Ch3-Job-Order-Costing Essay

23817 Words Jul 27th, 2013 96 Pages

True/False Questions 1. Job-order costing is used in manufacturing companies and process costing is used in service companies. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy 2. A flour manufacturer is more likely to use process costing than job-order costing whereas a manufacturer of customized leather jackets is more likely to use job-order costing than process costing. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy 3. Normally a job cost sheet is not prepared for a job until after the job has been completed. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium 4. Job cost
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Including manufacturing overhead costs in product costs ensures that each product will earn a profit. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 5 Level: Medium 10. A debit balance in the Manufacturing Overhead account at year end means that overhead was underapplied. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 7,8 Level: Medium 11. Nonmanufacturing costs are expensed as incurred, rather than going into the Work in Process account. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 7 Level: Easy 12. Indirect materials are not charged to a specific job but rather are included in manufacturing overhead. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 7 Level: Easy


13. Overhead is underapplied if actual overhead costs for a period are greater than the amount of overhead cost which has been charged to Work in Process. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 8 Level: Easy 14. Two of the reasons why overhead may be underapplied are: (1) the estimated overhead cost may be too low, and (2) the estimated base may be too high. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 8 Level: Easy 15. If the predetermined overhead rate is based on the estimated total amount of the allocation base at capacity, it is more

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