True-False
1. T F A job order costing system is typically used in production settings that are characterized by a continuous flow of similar or identical products.
2. T F In manufacturing companies, managers use unit cost information to develop budgets, establish product prices, and determine human resource needs.
3. T F Predetermined overhead rates are not used with a job order costing system.
4. T F Service organizations can use job order costing to trace costs to the services they render.
5. T F When a manufacturer receives a sales order, the purchasing process begins with a request for specific quantities of direct or indirect materials that are needed for the order but not currently available in the storeroom.
6. T F When a manufactured item is sold during the period, the cost is transferred from the Work in Process Inventory to the Finished Goods Inventory.
7. T F Both job order and process costing systems supply information that managers can use to evaluate an organization’s operating performance.
Multiple Choice
8. Which of the following organizations would use a job order costing system?
a. Custom-furniture manufacturer
b. Oil refinery
c. Cereal manufacturer
d. Paint manufacturer
e. None of the above
9. RBW Company’s job order costing system shows the following information:
Job #Balance, January 1January’s Production Costs
100$5,800
101 2,400$3,600
102 4,900
Jobs 100 and 102 were sold to customers in January. Job 101 was completed in January. What was RBW Company’s cost of goods sold for January?
a. $4,900
b. $5,800
c. $8,500
d. $10,700
e. None of the above
10. Based on the information given in question 11, the amount in RBW Company’s Work in Process Inventory on January 31 would be
a. $0.
b. $3,600.
c. $4,900.
d. $6,000.
e. none of the above.
11. The Work in Process Inventory account decreases as products are completed when a company uses
a. job order costing only.
b. both job order and process costing.
c. neither job order nor process costing.
d. process costing only.
e. none of the above.
12. In a job order costing system, the basic document used to accumulate the cost of each order is the
a. purchase request.
b. job order cost card.
c. time card.
d. process cost report.
e. none of the above.
13. A new advertising agency serves a wide variety of clients, including large manufacturing companies, small restaurants, service businesses, and shopping malls. The accounting system best suited to the advertising agency is
a. job order costing.
b. process costing.
c. average costing.
d. relevant costing.
e. none of the above.
14. Command Performances, Inc., specializes in planning special events. Which of following items of cost information is not likely to be available in the company’s product costing system?
a. Cost of paper and envelopes
b. Food costs for an event
c. Labor costs for an event
d. President’s salary
e. All of the above
Part II
True-False
1. T F A process costing system is typically used in production settings that are characterized by a continuous flow of similar or identical products.
2. T F A job order costing system traces costs to a process, department, or work cell.
3. T F Predetermined overhead rates are not used with a process costing system.
4. T F Service organizations can use process costing to trace costs to the services they render.
5. T F All organizations use either a job order costing system or a process costing system without modification.
6. T F Equivalent production is a measure of the number of equivalent whole units worked on during an accounting period.
7. T F A process costing systems supplies managers with information they can use to determine if goals for product costs are being achieved.
Multiple Choice
8. Which of the following organizations would use a process costing system?
a. Custom-home builder
b. Law firm
c. Automotive repair shop
d. Chemical manufacturer
e. None of the above
9. The concept of equivalent units is necessary in
a. process costing.
b. job order costing.
c. both process costing and job order costing.
d. neither process costing nor job order costing.
e. none of the above.
10. Which of the following is excluded from conversion costs?
a. Indirect materials costs
b. Indirect labor costs
c. Direct materials costs
d. Direct labor
e. None of the above
11. The Work in Process Inventory account decreases as products are completed when a company uses
a. job order costing only.
b. both job order and process costing.
c. neither job order nor process costing.
d. process costing only.
e. none of the above.
12. In a process costing system, the account used to accumulate costs within each department is the
a. finished goods inventory account.
b. work in process inventory account.
c. direct labor account.
d. process cost report.
e. none of the above.
13. A pharmaceutical company produces large quantities of generic drugs. The accounting system best suited to the pharmaceutical company is
a. job order costing.
b. process costing.
c. average costing.
d. relevant costing.
e. none of the above.
14. River Dale Vineyards produces boxed table wines. Which of following items of cost information is not likely to be available in the company’s product costing system?
a. Cost of boxes
b. Costs of unprocessed grapes
c. Labor costs
d. President’s salary
e. All of the above
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