6 AP
162. 1–3 C 168. 1–4 AN 174. 1,2,5 AP 180. 2,4,5 AP 186. 4,6 AP
163. 1–3 AP 169. 1–4 AP 175. 1–5 AP 181. 3,5 AP 187. 4 AP
164. 1–3 C 170. 1,2 AP 176. 2 AP 182. 3,5 AP 188. 4 AP
165. 1,2 AP 171. 1–4 AP 177. 2–4 AN 183. 3 AP
166. 1–4 AP 172. 1,4 AP 178. 2,4 AP 184. 3,5 AP
Completion Statements
189. 1 K 191. 1 K 193. 1 K 195. 2 K 197. 5 K
190. 1 K 192. 1 K 194. 2 AP 196. 3 K 198. 5 K
Matching Statements
199. 1 K
Short-Answer Essay
200. 1 S 202. 3 S 204. 2 S
201. 1 S 203. 3 S 205. 3 S

SUMMARY OF LEARNING OBJECTIVES BY QUESTION TYPE

Item Type Item Type Item Type Item Type Item Type Item Type Item Type
Learning Objective 1
1. TF 11. TF 38. MC 48. MC 58. MC 163. Ex 173. Ex
2. TF 12. TF 39. MC 49. MC 59. MC 164. Ex 175. Ex
3. TF 13. TF 40. MC 50. MC 60. MC 165. Ex 189. C
4. TF 14. TF 41. MC 51. MC 141. MC 166. Ex 190. C
5. TF 15. TF 42. MC 52. MC 142. MC 167. Ex 191. C
6. TF 16. TF 43. MC 53. MC 143. MC 168. Ex 192. C
7. TF 31. TF 44. MC 54. MC 151. BE 169. Ex 193. C
8. TF 32. TF 45. MC 55. MC 152. BE 170. Ex 199. MA
9. TF 36. MC 46. MC 56. MC 161. Ex 171. Ex 200. SA
10. TF 37. MC 47. MC 57. MC 162. Ex 172. Ex 201. SA
Learning Objective 2
17. TF 61. MC 69. MC 77. MC 162. Ex 170. Ex 179. Ex
18. TF 62. MC 70. MC 78. MC 163. Ex 171. Ex 180. Ex
19. TF 63. MC 71. MC 79. MC 164. Ex 173. Ex 194. C
20. TF 64. MC 72. MC 80. MC 165. Ex 174. Ex 195. C
21. TF 65. MC 73. MC 144. MC 166. Ex 175. Ex 204. SA
33. TF 66. MC 74. MC 145. MC 167. Ex 176. Ex
58. MC 67. MC 75. MC 153. BE 168. Ex 177. Ex
59. MC 68. MC 76. MC 154. BE 169. Ex 178. Ex

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 Job Order Costing 2-3

Learning Objective 3
22. TF 85. MC 93. MC 101. MC 166. Ex 180. Ex 202. SA
23. TF 86. MC 94. MC 146. MC 167. Ex 181. Ex 203. SA
24. TF 87. MC 95. MC 147. MC 168. Ex 182. Ex 205. SA
34. TF 88. MC 96. MC 155. BE 169. Ex 183. Ex
81. MC 89. MC 97. MC 156. BE 171. Ex 184. Ex
82. MC 90. MC 98. MC 162. Ex 173. Ex 185. Ex
83. MC 91. MC 99. MC 163. Ex 175. Ex 186. Ex
84. MC 92. MC 100. MC 164. Ex 177. Ex 196. C
Learning Objective 4
25. TF 104. MC 110. MC 116. MC 122. MC 169. Ex 178. Ex
26. TF 105. MC 111. MC 117. MC 123. MC 171. Ex 179. Ex
27. TF 106. MC 112. MC 118. MC 157. BE 172. Ex 187. Ex
28. TF 107. MC 113. MC 119. MC 166. Ex 173. Ex 188. Ex
102. MC 108. MC 114. MC 120. MC 167. Ex 175. Ex
103. MC 109. MC 115. MC 121. MC 168. Ex 177. Ex
Learning Objective 5
29. TF 127. MC 133. MC 139. MC 159. BE 182. Ex
30. TF 128. MC 134. MC 140. MC 160. BE 184. Ex
35. TF 129. MC 135. MC 148. MC 173. Ex 185. Ex
124. MC 130. MC 136. MC 149. MC 175. Ex 186. Ex
125. MC 131. MC 137. MC 150. MC 180. Ex 197. C
126. MC 132. MC 138. MC 158. BE 181. Ex 198. C

Note: TF = True-False BE = Brief Exercise C = Completion

MC = Multiple Choice Ex = Exercise MA = Matching
SA = Short-Answer Essay

CHAPTER LEARNING OBJECTIVES

1. Describe cost systems and the flow of costs in job order system. Cost accounting
involves the procedures for measuring, recording, and reporting product costs. From the data
accumulated, companies determine the total cost and the unit cost of each product. The two
basic types of cost accounting systems are job order cost and process cost. In job order
costing, companies first accumulate manufacturing costs in three accounts: Raw Materials
Inventory, Factory Labor, and Manufacturing Overhead. They then assign the accumulated
costs to Work in Process Inventory and eventually to Finished Goods Inventory and Cost of
Goods Sold.
2. Use a job cost sheet to assign costs to work in process. A job cost sheet is a form used
to record the costs chargeable to a specific job and to determine the total and unit costs of the
completed job. Job cost sheets constitute the subsidiary ledger for the Work in Process
Inventory control account.

3. Demonstrate how to determine and use the predetermined overhead rate. The
predetermined overhead rate is based on the relationship between estimated annual
overhead costs and expected annual operating activity. This is expressed in terms of a
common activity base, such as direct labor cost. Companies use this rate to assign overhead
costs to work in process and to specific jobs.

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2-4 Test Bank for Managerial Accounting, Seventh Edition

4. Prepare entries for manufacturing and service jobs completed and sold. When jobs are
completed, companies debit the cost to Finished Goods Inventory and credit it to Work in
Process Inventory. When a job is sold the entries are: (a) Debit Cash or Accounts Receivable
and credit Sales Revenue for the selling price, and (b) Debit Cost of Goods Sold and credit
Finished Goods Inventory for the cost of the goods.

5. Distinguish between under- or overapplied manufacturing overhead. Underapplied

manufacturing overhead indicates that the overhead assigned to work in process is less than
the overhead incurred. Overapplied overhead indicates that the overhead assigned to work in
process is greater than the overhead incurred.

TRUE-FALSE STATEMENTS
1. Cost accounting is primarily concerned with accumulating information about product costs.
Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting

2. A job order cost system is most appropriate when a large volume of uniform products are
produced.
Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: Reporting

3. A process cost accounting system is appropriate for similar products that are continuously
mass produced.
Ans: T, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: Reporting

4. The perpetual inventory method cannot be used in a job order cost system.
Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: Reporting

5. A job order cost system and a process cost system are two alternative methods for
valuing inventories.
Ans: T, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting

6. A job order cost system identifies costs with a particular job rather than with a set time
period.
Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting

7. A company may use either a job order cost system or a process cost system, but not both.
Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting

8. Raw Materials Inventory, Factory Labor, and Manufacturing Overhead are all control
accounts in the general ledger when a job order cost accounting system is used.
Ans: F, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting

9. Accumulating and assigning manufacturing costs are two important activities in a job order
cost system.
Ans: T, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: FSA

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 Job Order Costing 2-5

10. Recording the acquisition of raw materials is a part of accumulating manufacturing costs.
Ans: T, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: FSA

11. Manufacturing costs are generally incurred in one period and recorded in a subsequent
period.
Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: FSA

12. The Purchases account is credited for all raw materials purchase returns and allowances.
Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: FSA

13. When raw materials are received, there is no effort at this point to associate the cost of
materials with specific jobs.
Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: FSA

14. When raw materials are purchased, the Work in Process Inventory account is debited.
Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: FSA

15. Factory labor should be assigned to selling and administrative expenses on a

proportionate basis.
Ans: F, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting

16. Fringe benefits and payroll taxes associated with factory workers should be accumulated
as a part of Factory Labor.
Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: FSA

17. Job order cost sheets constitute the subsidiary ledger of the control account Work In
Process Inventory.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: FSA

18. In a job order cost system, each entry to the Work In Process Inventory account should be
accompanied by a posting to one or more job cost sheets.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: FSA

19. Direct materials requisitioned from the storeroom should be charged to the Work In
Process Inventory account and the job cost sheets for the individual jobs on which the
materials were used.
Ans: T, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: FSA

20. Manufacturing overhead is the only product cost that can be assigned to jobs as soon as
the costs are incurred.
Ans: F, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting

21. There should be a separate job cost sheet for each job.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: Business Economics

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2-6 Test Bank for Managerial Accounting, Seventh Edition

22. Actual manufacturing overhead costs are assigned to each job by tracing each overhead
cost to a specific job.
Ans: F, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
FSA

23. The formula for the predetermined overhead rate is estimated annual overhead costs
divided by an expected annual operating activity.
Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: Business Economics

24. Actual manufacturing overhead costs should be charged to the Work in Process Inventory
account as they are incurred.
Ans: F, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting

25. A good system of internal control requires that the job order cost sheet be destroyed as
soon as the job is complete.
Ans: F, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Risk Management, AICPA PC:
None, IMA: Internal Controls

26. Finished Goods Inventory is charged for the cost of jobs completed during a period.
Ans: T, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: FSA

27. When goods are sold, the Cost of Goods Sold account is debited and Work in Process
Inventory account is credited.
Ans: F, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
FSA

28. Total manufacturing costs for a period consists of the costs of direct materials used, the
cost of direct labor incurred, and the manufacturing overhead applied during the period.
Ans: T, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting

29. Overapplied overhead means that actual manufacturing overhead costs were greater than
the manufacturing overhead costs applied to jobs.
Ans: F, LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: Business Economics

30. At the end of the year, the accountant credits the amount of the overapplied overhead to
Cost of Goods Sold.
Ans: T, LO: 5, Bloom: C, Difficulty: Medium, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None,
IMA: Reporting

31. A cost accounting system consists of manufacturing cost accounts that are fully integrated
into the general ledger of a company.
Ans: T, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: Business Economics

32. The cost of raw materials purchased is credited to Raw Materials Inventory when
materials are received.
Ans: F, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: FSA

33. Requisitions for direct materials are posted daily to the individual job cost sheets.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: None, AICPA PC: None, IMA:
Business Economics

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 Job Order Costing 2-7

34. The predetermined overhead rate is based on the relationship between estimated annual
overhead costs and expected annual operating activity expressed in terms of a common
activity base.
Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: Business Economics

35. At the end of the year, underapplied overhead is usually credited to Cost of Goods Sold.
Ans: F, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting

Answers to True-False Statements

Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans.
1. T 6. T 11. F 16. T 21. T 26. T 31. T
2. F 7. F 12. F 17. T 22. F 27. F 32. F
3. T 8. F 13. T 18. T 23. T 28. T 33. T
4. F 9. T 14. F 19. T 24. F 29. F 34. T
5. T 10. T 15. F 20. F 25. F 30. T 35. F

MULTIPLE CHOICE QUESTIONS

36. Which of the following is one of the components of cost accounting?
a. It involves measuring product costs.
b. It involves the determination of company profits.
c. It requires GAAP to be applied.
d. It requires cost minimizing principles.
Ans: A, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: Business Economics

37. A major purpose of cost accounting is to

a. classify all costs as operating or nonoperating.
b. measure, record, and report period costs.
c. provide information to stockholders for investment decisions.
d. measure, record, and report product costs.
Ans: D, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting

38. The two basic types of cost accounting systems are

a. job order and job accumulation systems.
b. job order and process cost systems.
c. process cost and batch systems.
d. job order and batch systems.
Ans: B, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Business Economics

39. A process cost system would most likely be used by a company that makes
a. motion pictures.
b. repairs to automobiles.
c. breakfast cereal.
d. college graduation announcements.

Ans: C, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC:
None, IMA: Reporting

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2-8 Test Bank for Managerial Accounting, Seventh Edition

40. Which of the following would be accounted for using a job order cost system?
a. The production of personal computers.
b. The production of automobiles.
c. The refining of petroleum.
d. The construction of a new campus building.
Ans: D, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting

41. Process costing is used when

a. the production process is continuous.
b. production is aimed at filling a specific customer order.
c. dissimilar products are involved.
d. costs are to be assigned to specific jobs.
Ans: A, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting

42. Process costing is not used when

a. similar goods are being produced.
b. large volumes are produced.
c. jobs have distinguishing characteristics.
d. a series of connected manufacturing processes is necessary.
Ans: C, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting

43. An important feature of a job order cost system is that each job
a. must be similar to previous jobs completed.
b. has its own distinguishing characteristics.
c. must be completed before a new job is accepted.
d. consists of one unit of output.
Ans: B, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting

44. As of December 31, 2017, Stand Still Industries had $2,500 of raw materials inventory. At
the beginning of 2017, there was $2,000 of materials on hand. During the year, the
company purchased $375,000 of materials; however, it paid for only $312,500. How much
inventory was requisitioned for use on jobs during 2017?
a. $362,000
b. $374,500
c. $375,500
d. $363,000
Ans: B, LO: 1, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Resource Management, AICPA FN: Reporting, AICPA PC: Problem
Solving, IMA: Business Economics

45. The flow of costs in a job order cost system

a. involves accumulating manufacturing costs incurred and assigning the accumulated
costs to work done.
b. cannot be measured until all jobs are complete.
c. measures product costs for a set time period.
d. generally follows a LIFO cost flow assumption.
Ans: A, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: Business Economics

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 Job Order Costing 2-9

46. In a job order cost accounting system, the Raw Materials Inventory account is
a. an expense.
b. a control account.
c. not used.
d. a period cost.
Ans: B, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting

47. When a job is completed and all costs have been accumulated on a job cost sheet, the
journal entry that should be made is
a. Finished Goods Inventory
Direct Materials
Direct Labor
Manufacturing Overhead
b. Work In Process Inventory
Direct Materials
Direct Labor
Manufacturing Overhead
c. Raw Materials Inventory
Work In Process Inventory
d. Finished Goods Inventory
Work In Process Inventory
Ans: D, LO: 1, Bloom: C, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC:
None, IMA: FSA

48. The two major steps in the flow of costs are

a. allocating and assigning.
b. acquiring and accumulating.
c. accumulating and assigning.
d. accumulating and amortizing.
Ans: C, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: Business Economics

49. The Raw Materials Inventory account is

a. a subsidiary account.
b. debited for invoice costs and freight costs chargeable to the purchaser.
c. debited for purchase discounts taken.
d. debited for purchase returns and allowances.
Ans: B, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting

50. Records of individual items of raw materials would not be maintained

a. electronically.
b. manually.
c. on stores ledger cards.
d. in the Raw Materials Inventory account.
Ans: D, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Leverage Technology, AICPA PC:
Project Management, IMA: Business Applications

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2 - 10 Test Bank for Managerial Accounting, Seventh Edition

51. Cost of raw materials is debited to Raw Materials Inventory when the
a. materials are ordered.
b. materials are received.
c. materials are put into production.
d. bill for the materials is paid.
Ans: B, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: FSA

52. Which of the following is not included in factory labor costs?

a. Gross earnings.
b. Employer payroll taxes.
c. Fringe benefits.
d. All of these are included.
Ans: D, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting

53. All of the following would be entries in assigning accumulated costs to the Work In
Process Inventory except:
a. the purchase of raw materials.
b. raw materials are used.
c. overhead is applied.
d. factory labor is used.
Ans: A, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting

54. Factory labor costs

a. are accumulated in a control account.
b. do not include pension costs.
c. include vacation pay.
d. are based on workers’ net pay.
Ans: C, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: Business Economics

55. Factory Labor is a(n)

a. expense account.
b. control account.
c. subsidiary account.
d. temporary account.
Ans: D, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting

56. Kline Manufacturing has the following labor costs:

Factory—Gross wages $500,000
Factory—Net wages 420,000
Employer Payroll Taxes Payable 50,000
The entry to record the cost of factory labor and the associated payroll tax expense will
include a debit to Factory Labor for
a. $550,000.
b. $500,000.
c. $470,000.
d. $450,000.
Ans: A, LO: 1, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC:
Problem Solving, IMA: FSA

1 0
 Job Order Costing 2 - 11

57. Factory labor costs

a. accumulate in advance of utilization.
b. accumulate in a control account.
c. include sick pay earned by factory workers.
d. accumulate in the Factory Labor Expense account.
Ans: C, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: Business Economics

58. Which of the following is not a control account?

a. Manufacturing Overhead
b. Raw materials inventory
c. Accounts Receivable
d. All fo these are control accounts
Ans: B, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Business Economics

59. Manufacturing Overhead would not have a subsidiary account for

a. utilities.
b. property taxes.
c. insurance.
d. raw materials inventory.
Ans: D, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Business Economics

60. The entry to record the acquisition of raw materials on account is

a. Work in Process Inventory
Accounts Payable
b. Manufacturing Overhead
Raw Materials Inventory
Accounts Payable
c. Accounts Payable
Raw Materials Inventory
d. Raw Materials Inventory
Accounts Payable
Ans: D, LO: 1, Bloom: C, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC:
Problem Solving, IMA: FSA

61. Which one of the following best describes a job cost sheet?
a. It is a form used to record the costs chargeable to a specific job and to determine the
total and unit costs of the completed job.
b. It is used to track manufacturing overhead costs to specific jobs.
c. It is used by management to understand how direct costs affect profitability.
d. It is a daily form that management uses for tracking worker productivity on which
employee raises are based.
Ans: A, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting

62. Job cost sheets constitute the subsidiary ledger for the
a. Finished Goods Inventory account.
b. Cost of Goods Sold account.
c. Work In Process Inventory account.
d. Cost of Goods Manufactured account.
Ans: C, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting

1 0
2 - 12 Test Bank for Managerial Accounting, Seventh Edition

63. A materials requisition slip showed that direct materials requested were $66,000 and
indirect materials requested were $9,000. The entry to record the transfer of materials
from the storeroom is
a. Work In Process Inventory .................................................. 66,000
Raw Materials Inventory ............................................. 66,000
b. Direct Materials ................................................................... 66,000
Indirect Materials................................................................. 9,000
Work in Process Inventory.......................................... 75,000
c. Manufacturing Overhead..................................................... 75,000
Raw Materials Inventory ............................................. 75,000
d. Work In Process Inventory .................................................. 66,000
Manufacturing Overhead..................................................... 9,000
Raw Materials Inventory ............................................. 75,000
Ans: D, LO: 2, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC:
Problem Solving, IMA: FSA

64. The job cost sheet does not show

a. costs chargeable to a specific job.
b. the total costs of a completed job.
c. the unit cost of a completed job.
d. the cost of goods sold.
Ans: D, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Business Economics

65. Under an effective system of internal control, the authorization for issuing materials is
made
a. orally.
b. on a prenumbered materials requisition slip.
c. by the accounting department.
d. by anyone on the production line.
Ans: B, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Risk Management, AICPA PC:
None, IMA: Internal Controls

66. A copy of the materials requisition slip would not include the:
a. quantity.
b. stock number.
c. cost per unit.
d. name of the supplier.
Ans: D, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Internal Controls

67. Materials requisition slips are costed

a. by production supervisors.
b. by factory personnel who work on the production line.
c. after the goods have been sold.
d. using any of the inventory costing methods.
Ans: D, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: No ne,
IMA: FSA

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 Job Order Costing 2 - 13

68. Postings to control accounts in a costing system are made

a. monthly.
b. daily.
c. annually.
d. semi-annually.
Ans: A, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: Business Applications

69. Which one of the following should be equal to the balance of the Work In Process
Inventory account at the end of the period?
a. The total of the amounts transferred from raw materials for the current period
b. The sum of the costs shown on the job cost sheets of unfinished jobs
c. The total of manufacturing overhead applied to work in process for the period
d. The total manufacturing costs for the period
Ans: B, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting

70. Which of the following shows entries only to control accounts?

a. Factory Labor
Factory Wages Payable
b. Work in Process
Factory Labor
Raw Materials Inventory
Factory Wages Payable
c. Work in Process
Manufacturing Overhead
Raw Materials Inventory
d. Factory Labor
Raw Materials Inventory
Accounts Payable
Factory Wages Payable
Ans: C, LO: 2, Bloom: C, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC:
Problem Solving, IMA: FSA

71. A time ticket does not indicate the

a. employee's name.
b. account to be charged.
c. number of personal exemptions claimed by the employee.
d. job number.
Ans: C, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Business Economics

72. Which one of the following is a source document that impacts the job cost sheet?
a. Raw materials receiving slips.
b. Materials purchase orders.
c. Labor time tickets.
d. Finished goods shipping documents.
Ans: C, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Internal Controls

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2 - 14 Test Bank for Managerial Accounting, Seventh Edition

73. Time tickets should be approved by

a. the audit committee.
b. co-workers.
c. the employee's supervisor.
d. the payroll department.
Ans: C, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Internal Controls

74. If the entry to assign factory labor showed only a debit to Work In Process Inventory, then
all labor costs were
a. direct labor.
b. indirect labor.
c. overtime related.
d. regular hours.
Ans: A, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: FSA

75. The principal accounting record used in assigning costs to jobs is

a. a job cost sheet.
b. the cost of goods manufactured schedule.
c. the Manufacturing Overhead control account.
d. the stores ledger cards.
Ans: A, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Business Economics

76. The following information is available for completed Job No. 402: Direct materials,
$120,000; direct labor, $180,000; manufacturing overhead applied, $90,000; units
produced, 5,000 units; units sold, 4,000 units. The cost of the finished goods on hand from
this job is
a. $60,000.
b. $390,000.
c. $78,000.
d. $312,000.
Ans: C, LO: 2, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting

77. Sportly, Inc. completed Job No. B14 during 2017. The job cost sheet listed the following:
Direct materials $110,000
Direct labor $60,000
Manufacturing overhead applied $40,000
Units produced 3,000 units
Units sold 1,800 units
How much is the cost of the finished goods on hand from this job?
a. $210,000
b. $126,000
c. $ 84,000
d. $102,000
Ans: C, LO: 2, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting

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 Job Order Costing 2 - 15

78. Madison Inc. uses job order costing for its brand new line of sewing machines. The cost
incurred for production during 2017 totaled $18,000 of materials, $9,000 of direct labor
costs, and $6,000 of manufacturing overhead applied. The company ships all goods as
soon as they are completed which results in no finished goods inventory on hand at the
end of any year. Beginning work in process totaled $15,000, and the ending balance is
$9,000. During the year, the company completed 25 machines. How much is the cost per
machine?
a. $1,080
b. $1,560
c. $1,320
d. $1,920
Ans: B, LO: 2, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC:
Problem Solving, IMA: Business Economics

79. As of December 31, 2017, Nilsen Industries had $2,000 of raw materials inventory. At the
beginning of 2017, there was $1,600 of materials on hand. During the year, the company
purchased $354,000 of materials; however it paid for only $314,000. How much inventory
was requisitioned for use on jobs during 2017?
a. $354,400
b. $344,400
c. $343,600
d. $353,600
Ans: D, LO: 2, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC:
Problem Solving, IMA: Business Economics

80. Cost of goods manufactured equals $85,000 for 2017. Finished goods inventory is $2,000
at the beginning of the year and $5,500 at the end of the year. Beginning and ending work
in process for 2017 are $4,000 and $5,000, respectively. How much is cost of goods sold
for the year?
a. $87,500
b. $83,000
c. $81,500
d. $88,500
Ans: C, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting

81. A company expected its annual overhead costs to be $1,500,000 and direct labor costs to
be $1,000,000. Actual overhead was $1,450,000, and actual labor costs totaled
$1,100,000. How much is the company’s predetermined overhead rate to the nearest
cent?
a. $1.45
b. $1.31
c. $1.50
d. $1.37
Ans: C, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC:
Problem Solving, IMA: Business Economics

1 0
2 - 16 Test Bank for Managerial Accounting, Seventh Edition

82. Vektek, Inc. thinks machine hours is the best activity base for its manufacturing overhead.
The estimate of annual overhead costs for its jobs was $2,050,000. The company used
1,000 hours of processing on Job No. B12 during the period and incurred overhead costs
totaling $2,100,000. The budgeted machine hours for the year totaled 20,000. How much
overhead should be applied to Job No. B12?
a. $2,100
b. $102,500
c. $105,000
d. $2,050
Ans: B, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC:
Problem Solving, IMA: FSA

83. Barr Mfg. provided the following information from its accounting records for 2017:
Expected production 60,000 labor hours
Actual production 56,000 labor hours
Budgeted overhead $900,000
Actual overhead $870,000
How much is the overhead application rate if Barr bases the rate on direct labor hours?
a. $16.07 per hour
b. $15.00 per hour
c. $14.50 per hour
d. $15.54 per hour
Ans: B, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC:
Problem Solving, IMA: FSA

84. Kinney Company applies overhead on the basis of 150% of direct labor cost. Job No. 176
is charged with $150,000 of direct materials costs and $180,000 of manufacturing
overhead. The total manufacturing costs for Job No. 176 is
a. $330,000.
b. $600,000.
c. $450,000.
d. $405,000.
Ans: C, LO: 3, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC:
Problem Solving, IMA: FSA

85. Redman Company manufactures customized desks. The following pertains to Job No.
978:
Direct materials used $15,450
Direct labor hours worked 360
Direct labor rate per hour $15.00
Machine hours used 300
Applied factory overhead rate per machine hour $22.00
What is the total manufacturing cost for Job No. 978?
a. $25,650
b. $27,450
c. $28,950
d. $30,750
Ans: B, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting

1 0
 Job Order Costing 2 - 17

86. Henson Company applies overhead on the basis of 120% of direct labor cost. Job No. 190 is
charged with $140,000 of direct materials costs and $180,000 of manufacturing overhead. The
total manufacturing costs for Job No. 190 is
a. $320,000.
b. $536,000.
c. $348,000.
d. $470,000.
Ans: D, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC:
Problem Solving, IMA: FSA

87. Norman Company manufactures customized desks. The following pertains to Job No. 953:
Direct materials used $22,800
Direct labor hours worked 600
Direct labor rate per hour $16.00
Machine hours used 400
Applied factory overhead rate per machine hour $30.00
What is the total manufacturing cost for Job No. 953?
a. $41,200
b. $44,400
c. $47,200
d. $50,400
Ans: B, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting

88. Minton Company provided the following information from its accounting records for 2017:
Expected production 60,000 labor hours
Actual production 56,000 labor hours
Budgeted overhead $1,800,000
Actual overhead $1,740,000
How much is the overhead application rate if Minton Company bases it on direct labor hours?
a. $30.00 per hour
b. $29.00 per hour
c. $32.14 per hour
d. $31.07 per hour
Ans: A, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC:
Problem Solving, IMA: FSA

89. The labor costs that have been identified as indirect labor should be charged to
a. manufacturing overhead.
b. direct labor.
c. the individual jobs worked on.
d. salary expense.
Ans: A, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: Reporting

90. Manufacturing overhead is applied to each job

a. at the time when the overhead cost is incurred.
b. by means of a predetermined overhead rate.
c. at the end of the year when actual costs are known.
d. only if the overhead costs can be directly traced to that job.
Ans: B, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: Business Economics

1 0
2 - 18 Test Bank for Managerial Accounting, Seventh Edition

91. The predetermined overhead rate is based on the relationship between

a. estimated annual costs and actual activity.
b. estimated annual costs and expected annual activity.
c. actual monthly costs and actual annual activity.
d. estimated monthly costs and actual monthly activity.
Ans: B, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: Business Economics

92. The predetermined overhead rate is

a. determined on a moving average basis throughout the year.
b. not calculated until actual overhead costs are incurred.
c. determined at the beginning of the year.
d. determined at the end of the current year.
Ans: C, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: Business Economics

93. In calculating a predetermined overhead rate, a recent trend in automated manufacturing

operations is to choose an activity base related to
a. direct labor hours.
b. indirect labor dollars.
c. machine hours.
d. raw materials dollars.
Ans: C, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: Business Economics

94. If annual overhead costs are expected to be $750,000 and direct labor costs are expected
to be $1,000,000, then if the activity base is direct labor costs:
a. $1.33 is the predetermined overhead rate.
b. for every dollar of manufacturing overhead, 75 cents of direct labor will be assigned.
c. for every dollar of direct labor, 75 cents of manufacturing overhead will be assigned.
d. a predetermined overhead rate cannot be determined.
Ans: C, LO: 3, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC:
Problem Solving, IMA: Business Economics

95. Overhead application is recorded with a

a. credit to Work in Process Inventory.
b. credit to Manufacturing Overhead.
c. debit to Manufacturing Overhead.
d. credit to job cost sheets.
Ans: B, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: FSA

96. Manufacturing overhead applied is added to direct labor incurred and to what other item to
equal total manufacturing costs for the period?
a. Goods available for sale.
b. Raw materials purchased.
c. Work in process.
d. Direct materials used.
Ans: D, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: Business Economics

1 0
 Job Order Costing 2 - 19

97. Simmons Inc. applies overhead to production at a predetermined rate of 90% based on
direct labor cost. Job No. 250, the only job still in process at the end of August, has been
charged with manufacturing overhead of $8,100. What was the amount of direct materials
charged to Job 250 assuming the balance in Work in Process inventory is $30,000?
a. $ 8,100.
b. $ 9,000.
c. $12,900.
d. $30,000.
Ans: C, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting

98. Spencer Inc. applies overhead to production at a predetermined rate of 80% based on
direct labor cost. Job No. 130, the only job still in process at the end of August, has been
charged with manufacturing overhead of $6,400. What was the amount of direct materials
charged to Job 130 assuming the balance in Work in Process inventory is $20,000?
a. $7,000.
b. $6,400.
c. $5,600.
d. $20,000.
Ans: C, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting

99. For Jacobs Company, the predetermined overhead rate is 70% of direct labor cost. During
the month, $600,000 of factory labor costs are incurred of which $140,000 is indirect
labor. Actual overhead incurred was $320,000. The amount of overhead debited to Work
in Process Inventory should be:
a. $322,000
b. $320,000
c. $420,000
d. $460,000
Ans: A, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC:
Problem Solving, IMA: Business Economics

100. Simpson Company applies overhead on the basis of 200% of direct labor cost. Job No.
305 is charged with $180,000 of direct materials costs and $200,000 of manufacturing
overhead. The total manufacturing costs for Job No. 305 is:
a. $380,000
b. $480,000
c. $560,000
d. $580,000
Ans: B, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting

101. For Wilton Company, the predetermined overhead rate is 70% of direct labor cost. During
the month, $720,000 of factory labor costs are incurred of which $200,000 is indirect
labor. Actual overhead incurred was $360,000. The amount of overhead debited to Work
in Process Inventory should be:
a. $364,000
b. $360,000
c. $504,000
d. $520,000
Ans: A, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC:
Problem Solving, IMA: Business Economics

1 0
2 - 20 Test Bank for Managerial Accounting, Seventh Edition

102. At the beginning of the year, Monroe Company estimates annual overhead costs to be
$2,400,000 and that 300,000 machine hours will be operated. Using machine hours as a base,
the amount of overhead applied during the year if actual machine hours for the year was
315,000 hours is
a. $2,400,000.
b. $2,285,714.
c. $1,680,000.
d. $2,520,000.
Ans: D, LO: 4, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC:
Problem Solving, IMA: FSA

103. Cost of goods sold is obtained from

a. analysis of all the control accounts in the cost system.
b. the finished goods inventory records.
c. the work in process inventory records.
d. the Raw Materials Inventory control account.
Ans: B, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting

104. When determining costs of jobs, how does a company account for indirect materials?
a. It is added to work in process as used.
b. It remains part of raw materials inventory.
c. It is transferred out of raw materials into manufacturing overhead when used.
d. It is transferred out of raw materials into work in process as used.
Ans: C, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting

105. In a job order cost system, a credit to Manufacturing Overhead will be accompanied by a debit
to
a. Cost of Goods Manufactured.
b. Finished Goods Inventory.
c. Work in Process Inventory.
d. Raw Materials Inventory.
Ans: C, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: FSA

106. During 2017, Tanner Manufacturing expected Job No. 26 to cost $300,000 of overhead,
$500,000 of materials, and $200,000 in labor. Tanner applied overhead based on direct labor
cost. Actual production required an overhead cost of $290,000, $550,000 in materials used,
and $220,000 in labor. All of the goods were completed. What amount was transferred to
Finished Goods?
a. $1,000,000
b. $1,060,000
c. $1,070,000
d. $1,100,000
Ans: D, LO: 4, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC:
Problem Solving, IMA: FSA

107. Debits to Work in Process Inventory are accompanied by a credit to all but which one of the
following accounts?
a. Raw Materials Inventory
b. Factory Labor
c. Manufacturing Overhead
d. Cost of Goods Sold
Ans: D, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: FSA

1 0
Ans: D, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Pe
IMA: FSA

68. Postings to control accounts in a costing system are ma

a. monthly.
b. daily.
c. annually.
d. semi-annually.
Ans: A, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector P
IMA: Business Applications

69. Which one of the following should be equal to the

Inventory account at the end of the period?
a. The total of the amounts transferred from raw mater
b. The sum of the costs shown on the job cost sheets
c. The total of manufacturing overhead applied to work
d. The total 1manufacturing
0 costs for the period
Ans: B, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory P
Reporting
 70. Which of the following shows entries only to control acc
a. Factory Labor
Factory Wages Payable
b. Work in Process
Factory Labor
Raw Materials Inventory
Factory Wages Payable
c. Work in Process
Manufacturing Overhead
Raw Materials Inventory
d. Factory Labor
Raw Materials Inventory
Accounts Payable
Factory Wages Payable
Ans: C, LO: 2, Bloom: C, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Legal/Regu
Problem Solving, IMA: FSA

71. A time ticket does not indicate the

a. employee's name.
b. account to be charged.
c. number of personal exemptions claimed by the emp
d. job number.
Ans: C, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector P
Business Economics

72. Which one of the following is a source document that im

a. Raw materials receiving slips.
b. Materials purchase orders.
c. Labor time tickets.
d. Finished goods shipping documents.
Ans: C, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory P
Internal Controls

1 0
2 - 14 Test Bank for Managerial Accounting, Seventh Edit

73. Time tickets should be approved by

a. the audit committee.
b. co-workers.
c. the employee's supervisor.
d. the payroll department.
Ans: C, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Pe
Internal Controls

74. If the entry to assign factory labor showed only a debit to

all labor costs were
a. direct labor.
b. indirect labor.
c. overtime related.
d. regular hours.
Ans: A, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Pe
IMA: FSA

75. The principal accounting record used in assigning costs t

a. a job cost sheet.
b. the cost of goods manufactured schedule.
c. the Manufacturing Overhead control account.
d. the stores ledger cards.
Ans: A, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Per
Business Economics

76. The following information is available for completed

1
$120,000; direct 0
labor, $180,000; manufacturing ov
produced, 5,000 units; units sold, 4,000 units. The cost o
this job is
 a. $60,000.
b. $390,000.
c. $78,000.
d. $312,000.
Ans: C, LO: 2, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Reg
Problem Solving, IMA: Reporting

77. Sportly, Inc. completed Job No. B14 during 2017. The job
Direct materials $110,0
Direct labor $60,0
Manufacturing overhead applied $40,0
Units produced 3,000 un
Units sold 1,800 u
How much is the cost of the finished goods on hand from
a. $210,000
b. $126,000
c. $ 84,000
d. $102,000
Ans: C, LO: 2, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Reg
Problem Solving, IMA: Reporting

1 0
 78. Madison Inc. uses job order costing for its brand new
incurred for production during 2017 totaled $18,000 o
costs, and $6,000 of manufacturing overhead applied
soon as they are completed which results in no finish
end of any year. Beginning work in process totaled $
$9,000. During the year, the company completed 25 m
machine?
a. $1,080
b. $1,560
c. $1,320
d. $1,920
Ans: B, LO: 2, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regu
Problem Solving, IMA: Business Economics

79. As of December 31, 2017, Nilsen Industries had $2,00

beginning of 2017, there was $1,600 of materials on h
purchased $354,000 of materials; however it paid for o
was requisitioned for use on jobs during 2017?
a. $354,400
b. $344,400
c. $343,600
d. $353,600
Ans: D, LO: 2, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regu
Problem Solving, IMA: Business Economics

80. Cost of goods manufactured equals $85,000 for 2017.

at the beginning of the year and $5,500 at the end of th
in process for 2017 are $4,000 and $5,000, respective
for the year?
a. $87,500
b. $83,000
c. $81,500
d. $88,500
Ans: C, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Re
Problem Solving, IMA: Reporting

81. A company expected its annual overhead costs to be $

be $1,000,000. Actual overhead was $1,450,000,
$1,100,000. 1How much
0 is the company’s predetermi
cent?
a. $1.45
 b. $1.31
c. $1.50
d. $1.37
Ans: C, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regu
Problem Solving, IMA: Business Economics

2 - 16 Test Bank for Managerial Accounting, Seventh Edit

82. Vektek, Inc. thinks machine hours is the best activity bas
The estimate of annual overhead costs for its jobs was
1,000 hours of processing on Job No. B12 during the pe
totaling $2,100,000. The budgeted machine hours for the
overhead should be applied to Job No. B12?
a. $2,100
b. $102,500
c. $105,000
1 0
d. $2,050
Ans: B, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regula
Problem Solving, IMA: FSA
 83. Barr Mfg. provided the following information from its acco
Expected production 60,000 labor hours
Actual production 56,000 labor hours
Budgeted overhead $900,000
Actual overhead $870,000
How much is the overhead application rate if Barr bases
a. $16.07 per hour
b. $15.00 per hour
c. $14.50 per hour
d. $15.54 per hour
Ans: B, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regula
Problem Solving, IMA: FSA

84. Kinney Company applies overhead on the basis of 150%

is charged with $150,000 of direct materials costs
overhead. The total manufacturing costs for Job No. 176
a. $330,000.
b. $600,000.
c. $450,000.
d. $405,000.
Ans: C, LO: 3, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Legal/Regula
Problem Solving, IMA: FSA

85. Redman Company manufactures customized desks. T

978:
Direct materials used
Direct labor hours worked
Direct labor rate per hour
Machine hours used
Applied factory overhead rate per machine hour
What is the total manufacturing cost for Job No. 978?
a. $25,650
b. $27,450
c. $28,950
d. $30,750
Ans: B, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Reg
Problem Solving, IMA: Reporting
1 0
 86. Henson Company applies overhead on the basis of 120%
charged with $140,000 of direct materials costs and $180
total manufacturing costs for Job No. 190 is
a. $320,000.
b. $536,000.
c. $348,000.
d. $470,000.
Ans: D, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regu
Problem Solving, IMA: FSA

87. Norman Company manufactures customized desks. The f

Direct materials used
Direct labor hours worked
Direct labor rate per hour
Machine hours used
Applied factory overhead rate per machine hour
What is the total manufacturing cost for Job No. 953?
a. $41,200
b. $44,400
c. $47,200
d. $50,400 1 0
Ans: B, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Re
Problem Solving, IMA: Reporting
 88. Minton Company provided the following information from i
Expected production 60,000 labor hour
Actual production 56,000 labor hour
Budgeted overhead $1,800,00
Actual overhead $1,740,00
How much is the overhead application rate if Minton Com
a. $30.00 per hour
b. $29.00 per hour
c. $32.14 per hour
d. $31.07 per hour
Ans: A, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regu
Problem Solving, IMA: FSA

89. The labor costs that have been identified as indirect labor
a. manufacturing overhead.
b. direct labor.
c. the individual jobs worked on.
d. salary expense.
Ans: A, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory
IMA: Reporting

90. Manufacturing overhead is applied to each job

a. at the time when the overhead cost is incurred.
b. by means of a predetermined overhead rate.
c. at the end of the year when actual costs are known.
d. only if the overhead costs can be directly traced to tha
Ans: B, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory
IMA: Business Economics

1 0
2 - 18 Test Bank for Managerial Accounting, Seventh Edit

91. The predetermined overhead rate is based on the relatio

a. estimated annual costs and actual activity.
b. estimated annual costs and expected annual activity.
c. actual monthly costs and actual annual activity.
d. estimated monthly costs and actual monthly activity.
Ans: B, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Pe
IMA: Business Economics

92. The predetermined overhead rate is

a. determined on a moving average basis throughout th
b. not calculated until actual overhead costs are incurre
c. determined at the beginning of the year.
d. determined at the end of the current year.
Ans: C, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Pe
IMA: Business Economics

93. In calculating a predetermined overhead rate, a recent t

operations is to choose an activity base related to
a. direct labor hours.
b. indirect labor dollars.
c. machine hours.
d. raw materials dollars.
Ans: C, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Pe
IMA: Business Economics

94. If annual overhead costs are expected to be $750,000 an

to be $1,000,000, then if the activity base is direct labor c
a. $1.33 is the predetermined overhead rate.
b. for every dollar of manufacturing overhead, 75 cents
c. for every dollar of direct labor, 75 cents of manufactu
d. a predetermined overhead rate cannot be determined
Ans: C, LO: 3, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Legal/Regula
Problem Solving, IMA: Business Economics

1 0
95. Overhead application is recorded with a
a. credit to Work in Process Inventory.
b. credit to Manufacturing Overhead.
 c. debit to Manufacturing Overhead.
d. credit to job cost sheets.
Ans: B, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Pe
IMA: FSA

96. Manufacturing overhead applied is added to direct labor

equal total manufacturing costs for the period?
a. Goods available for sale.
b. Raw materials purchased.
c. Work in process.
d. Direct materials used.
Ans: D, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Pe
IMA: Business Economics

97. Simmons Inc. applies overhead to production at a pre

direct labor cost. Job No. 250, the only job still in proce
charged with manufacturing overhead of $8,100. What
1 0
charged to Job 250 assuming the balance in Work in P
a. $ 8,100.
b. $ 9,000.
 c. $12,900.
d. $30,000.
Ans: C, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Re
Problem Solving, IMA: Reporting

98. Spencer Inc. applies overhead to production at a pre

direct labor cost. Job No. 130, the only job still in proce
charged with manufacturing overhead of $6,400. What
charged to Job 130 assuming the balance in Work in P
a. $7,000.
b. $6,400.
c. $5,600.
d. $20,000.
Ans: C, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Re
Problem Solving, IMA: Reporting

99. For Jacobs Company, the predetermined overhead rate

the month, $600,000 of factory labor costs are incur
labor. Actual overhead incurred was $320,000. The am
in Process Inventory should be:
a. $322,000
b. $320,000
c. $420,000
d. $460,000
Ans: A, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regu
Problem Solving, IMA: Business Economics

100. Simpson Company applies overhead on the basis of 2

305 is charged with $180,000 of direct materials cos
overhead. The total manufacturing costs for Job No. 30
a. $380,000
b. $480,000
c. $560,000
d. $580,000
Ans: B, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Re
Problem Solving, IMA: Reporting

101. For Wilton Company, the predetermined overhead rate

the month, $720,000 of factory labor costs are incur
labor. Actual overhead incurred was $360,000. The am
1 0 should be:
in Process Inventory
a. $364,000
b. $360,000
 c. $504,000
d. $520,000
Ans: A, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regu
Problem Solving, IMA: Business Economics

2 - 20 Test Bank for Managerial Accounting, Seventh Edit

102. At the beginning of the year, Monroe Company estima

$2,400,000 and that 300,000 machine hours will be operate
the amount of overhead applied during the year if actua
315,000 hours is
a. $2,400,000.
b. $2,285,714.
c. $1,680,000.
d. $2,520,000.
Ans: D, LO: 4, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regula
Problem Solving, IMA: FSA

103. Cost of goods sold is obtained from

a. analysis of all the control accounts in the cost system.
b. the finished goods inventory records.
c. the work in process inventory records.
d. the Raw Materials Inventory control account.
1 0
Ans: B, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Pe
Reporting
104. When determining costs of jobs, how does a company acco
a. It is added to work in process as used.
b. It remains part of raw materials inventory.
c. It is transferred out of raw materials into manufacturing
d. It is transferred out of raw materials into work in proces
Ans: C, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Pe
Reporting

105. In a job order cost system, a credit to Manufacturing Overh

to
a. Cost of Goods Manufactured.
b. Finished Goods Inventory.
c. Work in Process Inventory.
d. Raw Materials Inventory.
Ans: C, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Pe
IMA: FSA

106. During 2017, Tanner Manufacturing expected Job No. 2

$500,000 of materials, and $200,000 in labor. Tanner appl
cost. Actual production required an overhead cost of $29
and $220,000 in labor. All of the goods were completed
Finished Goods?
a. $1,000,000
b. $1,060,000
c. $1,070,000
d. $1,100,000
Ans: D, LO: 4, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regula
Problem Solving, IMA: FSA

107. Debits to Work in Process Inventory are accompanied by

following accounts?
a. Raw Materials Inventory
b. Factory Labor
c. Manufacturing Overhead
d. Cost of Goods Sold
Ans: D, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Pe
IMA: FSA

1 0
108. Which of the following is not viewed as part of accumu
order cost system?
a. Cost of goods sold is recognized
b. Raw materials are purchased
c. Factory labor is incurred
d. Manufacturing overhead is incurred
Ans: A, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory
IMA: Business Economics

109. Which of the following is not viewed as part of assig

order cost system?
a. Manufacturing overhead is applied
b. Raw materials are used
c. Manufacturing overhead is incurred
d. Completed goods are recognized
Ans: C, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory
IMA: Business Economics

110. In determining total manufacturing costs on the cost of g

a. beginning work in process inventory should have a
b. actual manufacturing overhead costs appear as a d
c. manufacturing overhead applied is added to direct m
d. ending work in process inventory is deducted
inventory.
Ans: C, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory P
Reporting

111. Gulick Company developed the following data for the cu

1 in process
Beginning work 0 inventory $240
Direct materials used 144
Actual overhead 288
 Overhead applied 216
Cost of goods manufactured 264
Total manufacturing costs 720

Gulick Company's direct labor cost for the year is

a. $72,000.
b. $360,000.
c. $216,000.
d. $288,000.
Ans: B, LO: 4, Bloom: AP, Difficulty: Hard, Min: 3, AACSB: Analytic, AICPA BB: Legal/Re
Problem Solving, IMA: Reporting

1 0
2 - 22 Test Bank for Managerial Accounting, Seventh Edit

112. Gulick Company developed the following data for the cur
 Beginning work in process inventory $240,0
Direct materials used 144,0
Actual overhead 288,0
Overhead applied 216,0
Cost of goods manufactured 264,0
Total manufacturing costs 720,0

Gulick Company's ending work in process inventory is

a. $696,000.
b. $480,000.
c. $456,000.
d. $216,000.
Ans: A, LO: 4, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Reg
Problem Solving, IMA: Reporting

113. Hayward Manufacturing Company developed the followin

Beginning work in process inventory $9
Direct materials used 7
Actual overhead 1,1
Overhead applied 8
Cost of goods manufactured 1,2
Ending work in process 1,5
Hayward Manufacturing Company's total manufacturing
a. $1,900,000.
b. $1,800,000.
c. $1,300,000.
d. cannot be determined from the data provided.
Ans: B, LO: 4, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Reg
Problem Solving, IMA: Reporting

114. Which of the following is not used in assigning manufa

inventory?
a. Actual manufacturing overhead
b. Time tickets
c. Materials requisitions
d. Predetermined overhead rate
Ans: A, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Pe
IMA: Business Economics
1 0
115. On the cost of goods manufactured schedule, the cost of
the
 a. balance of Finished Goods Inventory at the end of the
b. total debits to Work in Process Inventory during the p
c. amount transferred from Work in Process Invento
period.
d. debits to Cost of Goods Sold during the period.
Ans: C, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Pe
Reporting

116. Gannon Company had the following information at Decem

Finished goods inventory, January 1 $
Finished goods inventory, December 31 1
If the cost of goods manufactured during the year amou
were $2,750,000, the amount of gross profit for the year is
a. $550,000.
b. $2,100,000.
c. $650,000.
d. $450,000.
1
Ans: C, LO: 4, Bloom: AP, Difficulty: 0
Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Re
Problem Solving, IMA: Reporting

117. Haight Company incurred direct materials costs of $2,500

 overhead applied was $450,000 and is applied at the rate
Company’s total manufacturing costs for the year was
a. $3,700,000.
b. $3,220,000.
c. $2,950,000.
d. $4,720,000.
Ans: A, LO: 4, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Re
Problem Solving, IMA: Reporting

118. Greer Company developed the following data for the curre
Beginning work in process inventory $ 136
Direct materials used 208
Actual overhead 176
Overhead applied 184
Cost of goods manufactured 900
Total manufacturing costs 856

How much is Greer Company's direct labor cost for the ye

a. $508,000
b. $600,000
c. $464,000
d. $328,000
Ans: C, LO: 4, Bloom: AP, Difficulty: Hard, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regu
Problem Solving, IMA: Business Economics

119. Greer Company developed the following data for the curre
Beginning work in process inventory $ 136
Direct materials used 208
Actual overhead 176
Overhead applied 184
Cost of goods manufactured 900
Total manufacturing costs 856

How much is Greer Company's ending work in process inv

a. $92,000
b. $484,000
c. $84,000
d. $372,000
Ans: A, LO: 4, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Re
Problem Solving, IMA: Reporting
1 0
2 - 24 Test Bank for Managerial Accounting, Seventh Edit

120. Chmelar Manufacturing Company developed the followin

Beginning work in process inventory $ 1
Direct materials used 7
Actual overhead 8
Overhead applied 8
Cost of goods manufactured 1,9
Ending work in process

How much are total manufacturing costs for the period?

a. $2,370,000
b. $1,890,000
c. $1,650,000
d. $1,830,000
Ans: B, LO: 4, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regula
Problem Solving, IMA: Business Economics

121. Barger Company had the following information at Decem

Finished goods inventory, January 1 $ 90,0
Finished goods inventory, December 31 126,0
If the cost of goods manufactured during the year amo
sales were $2,994,000, how much is the amount of gross
a. $1,099,0001 0
b. $1,009,000
c. $1,859,000
 Job Order Costing 2 - 41

Ex. 168
Manufacturing cost data for Dolan Company, which uses a job order cost system, are presented
below:
Case A Case B
Direct Materials Used (a) $103,000
Direct Labor $ 70,000 150,000
Manufacturing Overhead Applied 63,000 (d)
Total Manufacturing Costs 240,000 (e)
Work in Process, 1/1/17 (b) 45,000
Total Cost of Work in Process 300,000 (f)
Work in Process, 12/31/17 (c) 40,000
Cost of Goods Manufactured 205,000 (g)
Instructions
Indicate the missing amount for each letter. Assume that overhead is applied on the basis of
direct labor cost and that the rate is the same for both cases.
Ans: N/A, LO: 1, 2, 3, 4, Bloom: AN, Difficulty: Hard, Min: 9, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement,
AICPA PC: Problem Solving, IMA: Business Economics

Solution 168 (9–12 min.)

Case A
(a) + $70,000 + $63,000 = $240,000 $300,000 – (c) = $205,000
(a) = $107,000 (c) = $95,000
$240,000 + (b) = $300,000
(b) = $60,000

Case B [Note that the overhead rate from Case A is 90% ($63,000 ÷ $70,000)]
$150,000 × 90% = (d) $388,000 + $45,000 = (f)
(d) = $135,000 (f) = $433,000
$103,000 + $150,000 + $135,000 = (e) $433,000 – $40,000 = (g)
(e) = $388,000 (g) = $393,000

Ex. 169
Fort Corporation had the following transactions during its first month of operations:
1. Purchased raw materials on account, $85,000.
2. Raw Materials of $30,000 were requisitioned to the factory. An analysis of the materials
requisition slips indicated that $6,000 was classified as indirect materials.
3. Factory labor costs incurred were $175,000 of which $145,000 pertained to factory wages
payable and $30,000 pertained to employer payroll taxes payable.
4. Time tickets indicated that $145,000 was direct labor and $30,000 was indirect labor.
5. Overhead costs incurred on account were $198,000.
6. Manufacturing overhead was applied at the rate of 150% of direct labor cost.
7. Goods costing $115,000 are still incomplete at the end of the month; the other goods were
completed and transferred to finished goods.
8. Finished goods costing $100,000 to manufacture were sold on account for $130,000.

1 0
2 - 42 Test Bank for Managerial Accounting, Seventh Edition

Ex. 169 (Cont.)

Instructions
Journalize the above transactions for Fort Corporation.
Ans: N/A, LO: 1, 2, 3, 4, Bloom: AP, Difficulty: Medium, Min: 12, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement,
AICPA PC: Problem Solving, IMA: FSA

Solution 169 (12–17 min.)

1. Raw Materials Inventory ................................................................. 85,000
Accounts Payable .................................................................. 85,000
2. Work in Process Inventory .............................................................. 24,000
Manufacturing Overhead ................................................................ 6,000
Raw Materials Inventory......................................................... 30,000
3. Factory Labor ................................................................................. 175,000
Factory Wages Payable ......................................................... 145,000
Employer Payroll Taxes Payable ........................................... 30,000
4. Work in Process Inventory .............................................................. 145,000
Manufacturing Overhead ................................................................ 30,000
Factory Labor......................................................................... 175,000
5. Manufacturing Overhead ................................................................ 198,000
Accounts Payable .................................................................. 198,000
6. Work in Process Inventory .............................................................. 217,500
Manufacturing Overhead........................................................ 217,500
($145,000 × 150% = $217,500)
7. Finished Goods Inventory ............................................................... 271,500
Work in Process Inventory ..................................................... 271,500
($24,000 + $145,000 + $217,500 = $386,500)
($386,500 – $115,000 = $271,500)
8. Accounts Receivable ...................................................................... 130,000
Sales Revenue ..................................................................... 130,000
Cost of Goods Sold ........................................................................ 100,000
Finished Goods Inventory ...................................................... 100,000

Ex. 170
Lando Company reported the following amounts for 2017:
Raw materials purchased $85,000
Beginning raw materials inventory 5,200
Ending raw materials inventory 4,500
Beginning finished goods inventory 7,600
Ending finished goods inventory 8,000
Direct labor used 20,000
Manufacturing overhead costs applied 30,000
Beginning work in process inventory 6,100
Ending work in process inventory 6,300

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 Job Order Costing 2 - 43

Ex. 170 (Cont.)

Instructions
Calculate (a) the cost of materials used in production and (b) total manufacturing costs.
Ans: N/A, LO: 1, 2, Bloom: AP, Difficulty: Medium, Min: 4, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Business Economics

Solution 170 (4 min.)

(a) Cost of materials used in production: $5,200 + $85,000 – $4,500 = $85,700
(b) Total manufacturing costs: $85,700 + $20,000 + $30,000 = $135,700

Ex. 171
A job cost sheet of Fugate Company is given below.

Job Cost Sheet

JOB NO. 172 Quantity 1,500
FOR James Company Date Completed 5/31

Date Direct Direct Manufacturing

Materials Labor Overhead
5/10 1,330
12 1,120
15 550 825
22 480 720
24 1,000
27 1,870
31 670 1,005
Cost of completed job:
Direct materials ________
Direct labor ________
Manufacturing Overhead ________
Total cost ________
Unit cost ________

Instructions
(a) Answer the following questions.
(1) What is the predetermined manufacturing overhead rate?
(2) What are the total cost and the unit cost of the completed job?
(b) Prepare the entry to record the completion of the job.
Ans: N/A, LO: 1, 2, 3, 4, Bloom: AP, Difficulty: Medium, Min: 8, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement,
AICPA PC: Problem Solving, IMA: Business Economics

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2 - 44 Test Bank for Managerial Accounting, Seventh Edition

Solution 171 (8 min.)

(a)
(1) The predetermined overhead rate is 150% of direct labor cost. For example, on May 15, the
computation is $825 ÷ $550 = 150%. The same result is obtained on May 22 and 31.

(2) The total cost is:

Direct materials ..................................................... $5,320
Direct labor ........................................................... 1,700
Manufacturing overhead ........................................ 2,550
9,570
The unit cost is $6.38 ($9,570 ÷ 1,500)

(b) May 31 Finished Goods Inventory ......................... 9,570

Work in Process Inventory .................... 9,570

Ex. 172
At May 31, 2017, the accounts of Kuhlmann Manufacturing Company show the following.

1. May 1 inventories—finished goods $12,600, work in process $14,700, and raw materials
$8,200.
2. May 31 inventories—finished goods $8,500, work in process $22,900, and raw materials
$7,100.
3. Debit postings to work in process were: direct materials $77,400, direct labor $50,000, and
manufacturing overhead applied $45,000.
4. Sales totaled $225,000.

Instructions
(a) Prepare a condensed cost of goods manufactured schedule.
(b) Prepare an income statement for May through gross profit.
Ans: N/A, LO: 1, 4, Bloom: AP, Difficulty: Medium, Min: 10, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA
PC: Problem Solving, IMA: Reporting

Solution 172 (10 min.)

(a) KUHLMANN MANUFACTURING COMPANY
Cost of Goods Manufactured Schedule
For the Month Ended May 31, 2017
_____________________________________________________________________________
Work in process, May 1 .............................................. $ 14,700
Direct materials used................................................. $77,400
Direct labor................................................................ 50,000
Manufacturing overhead applied ............................... 45,000
Total manufacturing costs................................... 172,400
Total cost of work in process ...................................... 187,100
Less: Work in process, May 31................................... 22,900
Cost of goods manufactured ...................................... $164,200

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 Job Order Costing 2 - 45

Solution 172 (Cont.)

(b) KUHLMANN MANUFACTURING COMPANY

Cost of Goods Manufactured Schedule
For the Month Ended May 31, 2017
_____________________________________________________________________________
Sales............................................................................ $225,000
Cost of goods sold
Finished goods, May 1 .......................................... $ 12,600
Cost of Goods manufactured................................. 164,200
Cost of goods available for sale............................. 176,800
Finished goods, May 31 ........................................ 8,500
Cost of goods sold ..................................... 168,300
Gross profit ................................................................... $56,700

Ex. 173
Watson Manufacturing Company employs a job order cost accounting system and keeps
perpetual inventory records. The following transactions occurred in the first month of operations:
1. Direct materials requisitioned during the month:
Job 101 $20,000
Job 102 16,000
Job 103 24,000
$60,000

2. Direct labor incurred and charged to jobs during the month was:
Job 101 $32,000
Job 102 28,000
Job 103 20,000
$80,000

3. Manufacturing overhead was applied to jobs worked on using a predetermined overhead rate
based on 75% of direct labor costs.

4. Actual manufacturing overhead costs incurred during the month amounted to $66,000.

5. Job 101 consisting of 1,000 units and Job 103 consisting of 200 units were completed during
the month.

Instructions
(a) Prepare journal entries to record the above transactions.
(b) Answer the following questions:
1. How much manufacturing overhead was applied to Job 103 during the month?
2. Compute the unit cost of Jobs 101 and 103.
3. What is the balance in Work In Process Inventory at the end of the month?
4. Determine if manufacturing overhead was under- or overapplied during the month. How
much?
Ans: N/A, LO: 1, 2, 3, 4, 5, Bloom: AP, Difficulty: Medium, Min: 15, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement,
AICPA PC: Problem Solving, IMA: FSA

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2 - 46 Test Bank for Managerial Accounting, Seventh Edition

Solution 173 (15–20 min.)

(a) 1. Work in Process Inventory....................................................... 60,000

Raw Materials Inventory ................................................. 60,000
2. Work in Process Inventory....................................................... 80,000
Factory Labor ................................................................ 80,000
3. Work in Process Inventory....................................................... 60,000
Manufacturing Overhead ................................................ 60,000
4. Manufacturing Overhead ......................................................... 66,000
Cash, Payables, etc. ....................................................... 66,000
5. Finished Goods Inventory........................................................ 135,000
Work in Process Inventory .............................................. 135,000
[Job 101 $76,000; Job 103 $59,000—see (b) 2]

(b) 1. $15,000 ($20,000 × 75%).

2. Unit cost: Job 101, $76; Job 103, $295.
Job 101 Job 103
Direct materials $20,000 $24,000
Direct labor 32,000 20,000
Overhead applied 24,000 15,000
Total cost 76,000 59,000
Units ÷ 1,000 ÷ 200
Unit cost $76 $295
3. Work In Process Inventory is $65,000 and consists of work performed on Job 102.
Job 102
Direct materials $16,000
Direct labor 28,000
Overhead applied 21,000
Total cost $65,000
4. Manufacturing overhead costs were underapplied by $6,000 during the month.
Actual manufacturing overhead $66,000
Manufacturing overhead applied 60,000
Underapplied overhead $ 6,000

Ex. 174
Graham Manufacturing is a small manufacturer that uses machine-hours as its activity base for
assigned overhead costs to jobs. The company estimated the following amounts for 2017 for the
company and for Job 62:
Company Job 62
Direct materials $60,000 $4,500
Direct labor $25,000 $2,500
Manufacturing overhead costs $72,000
Machine hours 90,000 1,350

During 2017, the actual machine-hours totaled 95,000, and actual overhead costs were $71,000.

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 Job Order Costing 2 - 47

Ex. 174 (Cont.)

Instructions
(a) Compute the predetermined overhead rate.
(b) Compute the total manufacturing costs for Job 62.
(c) How much overhead is over or underapplied for the year for the company? State amount and
whether it is over- or underapplied.
(d) If Graham Manufacturing sells Job 62 for $14,000, compute the gross profit.
Ans: N/A, LO: 1,2,5, Bloom: AP, Difficulty: Medium, Min: 7, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICP A
PC: Problem Solving, IMA: Business Economics

Solution 174 (7–9 min.)

(a) $72,000  90,000 = $0.80 per machine hour
(b) $4,500 + $2,500 + ($0.80 × 1,350) = $8,080
(c) Actual – Applied = Over/Underapplied
$71,000 – ($0.80 × 95,000) = $5,000 overapplied
(d) $14,000 – $8,080 (from (b) above) = $5,920

Ex. 175
The following inventory information is available for Ricci Manufacturing Corporation for the year
ended December 31, 2017:
Beginning Ending
Inventories:
Raw materials $17,000 $19,000
Work in process 9,000 14,000
Finished goods 11,000 8,000
Total $37,000 $41,000
In addition, the following transactions occurred in 2017:
1. Raw materials purchased on account, $75,000.
2. Incurred factory labor, $80,000, all is direct labor. (Credit Factory Wages Payable).
3. Incurred the following overhead costs during the year: Utilities $6,800, Depreciation on
manufacturing machinery $8,000, Manufacturing machinery repairs $9,200, Factory insurance
$9,000 (Credit Accounts Payable and Accumulated Depreciation).
4. Assigned $80,000 of factory labor to jobs.
5. Applied $36,000 of overhead to jobs.

Instructions
(a) Journalize the above transactions.
(b) Reproduce the manufacturing cost and inventory accounts. Use T-accounts.
(c) From an analysis of the accounts, compute the following:
1. Raw materials used.
2. Completed jobs transferred to finished goods.
3. Cost of goods sold.
4. Under- or overapplied overhead.
Ans: N/A, LO: 1, 2, 3, 4, 5, Bloom: AP, Difficulty: Medium, Min: 16, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement,
AICPA PC: Problem Solving, IMA: FSA

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2 - 48 Test Bank for Managerial Accounting, Seventh Edition

Solution 175 (16–22 min.)

(a) 1. Raw Materials Inventory .......................................................... 75,000
Accounts Payable ........................................................... 75,000
2. Factory Labor .......................................................................... 80,000
Factory Wages Payable.................................................. 80,000
3. Manufacturing Overhead ......................................................... 33,000
Accounts Payable ........................................................... 25,000
Accumulated Depreciation .............................................. 8,000
4. Work in Process Inventory....................................................... 80,000
Factory Labor ................................................................. 80,000
5. Work in Process Inventory....................................................... 36,000
Manufacturing Overhead ................................................ 36,000

(b)
Raw Materials Inventory Work in Process Inventory
Bal. 17,000 Bal. 9,000
(1) 75,000 (4) 80,000
Bal. 19,000 (5) 36,000
Bal. 14,000

Finished Goods Inventory Factory Labor

Bal. 11,000 (2) 80,000 (4) 80,000

8,000

Manufacturing Overhead Cost of Goods Sold

(3) 33,000 (5) 36,000

(c) 1. Raw materials used = $17,000 + $75,000 – $19,000 = $73,000.

2. Completed jobs transferred to finished goods = W/P debits
$9,000 + $73,000 + $116,000 – $14,000 = $184,000.
3. Cost of goods sold = $11,000 + $184,000 – $8,000 = $187,000.
4. Overhead overapplied = $3,000 (credit balance in Manufacturing Overhead).

Ex. 176
Builder Bug Company allocates manufacturing overhead at $9 per direct labor hour. Job A45
required 4 boxes of direct materials at a cost of $30 per box and took employees 14 hours to
complete. Employees earn $15 per hour.

Instructions
Compute the total cost of Job A45.
Ans: N/A, LO: 2, Bloom: AP, Difficulty: Medium, Min: 5, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA
PC: Problem Solving, IMA: Business Economics

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 Job Order Costing 2 - 49

Solution 176 (5 min.)

Direct materials (4 boxes × $30) $120
Direct labor (14 hours × $15) 210
Manufacturing overhead (14 hours × $9) 126
Total job cost of Job A45 $456

Ex. 177
Job cost sheets for Howard Manufacturing are as follows:
Job No 210 Quantity 1,500

Manufacturing
Date Direct Materials Direct Labor Overhead
July 1 9,000 8,000 12,000
8 8,500
10 10,000
15 5,500
25 20,000

Job No 211 Quantity 1,200

Manufacturing
Date Direct Materials Direct Labor Overhead
July 1 5,000 6,000 9,000
10 9,000
15 8,000
20 7,000
27 12,000

Instructions
(a) Answer the following questions.
1. What was the balance in Work in Process Inventory on July 1 if these were the only
unfinished jobs?
2. What was the predetermined overhead rate in June if overhead was applied on the basis
of direct labor cost?
3. If July is the start of a new fiscal year and the overhead rate is 20% higher than in the
preceding year, how much overhead should be applied to Job 210 in July?
4. Assuming Job 210 is complete, what is the total and unit cost of the job?
5. Assuming Job 211 is the only unfinished job at July 31, what is the balance in Work in
Process Inventory on this date?

(b) Journalize the summary entries to record the assignment of costs to the jobs in July.
(Note: Make one entry in total for each manufacturing cost element.)
Ans: N/A, LO: 2, 3, 4, Bloom: AN, Difficulty: Medium, Min: 15, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA
PC: Problem Solving, IMA: Reporting

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2 - 50 Test Bank for Managerial Accounting, Seventh Edition

Solution 177 (15–20 min.)

(a) 1. Job 210 — $9,000 + $8,000 + $12,000 = $29,000
Job 211 — $5,000 + $6,000 + $9,000 = 20,000
$49,000

2. Manufacturing overhead rate = 150% of direct labor cost ($12,000 ÷ $8,000

or $9,000 ÷ $6,000)

3. July overhead rate = 150% × 120% = 180%

Overhead applied in July = $30,000 × 180% = $54,000

4. Direct materials $ 23,000

Direct labor 38,000
Manufacturing overhead ($12,000 + $54,000) 66,000
Total cost $127,000
Unit cost ($127,000 ÷ 1,500) $ 84.67

5. Direct materials $21,000

Direct labor 26,000
Manufacturing overhead ($9,000 + $36,000) 45,000
Total cost of work in process $92,000

(b) Work in Process Inventory ............................................................ 30,000

Raw Materials Inventory ....................................................... 30,000
Work in Process Inventory ............................................................ 50,000
Factory Labor ....................................................................... 50,000
Work in Process Inventory ............................................................ 90,000
Manufacturing Overhead ...................................................... 90,000

Ex. 178
Garner Company begins operations on July 1, 2017. Information from job cost sheets shows the
following:
Manufacturing Costs Assigned
Job No. July August September
100 $12,000 $8,800
101 10,800 9,700 $12,000
102 5,000
103 11,800 6,000
104 5,800 7,000

Job 102 was completed in July. Job 100 was completed in August, and Jobs 101 and 103 were
completed in September. Each job was sold for 60% above its cost in the month following
completion.

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 Job Order Costing 2 - 51

Ex. 178 (Cont.)

Instructions
(a) Compute the balance in Work in Process Inventory at the end of July.
(b) Compute the balance in Finished Goods Inventory at the end of September.
(c) Compute the gross profit for August.
Ans: N/A, LO: 2, 4, Bloom: AP, Difficulty: Medium, Min: 10, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA
PC: Problem Solving, IMA: Reporting

Solution 178 (10–13 min.)

(a) Work in Process Inventory
July Job 100 $12,000
Job 101 10,800
Balance, July 31 $22,800
(b) Finished Goods Inventory
Job 101 $32,500
Job 103 17,800
Balance, Sept. 30 $50,300
(c) Gross Profit
Month Job Number Sales COGS Gross Profit
August 102 $8,000 $5,000 $3,000

Ex. 179
The accounting records of Roland Manufacturing Company include the following information:
Dec. 31 Jan. 1
Work in process inventory $ 20,000 $ 50,000
Finished goods inventory 120,000 150,000
Direct materials used 350,000
Direct labor 160,000
Selling expenses 125,000

Manufacturing overhead is applied at a rate of 150% of direct labor cost.

Instructions
Answer the following questions:
1. What is the total of the debits to Work in Process Inventory during the year?
2. What is the amount transferred to Finished Goods Inventory during the year?
3. What is the cost of goods sold?
Ans: N/A, LO: 2, 4, Bloom: AP, Difficulty: Medium, Min: 10, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA
PC: Problem Solving, IMA: FSA

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2 - 52 Test Bank for Managerial Accounting, Seventh Edition

Solution 179 (10–14 min.)

1. Direct Materials $ 350,000
Direct Labor 160,000
Manufacturing Overhead Applied ($160,000 × 150%) 240,000
Total debits $750,000

2. WORK IN PROCESS INVENTORY

Balance 50,000 Transferred to
From (1) 750,000 Finished Goods 780,000
Balance 20,000

3. FINISHED GOODS INVENTORY

Balance 150,000 Cost of Goods Sold 810,000
From WIP (see 2) 780,000
Balance 120,000

Ex. 180
Grant Marwick and Associates, a CPA firm, uses job order costing to capture the costs of its audit
jobs. There were no audit jobs in process at the beginning of November. Listed below are data
concerning the three audit jobs conducted during November.

Rondelli Preston Lopez

Direct materials $900 $600 $300
Auditor labor costs $5,900 $6,600 $3,700
Auditor hours 66 88 45

Overhead costs are applied to jobs on the basis of auditor hours, and the predetermined
overhead rate is $50 per auditor hour. The Rondelli job is the only incomplete job at the end of
November. Actual overhead for the month was $10,500.
Instructions
(a) Determine the cost of each job.
(b) Indicate the balance of the Work in Process account at the end of November.
(c) Calculate the ending balance of the Manufacturing Overhead account for November.
Ans: N/A, LO: 2, 3, 5, Bloom: AP, Difficulty: Medium, Min: 8, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA
PC: Problem Solving, IMA: Reporting

Solution 180 (8 min.)

(a) Rondelli Preston Lopez
Direct materials $ 900 $ 600 $ 300
Auditor labor costs 5,900 6,600 3,700
Applied overhead 3,300 4,400 2,250
Total cost $10,100 $11,600 $6,250

(b) The Rondelli job is the only incomplete job, therefore, $10,100

(c) Actual overhead $10,500 (DR)

Applied overhead 9,950 (CR)
Balance $ 550 (DR)

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 Job Order Costing 2 - 53

Ex. 181
Gallagher Company applies manufacturing overhead to jobs on the basis of machine hours used.
Overhead costs are expected to total $425,000 for the year, and machine usage is estimated at
125,000 hours.
For the year, $450,000 of overhead costs are incurred and 130,000 hours are used.

Instructions
(a) Compute the manufacturing overhead rate for the year.
(b) What is the amount of under - or overapplied overhead at December 31?
(c) Assuming the under - or overapplied overhead for the year is not allocated to inventory
accounts, prepare the adjusting entry to assign the amount to cost of goods sold
Ans: N/A, LO: 3, 5, Bloom: AP, Difficulty: Medium, Min: 6, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICP A
PC: Problem Solving, IMA: Business Economics

Solution 181 (6 min.)

(a) $3.40 per machine hour ($425,000 ÷ 125,000).

(b) ($450,000) – ($3.40  130,000 Machine Hours)

$450,000 – $442,000 = $8,000 underapplied

(c) Cost of Goods Sold .............................. 8,000

Manufacturing Overhead .......................... 8,000

Ex. 182
Fancy Decorating uses a job order costing system to collect the costs of its interior decorating
business. Each client's consultation is treated as a separate job. Overhead is applied to each job
based on the number of decorator hours incurred. Listed below are data for the current year.

Budgeted overhead $880,000

Actual overhead $910,000
Budgeted decorator hours 40,000
Actual decorator hours 41,000

The company uses Operating Overhead in place of Manufacturing Overhead.

Instructions
(a) Compute the predetermined overhead rate.
(b) Prepare the entry to apply the overhead for the year.
(c) Determine whether the overhead was under - or overapplied and by how much.
Ans: N/A, LO: 3, 5, Bloom: AP, Difficulty: Medium, Min: 6, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA
PC: Problem Solving, IMA: Business Economics

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2 - 54 Test Bank for Managerial Accounting, Seventh Edition

Solution 182 (6 min.)

(a) Predetermined overhead rate = Budgeted overhead ÷ Budgeted
decorator hours
= $880,000 ÷ 40,000 decorator hours
= $22 per decorator hour

(b) Applied Overhead

Work in Process (41,000 hrs  $22).............. 902,000
Operating Overhead............. 902,000

(c) Actual overhead $910,000

Applied overhead 902,000
Balances $ 8,000 underapplied

Ex. 183
Martin Company applies manufacturing overhead based on direct labor hours. Information
concerning manufacturing overhead and labor for the year follows:
Actual manufacturing overhead $80,000
Estimated manufacturing overhead $75,000
Direct labor hours incurred 4,800
Direct labor hours estimated 5,000

Instructions
Compute (a) the predetermined overhead rate and (b) the amount of applied manufacturing
overhead.
Ans: N/A, LO: 3, Bloom: AP, Difficulty: Medium, Min: 4, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA
PC: Problem Solving, IMA: Business Economics

Solution 183 (4 min.)

(a) Predetermined overhead rate: $75,000  5,000 = $15 per direct labor hour
(b) Applied manufacturing overhead: 4,800 × $15 = $72,000

Ex. 184
Landis Company uses a job order cost system in each of its two manufacturing departments.
Manufacturing overhead is applied to jobs on the basis of direct labor cost in Department A and
machine hours in Department B. In establishing the predetermined overhead rates for 2017, the
following estimates were made for the year:
Department
A B
Manufacturing overhead $2,100,000 $1,400,000
Direct labor cost 1,500,000 1,200,000
Direct labor hours 100,000 100,000
Machine hours 200,000 400,000

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 Job Order Costing 2 - 55

Ex. 184 (Cont.)

During January, the job cost sheet showed the following costs and production data:
Department
A B
Direct materials used $195,000 $128,000
Direct labor cost 100,000 110,000
Manufacturing overhead incurred 130,000 135,000
Direct labor hours 8,000 8,400
Machine hours 16,000 34,000

Instructions
(a) Compute the predetermined overhead rate for each department.
(b) Compute the total manufacturing cost assigned to jobs in January in each department.
(c) Compute the balance in the Manufacturing Overhead account at the end of January and
indicate whether overhead is over- or underapplied.
Ans: N/A, LO: 3, 5, Bloom: AP, Difficulty: Medium, Min: 15, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA
PC: Problem Solving, IMA: Business Economics

Solution 184 (15–20 min.)

(a) Predetermined overhead rates:
Department A (using direct labor cost): $2,100,000 ÷ $1,500,000 = 140%
Department B (using machine hours): $1,400,000 ÷ 400,000 = $3.50 per machine hour
(b) Total manufacturing costs by department:
Department A:
Direct materials $195,000
Direct labor cost 100,000
Manufacturing overhead applied ($100,000 × 140%) 140,000
Total manufacturing costs $435,000
Department B:
Direct materials $128,000
Direct labor cost 110,000
Manufacturing overhead applied (34,000 hrs. × $3.50) 119,000
Total manufacturing costs $357,000

(c) MANUFACTURING OVERHEAD

Dept. A 130,000 Dept. A 140,000
Dept. B 135,000 Dept. B 119,000
265,000 259,000
Bal. Underapplied 6,000

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2 - 56 Test Bank for Managerial Accounting, Seventh Edition

Ex. 185
Edwards Company applies manufacturing overhead to jobs on the basis of machine hours used.
Overhead costs are expected to total $1,800,000 for the year, and machine usage is estimated at
200,000 hours.

In January, $186,000 of overhead costs are incurred and 22,000 machine hours are used. For the
remainder of the year, $1,940,000 of additional overhead costs are incurred and 214,000
additional machine hours are worked.

Instructions
(a) Compute the manufacturing overhead rate for the year.
(b) What is the amount of over- or underapplied overhead at January 31?
(c) What is the amount of over- or underapplied overhead at December 31?
Ans: N/A, LO: 3, 5, Bloom: AP, Difficulty: Medium, Min: 11, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA
PC: Problem Solving, IMA: Business Economics

Solution 185 (11–14 min.)

(a) $9 per machine hour ($1,800,000 ÷ 200,000)

(b) Incurred $186,000

Applied ($9 × 22,000) 198,000
Overapplied overhead $ 12,000

(c) Incurred ($186,000 + $1,940,000) $2, 126,000

Applied ($9 × 236,000) 2,124,000
Underapplied overhead $ 2,000

Ex. 186
Klinger Company estimates that annual manufacturing overhead costs will be $4,800,000 for
2017. The actual overhead costs at the end of 2017 are $4,980,000. Activity base information for
2017 follows:
Activity Base Estimated Actual
Direct Labor Cost $3,000,000 $3,150,000
Direct Labor Hours 200,000 212,000
Machine Hours 150,000 152,000
Instructions
(a) Compute the predetermined overhead rate for each activity base.
(b) Compute the amount of overhead applied in 2017 for each activity base.
(c) Compute the amount of under- or overapplied overhead for 2017 for each activity base.
Ans: N/A, LO: 3, 5, Bloom: AP, Difficulty: Medium, Min: 12, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA
PC: Problem Solving, IMA: Business Economics

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 Job Order Costing 2 - 57

Solution 186 (12–16 min.)

(a) Predetermined overhead rate as a % of direct labor cost:
$4,800,000 ÷ $3,000,000 = 160%

Predetermined overhead rate per hour of direct labor:

$4,800,000 ÷ 200,000 = $24 per hour

Predetermined overhead rate per machine hour used:

$4,800,000 ÷ 150,000 = $32 per machine hour

(b) Overhead applied as a % of direct labor cost: (c) Over- or Underapplied Overhead
$3,150,000 × 1.60 = $5,040,000 ($5,040,000 – $4,980,000 =
$60,000 Overapplied)
Overhead applied per hour of direct labor:
212,000 × $24 = $5,088,000 ($5,088,000 – $4,980,000 =
$108,000 Overapplied)
Overhead applied per machine hour used:
152,000 × $32 = $4,864,000 ($4,864,000 – $4,980,000 =
$116,000 Underapplied)

Ex. 187
Jensen Manufacturing Company makes specialty tools. In January, Jensen incurs manufacturing
costs of $13,000,000 for direct materials, direct labor, and overhead. 20% of the total costs
represents overhead applied. The overhead rate is $1 for every $2 of direct labor costs incurred.
Inventory balances were:

January 1 January 31
Raw materials $300,000 $500,000
Work in process 600,000 400,000
Finished goods 400,000 200,000

At the end of January, there was $1,000 of overapplied overhead.

Instructions
(a) Determine the cost of raw materials purchased in January.
(b) Prepare a cost of goods manufactured schedule for January 2017.
(c) Compute the cost of goods sold for January.
Ans: N/A, LO: 4, Bloom: AP, Difficulty: Medium, Min: 15, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting

Solution 187 (15–20 min.)

(a) Overhead applied ($13,000,000 × 20%) = $2,600,000
Direct labor used ($2 × $2,600,000) = $5,200,000
Direct materials used ($13,000,000 – $7,800,000) = $5,200,000

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2 - 58 Test Bank for Managerial Accounting, Seventh Edition

Solution 187 (Cont.)

Ending raw materials inventory $ 500,000

Direct materials used 5,200,000
5,700,000
Less: Beginning raw materials inventory 300,000
Raw materials purchases $5,400,000

(b) JENSEN MANUFACTURING COMPANY

Cost of Goods Manufactured Schedule
For the Month Ended January 31, 2017
———————————————————————————————————————————
Work in process, January 1 ............................................. $ 600,000
Direct materials used ....................................................... $5,200,000
Direct labor ...................................................................... 5,200,000
Manufacturing overhead applied ...................................... 2,600,000
Total manufacturing costs .......................................... 13,000,000
Total cost of work in process ........................................... 13,600,000
Less: Work in process, January 31 ................................. 400,000
Cost of goods manufactured ............................................ $ 13,200,000

(c) Finished goods, January 1...................................................................... $ 400,000

Cost of goods manufactured ................................................................... 13,200,000
Cost of goods available for sale .............................................................. 13,600,000
Finished goods, January 31 .................................................................... 200,000
Cost of goods sold ................................................................................. $13,400,000

Ex. 188
The following information is available for Marks Company at December 31, 2017:

1. Inventory balance Beginning of Year End of Year

Finished Goods $14,000 $10,000
Work in Process 6,000 12,000
Raw Materials 10,300 6,500

2. Debit postings to Work in Process Inventory during the year were:

Direct materials $90,000
Direct labor 60,000
Manufacturing overhead applied 75,000

3. Sales totaled $310,000 for the year.

Instructions
(a) Prepare a condensed cost of goods manufactured schedule.
(b) Prepare an income statement for the year through gross profit.
Ans: N/A, LO: 4, Bloom: AP, Difficulty: Medium, Min: 14, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC:
Problem Solving, IMA: Reporting

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 Job Order Costing 2 - 59

Solution 188 (14–18 min.)

(a) MARKS COMPANY
Cost of Goods Manufactured Schedule
For the Year Ended December 31, 2017

Work in process, January 1 $ 6,000

Direct materials used $90,000
Direct labor 60,000
Manufacturing overhead applied 75,000
Total manufacturing costs 225,000
Total cost of work in process 231,000
Less: Work in process, December 31 12,000
Cost of goods manufactured $219,000

(b) MARKS COMPANY

(Partial) Income Statement
For the Year Ended December 31, 2017

Sales $310,000
Cost of Goods Sold
Finished Goods, January 1 $ 14,000
Cost of goods manufactured 219,000
Cost of goods available for sale 233,000
Finished Goods, December 31 10,000
Cost of goods sold 223,000
Gross profit $87,000

COMPLETION STATEMENTS
189. Cost accounting involves the measuring, recording, and reporting of ______________
costs.
Ans: N/A, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: Business Applications

190. There are two basic types of cost accounting systems: (1)__________________ system,
and (2)__________________ system.
Ans: N/A, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Business Economics

191. A ______________ cost system is appropriate when similar products are continuously
produced, whereas a ______________ cost system would be more appropriate if the
product is custom-made.
Ans: N/A, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA:
Business Applications

192. In a job order system, raw materials purchased are charged to the ______________
account.
Ans: N/A, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None,
IMA: FSA

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2 - 60 Test Bank for Managerial Accounting, Seventh Edition

193. Of these three accounts; Raw Materials Inventory, Factory Labor, and Manufacturing
Overhead, ______________ is not a control account.
Ans: N/A, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None,
IMA: Reporting

194. If $20,000 direct materials are requisitioned for a job and $7,000 of indirect materials are
requisitioned for general use, the debit to Work In Process Inventory should be for
$______________.
Ans: N/A, LO: 2, Bloom: AP, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC:
None, IMA: FSA

195. The cost of producing a particular job under a job cost system is accumulated on a record
called a ___________________.
Ans: N/A, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC:
None, IMA: Business Economics

196. Manufacturing overhead is applied to jobs by means of a ___________________ rate.

Ans: N/A, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC:
None, IMA: Business Economics

197. If actual manufacturing overhead was greater than the amount of manufacturing overhead
applied to jobs, the Manufacturing Overhead account will have a ___________ balance
and overhead is said to be ______________.
Ans: N/A, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC:
None, IMA: Business Economics

198. At the end of the year, any balance in the Manufacturing Overhead account should be
eliminated as an adjustment to ___________________.
Ans: N/A, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC:
None, IMA: FSA

Answers to Completion Statements

189. product
190. job order cost, process cost
191. process, job order
192. Raw Materials Inventory
193. Factory Labor
194. 20,000
195. job cost sheet
196. predetermined overhead
197. debit, underapplied
198. cost of goods sold

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 1. Raw materials were purchased on account.
————————————————————————————
2. Issued a check to Dixon Machine Shop for
repair work on factory equipment.
————————————————————————————
3. Direct materials were requisitioned for Job 280
————————————————————————————
4. Factory labor was paid as incurred.
————————————————————————————
5. Recognized direct labor and indirect labor used
————————————————————————————
6. The production department requisitioned indirect
materials for use in the factory.
————————————————————————————
7. Overhead was applied to production based on a
on a predetermined overhead rate of $8 per labor hour
————————————————————————————
8. Goods that were completed were transferred to
finished goods.
————————————————————————————
9. Goods costing $80,000 were sold for $105,000
on account.
————————————————————————————
10. Paid for raw materials purchased previously
on account.

Ex. 163
Finn Manufacturing Company uses a job order cost account
inventory records. Prepare journal entries to record the following
June.

June 1 Purchased raw materials for $20,000 on account.

8 Raw materials requisitioned by production:

Direct materials $8,000
Indirect materials 1,000

15 Paid factory utilities, $2,100 and repairs for factory eq

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25 Incurred $108,000 of factory labor.
 25 Time tickets indicated the following:
Direct Labor (7,000 hrs × $12 per hr) = $8
Indirect Labor (3,000 hrs × $8 per hr) = 2
$1

Ex. 163 (Cont.)

25 Applied manufacturing overhead to production bas
rate of $7 per direct labor hour worked.

28 Goods costing $18,000 were completed in the facto

goods.

30 Goods costing $15,000 were sold for $20,000 on ac

Ans: N/A, LO: 1, 2, 3, Bloom: AP, Difficulty: Medium, Min: 16, AACSB: Analytic, AICPA BB:
AICPA PC: Problem Solving, IMA: FSA

Solution 163 (16–23 min.)

June 1 Raw Materials Inventory .........................................
Accounts Payable ..........................................
(Purchase
1 0 of raw materials on account)

8 Work In Process Inventory ......................................

 Manufacturing Overhead ........................................
Raw Materials Inventory ................................
(To assign materials to jobs and overhead)

15 Manufacturing Overhead ........................................

Cash ..............................................................
(To record payment of factory utilities and re

25 Factory Labor .........................................................

Factory Wages Payable .................................
(To record factory labor costs)

25 Work In Process Inventory ......................................

Manufacturing Overhead ........................................
Factory Labor .................................................
(To assign factory labor to jobs and overhea

25 Work In Process Inventory ......................................

Manufacturing Overhead ................................
(To apply overhead to jobs)

28 Finished Goods Inventory .......................................

Work In Process Inventory ............................
(To record completion of production)

30 Accounts Receivable ..............................................

Cost of Goods Sold .................................................
Sales Revenue ...............................................
Finished Goods Inventory ..............................
(To record sales of finished goods and its co

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2 - 38 Test Bank for Managerial Accounting, Seventh Edit

Ex. 164
Selected accounts of Kosar Manufacturing Company at year end

RAW MATERIALS INVENTORY WORK IN

(a) 40,000 (d) 25,000 (d)
(e)
(f) 1

FINISHED GOODS INVENTORY COS

(g) 140,000 (h) 120,000 (h) 12

FACTORY LABOR MANUF

(b) 110,000 (e) 110,000 (c)
(e)

Instructions
Explain the probable transaction that took place for each of the
accounts. For example:
(a) Raw materials costing $40,000 were purchased.
Ans: N/A, LO: 1, 2, 3, Bloom: C, Difficulty: Hard, Min: 9, AACSB: Analytic, AICPA BB: Legal/Re
PC: Problem Solving, IMA: FSA

Solution 164 (9–14 min.)

(a) Raw materials costing $40,000 were purchased.
(b) Factory labor costs
1 incurred
0 amounted to $110,000.
(c) Actual manufacturing overhead costs incurred were $75,00
(d) Direct materials requisitioned for production amounted to $
(e) Factory labor used consisted of:
Direct labor $80,000
Indirect labor 30,000
(f) Manufacturing overhead applied to production was $100,00
(g) Completed goods costing $140,000 were transferred to fini
(h) Finished goods costing $120,000 were sold.

Ex. 165
Sardin Company begins the month of March with $17,000 of wo
Information from job cost sheets shows the following addition
April, and May of 2013:
Manufacturing Costs Assigned
Job No. March April Ma
324 $26,000
325 20,000 $28,000 $15,0
326 41,000 11,000
327 16,000 39,0
328 34,000 51,0

Job 324 was completed in March. Jobs 325 and 327 were com
completed in April. Jobs are sold during the month after compl
during the 3-month period is $145,000.

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