Managerial Accounting
Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Chapter – 3
Job-Order Costing
,Chpter 03: job-order costing
Chapter 03 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
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Bloom's: Knowledge
Learning Objective: 03-01 Compute a predetermined overhead rate
Level: Easy
2. A job cost sheet is used to accumulate costs charged to a job.
TRUE
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Bloom's: Knowledge
Learning Objective: 03-03 Compute the total cost and average cost per unit of a job
Level: Easy
3. The following journal entry would be made to apply overhead cost to jobs in a job-order
costing system:
FALSE
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Bloom's: Comprehension
Learning Objective: 03-02 Apply overhead cost to jobs using a predetermined overhead rate
Learning Objective: 03-04 Understand the flow of costs in a job-order costing system and prepare appropriate journal entries to record
costs
Level: Medium
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,Chpter 03: job-order costing
4. Under a job-order cost system the Work in Process account is debited with the cost of
materials purchased.
FALSE
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Bloom's: Comprehension
Learning Objective: 03-04 Understand the flow of costs in a job-order costing system and prepare appropriate journal entries to record
costs
Level: Medium
5. The process of assigning overhead cost to jobs is known as overhead application.
TRUE
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Bloom's: Knowledge
Learning Objective: 03-02 Apply overhead cost to jobs using a predetermined overhead rate
Level: Easy
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.
FALSE
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Bloom's: Comprehension
Learning Objective: 03-02 Apply overhead cost to jobs using a predetermined overhead rate
Level: Medium
2/127
, Chpter 03: job-order costing
7. A debit balance in the Manufacturing Overhead account at the end of the year means that
manufacturing overhead is overapplied.
FALSE
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Bloom's: Comprehension
Learning Objective: 03-05 Use T-accounts to show the flow of costs in a job-order costing system
Learning Objective: 03-07 Compute underapplied or overapplied overhead cost and prepare the journal entry to close the balance in
Manufacturing Overhead to the appropriate accounts
Level: Medium
8. Period costs are expensed as incurred, rather than going into the Work in Process account.
TRUE
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Bloom's: Comprehension
Learning Objective: 03-05 Use T-accounts to show the flow of costs in a job-order costing system
Level: Medium
9. Advertising costs should be charged to the Manufacturing Overhead account.
FALSE
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Bloom's: Knowledge
Learning Objective: 03-05 Use T-accounts to show the flow of costs in a job-order costing system
Level: Easy
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
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Bloom's: Knowledge
Learning Objective: 03-05 Use T-accounts to show the flow of costs in a job-order costing system
Level: Easy
3/127
Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Chapter – 3
Job-Order Costing
,Chpter 03: job-order costing
Chapter 03 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
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Bloom's: Knowledge
Learning Objective: 03-01 Compute a predetermined overhead rate
Level: Easy
2. A job cost sheet is used to accumulate costs charged to a job.
TRUE
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Bloom's: Knowledge
Learning Objective: 03-03 Compute the total cost and average cost per unit of a job
Level: Easy
3. The following journal entry would be made to apply overhead cost to jobs in a job-order
costing system:
FALSE
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Bloom's: Comprehension
Learning Objective: 03-02 Apply overhead cost to jobs using a predetermined overhead rate
Learning Objective: 03-04 Understand the flow of costs in a job-order costing system and prepare appropriate journal entries to record
costs
Level: Medium
1/127
,Chpter 03: job-order costing
4. Under a job-order cost system the Work in Process account is debited with the cost of
materials purchased.
FALSE
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Bloom's: Comprehension
Learning Objective: 03-04 Understand the flow of costs in a job-order costing system and prepare appropriate journal entries to record
costs
Level: Medium
5. The process of assigning overhead cost to jobs is known as overhead application.
TRUE
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Bloom's: Knowledge
Learning Objective: 03-02 Apply overhead cost to jobs using a predetermined overhead rate
Level: Easy
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.
FALSE
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Bloom's: Comprehension
Learning Objective: 03-02 Apply overhead cost to jobs using a predetermined overhead rate
Level: Medium
2/127
, Chpter 03: job-order costing
7. A debit balance in the Manufacturing Overhead account at the end of the year means that
manufacturing overhead is overapplied.
FALSE
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Bloom's: Comprehension
Learning Objective: 03-05 Use T-accounts to show the flow of costs in a job-order costing system
Learning Objective: 03-07 Compute underapplied or overapplied overhead cost and prepare the journal entry to close the balance in
Manufacturing Overhead to the appropriate accounts
Level: Medium
8. Period costs are expensed as incurred, rather than going into the Work in Process account.
TRUE
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Bloom's: Comprehension
Learning Objective: 03-05 Use T-accounts to show the flow of costs in a job-order costing system
Level: Medium
9. Advertising costs should be charged to the Manufacturing Overhead account.
FALSE
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Bloom's: Knowledge
Learning Objective: 03-05 Use T-accounts to show the flow of costs in a job-order costing system
Level: Easy
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
AACSB: Reflective Thinking
AICPA BB: Critical Thinking
AICPA FN: Measurement
Bloom's: Knowledge
Learning Objective: 03-05 Use T-accounts to show the flow of costs in a job-order costing system
Level: Easy
3/127
