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Chapter 02
Job-Order Costing
True / False Questions
1. The use of predetermined overhead rates in a job-order cost system makes it
possible to estimate the total cost of a given job as soon as production is completed.
True False
2. A job cost sheet is used to accumulate costs charged to a job.
True False
3. The following journal entry would be made to apply overhead cost to jobs in a job-
order costing system:
True False
,4. Under a job-order cost system the Work in Process account is debited with the cost
of materials purchased.
True False
5. The process of assigning overhead cost to jobs is known as overhead application.
True False
6. The cost of a completed job in a job-order costing system typically consists of the
actual direct materials cost of the job, the actual direct labor cost of the job, and the
actual manufacturing overhead cost of the job.
True False
7. A debit balance in the Manufacturing Overhead account at the end of the year
means that manufacturing overhead is overapplied.
True False
8. Period costs are expensed as incurred, rather than going into the Work in Process
account.
True False
,9. Advertising costs should be charged to the Manufacturing Overhead account.
True False
10. When a job has been completed, the goods are transferred from the production
department to the finished goods warehouse and the journal entry would include a
credit to Work in Process.
True False
11. Underapplied or overapplied manufacturing overhead represents the difference
between actual overhead costs and applied overhead costs.
True False
12. Top management salaries should not go into the Manufacturing Overhead account.
True False
13. If manufacturing overhead applied exceeds the actual manufacturing overhead costs
of the period, then manufacturing overhead is overapplied.
True False
Multiple Choice Questions
, 14. In computing its predetermined overhead rate, Marple Company inadvertently left its
indirect labor costs out of the computation. This oversight will cause:
A. Manufacturing Overhead to be overapplied.
B. the Cost of Goods Manufactured to be understated.
C. the debits to the Manufacturing Overhead account to be understated.
D. the ending balance in Work in Process to be overstated.
15. Which of the following is the correct formula to compute the predetermined
overhead rate?
A. Estimated total units in the allocation base divided by estimated total
manufacturing overhead costs.
B. Estimated total manufacturing overhead costs divided by estimated total units in
the allocation base.
C. Actual total manufacturing overhead costs divided by estimated total units in the
allocation base.
D. Estimated total manufacturing overhead costs divided by actual total units in the
allocation base.
Chapter 02
Job-Order Costing
True / False Questions
1. The use of predetermined overhead rates in a job-order cost system makes it
possible to estimate the total cost of a given job as soon as production is completed.
True False
2. A job cost sheet is used to accumulate costs charged to a job.
True False
3. The following journal entry would be made to apply overhead cost to jobs in a job-
order costing system:
True False
,4. Under a job-order cost system the Work in Process account is debited with the cost
of materials purchased.
True False
5. The process of assigning overhead cost to jobs is known as overhead application.
True False
6. The cost of a completed job in a job-order costing system typically consists of the
actual direct materials cost of the job, the actual direct labor cost of the job, and the
actual manufacturing overhead cost of the job.
True False
7. A debit balance in the Manufacturing Overhead account at the end of the year
means that manufacturing overhead is overapplied.
True False
8. Period costs are expensed as incurred, rather than going into the Work in Process
account.
True False
,9. Advertising costs should be charged to the Manufacturing Overhead account.
True False
10. When a job has been completed, the goods are transferred from the production
department to the finished goods warehouse and the journal entry would include a
credit to Work in Process.
True False
11. Underapplied or overapplied manufacturing overhead represents the difference
between actual overhead costs and applied overhead costs.
True False
12. Top management salaries should not go into the Manufacturing Overhead account.
True False
13. If manufacturing overhead applied exceeds the actual manufacturing overhead costs
of the period, then manufacturing overhead is overapplied.
True False
Multiple Choice Questions
, 14. In computing its predetermined overhead rate, Marple Company inadvertently left its
indirect labor costs out of the computation. This oversight will cause:
A. Manufacturing Overhead to be overapplied.
B. the Cost of Goods Manufactured to be understated.
C. the debits to the Manufacturing Overhead account to be understated.
D. the ending balance in Work in Process to be overstated.
15. Which of the following is the correct formula to compute the predetermined
overhead rate?
A. Estimated total units in the allocation base divided by estimated total
manufacturing overhead costs.
B. Estimated total manufacturing overhead costs divided by estimated total units in
the allocation base.
C. Actual total manufacturing overhead costs divided by estimated total units in the
allocation base.
D. Estimated total manufacturing overhead costs divided by actual total units in the
allocation base.
