1.

Under job order cost accumulation, the factory overhead control account controls:
A. factory overhead analysis sheets
B. all general ledger subsidiary accounts
C. job order cost sheets
D. cost reports by processes
E. materials inventories

2.Supplies needed for use in the factory are issued on the basis of:
A. job cost sheets
B. materials requisitions
C. time tickets
D. factory overhead analysis sheets
E. clock cards

3.Finished Goods is debited and Work in Process is credited for a:

A. transfer of completed goods out of the factory
B. transfer of completed production to the finished goods storeroom
C. purchase of goods on account
D. transfer of materials to the factory
E. return of unused materials from the factory

4.In job order costing, when materials are returned to the storekeeper that were previously issued to the
factory for cleaning supplies, the journal entry should be made to:
A. Materials
Factory Overhead
B. Materials
Work in Process
C. Purchases Returns
Work in Process
D. Work in Process
Materials
E. Factory Overhead
Work in Process

46
Job Order Costing 47

5.Under a job order cost system, the dollar amount of the entry to transfer the inventory from Work in
Process to Finished Goods is the sum of the costs charged to all jobs:
A. completed during the period
B. started in process during the period
C. in process during the period
D. completed and sold during the period
E. none of the above

6.When a manufacturing company has a highly automated plant producing many different products,
probably the most appropriate basis of applying factory overhead costs to Work in Process is:
A. units processed
B. machine hours
C. direct labor hours
D. direct labor dollars
E. none of the above

7.Blair Company applies factory overhead on the basis of direct labor hours. Budget and actual data for
direct labor and overhead for the year are as follows:

Budget Actual
Direct labor hours........................................................................... 600,000 650,000
Factory overhead costs................................................................... P720,000 P760,000

The factory overhead for Cherokee for the year is:

A. overapplied by P20,000
B. overapplied by P40,000
C. underapplied by P20,000
D. underapplied by P40,000
E. neither underapplied nor overapplied

SUPPORTING CALCULATION:

$720,000
= $1. 20 _ 650,000
600,000

= $780,000 (applied )⋅ $760,000 (actual ) = $20,000 (overapplied )

Job Order Costing 48

8.At the end of the year, Paola Company had the following account balances after applied factory overhead
had been closed to Factory Overhead Control:

Factory Overhead Control...................................................................................... P 1,000 CR

Cost of Goods Sold................................................................................................... 980,000 DR
Work in Process....................................................................................................... 38,000 DR
Finished Goods......................................................................................................... 82,000 DR

The most common treatment of the balance in Factory Overhead Control would be to:
A. carry it as a deferred credit on the balance sheet
B. report it as miscellaneous operating revenue on the income statement
C. credit it to Cost of Goods Sold
D. prorate it between Work in Process and Finished Goods
E. prorate it among Work in Process, Finished Goods, and Cost of Goods Sold

9.Overapplied factory overhead would result if:

A. the plant were operated at less than normal capacity
B. factory overhead costs incurred were less than costs charged to production
C. factory overhead costs incurred were unreasonably large in relation to units produced
D. factory overhead costs incurred were greater than costs charged to production
E. a firm incurred a significant amount of overhead

10.The Waitkins Company estimated Department A's overhead at P255,000 for the period based on an
estimated volume of 100,000 direct labor hours. At the end of the period, the factory overhead
control account for Department A had a balance of P265,500; actual direct labor hours were
105,000. What was the over- or under-applied overhead for the period?
A. P2,250
B. P(2,250)
C. P15,000
D. P(15,000)
E. P(5,000)

SUPPORTING CALCULATION:

$255,000
= $2 .55 _ 105,000 = $267,750 (applied )⋅ $265,500 (actual )
100,000

= $2,250 (overapplied )
Job Order Costing 49

11. Corporation has a job order cost system. The following debits (credits) appeared in Work in Process for
the month of July:

July 1, balance.............................................................................................................. P 12,000

July 31, direct materials............................................................................................... 40,000
July 31, direct labor..................................................................................................... 30,000
July 31, factory overhead............................................................................................ 27,000
July 31, to finished goods............................................................................................. (100,000)

Howell applies overhead to production at a predetermined rate of 90% based on the direct labor
cost. Job 1040, the only job still in process at the end of July, has been charged with factory
overhead of P2,250. What was the amount of direct materials charged to Job 1040?
A. P6,750
B. P2,250
C. P2,500
D. P4,250
E. P9,000
SUPPORTING CALCULATION:

Job 1040 = $12,000 + $40,000 + $30,000 + $27,000 - $100,000 = $9,000

$2,250
Direct materials = $9,000 ⋅ ⋅ $2,250 = $4,250
12. .9
Valentino Corporation makes aluminum fasteners. Among Valentino's 19--
manufacturing costs were:

Wages and salaries:

Machine operators............................................................................................... P80,000
Factory supervisors.............................................................................................. 30,000
Machine mechanics.............................................................................................. 20,000

Direct labor amounted to:

A. P50,000
B. P100,000
C. P110,000
D. P130,000
E. none of the above
Job Order Costing 50

13. Rudolpho Corporation makes aluminum fasteners. Among Rudolpho's 19-- manufacturing costs were:

Materials and supplies:

Aluminum................................................................................................................... P400,000
Machine parts............................................................................................................. 18,000
Lubricants for machines............................................................................................ 5,000

Direct materials amounted to:

A. P23,000
B. P400,000
C. P405,000
D. P418,000
E. P423,000

14.Selected cost data (in thousands) concerning the past fiscal year's operations of the Moscow
Manufacturing Company are presented below.

Inventories
Beginning Ending
Materials.......................................................................................... P75 P 85
Work in process.............................................................................. 80 30
Finished goods................................................................................. 90 110

Materials used, P326

Total manufacturing costs charged to production during the year (including direct materials,
direct labor, and factory overhead applied at the rate of 60% of direct labor cost), P686
Cost of goods available for sale, P826
Selling and general expenses, P25

The cost of direct materials purchased during the year amounted to:
A. P360
B. P316
C. P336
D. P411
E. none of the above
SUPPORTING CALCULATION: $326 + $85 - $75 = $336

15.Selected cost data (in thousands) concerning the past fiscal year's operations of the Moscow
Manufacturing Company are presented below.

Inventories
Beginning Ending
Materials.......................................................................................... P75 P 85
Work in process.............................................................................. 80 30
Finished goods................................................................................. 90 110

Materials used, P326

Total manufacturing costs charged to production during the year (including direct materials,
direct labor, and factory overhead applied at the rate of 60% of direct labor cost), P686
Cost of goods available for sale, P826
Selling and general expenses, P25

Direct labor costs charged to production during the year amounted to:
A. P216
B. P135
Job Order Costing 51

C. P225
D. P360
E. none of the above

SUPPORTING CALCULATION: $686 = $326 + x + .6x

x = $225

16.Selected cost data (in thousands) concerning the past fiscal year's operations of the Moscow
Manufacturing Company are presented below.

Inventories
Beginning Ending
Materials.......................................................................................... P75 P 85
Work in process.............................................................................. 80 30
Finished goods................................................................................. 90 110

Materials used, P326

Total manufacturing costs charged to production during the year (including direct materials,
direct labor, and factory overhead applied at the rate of 60% of direct labor cost), P686
Cost of goods available for sale, P826
Selling and general expenses, P25

The cost of goods manufactured during the year was:

A. P736
B. P716
C. P636
D. P766
E. none of the above
SUPPORTING CALCULATION: $80 + $686 - $30 = $736

17.Selected cost data (in thousands) concerning the past fiscal year's operations of the Moscow
Manufacturing Company are presented below.

Inventories
Beginning Ending
Materials.......................................................................................... P75 P 85
Work in process.............................................................................. 80 30
Finished goods................................................................................. 90 110

Materials used, P326

Total manufacturing costs charged to production during the year (including direct materials,
direct labor, and factory overhead applied at the rate of 60% of direct labor cost), P686
Cost of goods available for sale, P826
Selling and general expenses, P25

The cost of goods sold during the year was:

A. P716
B. P691
C. P801
D. P736
E. none of the above
SUPPORTING CALCULATION: $90 + $736 - $110 = $716
Job Order Costing 52

18.J. D. Doonesbury Company manufactures tools to customer specifications. The following data pertain to
Job 1501 for April:

Direct materials used..................................................................................................... P 4,200

Direct labor hours worked............................................................................................ 300
Direct labor rate per hour............................................................................................. P 8.00
Machine hours used....................................................................................................... 200
Applied factory overhead rate per machine hour...................................................... P 15.00

What is the total manufacturing cost recorded on Job 1501 for April?
A. P9,600
B. P10,300
C. P11,100
D. P5,400
E. P8,800
SUPPORTING CALCULATION: $4,200 + (300 x $8) + (200 x $15) = $9,600

19. In service businesses using job order costing, the most commonly used base for applying overhead to jobs
is:
A. machine hours
B. direct materials consumed
C. direct labor cost
D. meals, travel, and entertainment
E. none of the above
Job Order Costing 32

20.In service businesses using job order costing, the hourly rate used to charge costs to a job usually includes:
A. both labor and overhead cost
B. labor cost only
C. overhead cost only
D. labor, overhead, and miscellaneous costs
E. none of the above

21.Work in Process is debited and Materials is credited for:

A. the issuance of direct materials into production
B. the issuance of indirect materials into production
C. the return of materials to the storeroom
D. the application of materials overhead
E. none of the above

22.Factory Overhead Control is debited and Payroll is credited for:

A. the recording of payroll
B. the distribution of indirect labor costs
C. the distribution of direct labor costs
D. the distribution of withholding taxes
E. none of the above

23.Applied Factory Overhead is debited and Factory Overhead is credited to:

A. close the estimated overhead account to actual overhead
B. record the actual factory overhead for the period
C. charge estimated overhead to all jobs worked on during the period
D. to record overapplied overhead for the period
E. none of the above

24.The best overhead allocation base to use in a labor-intensive manufacturing environment probably would
be:
A. materials cost
B. machine hours
C. direct labor hours
D. units of production
E. none of the above

25.Finished Goods is debited and Cost of Goods Sold is credited for:

A. transfer of completed goods to the customer
B. sale of a customer order
C. return of materials to the supplier
D. return of goods by the customer
E. none of the above
26. The tie-in between general accounts and cost accounts is often discussed with accounting procedures. An
example of a general account is:
A. Materials
B. Work in Process
C. Factory Overhead Control
D. Finished Goods
E. Accumulated Depreciation

27. One feature of a standard cost system is that:

A. selection of the cost unit becomes simplified
B. predetermined amounts are ignored
C. an analysis of cost variances is facilitated
D. historical costs are recorded as they are incurred

32
Job Order Costing 33

E. reports are delayed until operations have been performed

28. An industry that would most likely use job order costing procedures is:
A. road building
B. fertilizer manufacturing
C. flour milling
D. petroleum refining
E. textile manufacturing

29. An industry that would most likely use process costing procedures is:
A. musical instrument manufacturing
B. construction
C. aircraft
D. chemicals
E. office equipment

30. Supplies needed for use in the factory are issued on the basis of:
A. materials requisitions
B. time tickets
C. factory overhead analysis sheets
D. clock cards
E. purchase invoices

33
Cost Systems and Cost Accumulation 34

31. Finished Goods is debited and Work in Process is credited for a:

A. transfer of materials to the factory
B. return of unused materials from the factory
C. purchase of goods on account
D. transfer of completed production
E. transfer of completed goods out of the factory

32, The best cost accumulation procedure to use when many batches, each differing as to product
specifications, are produced is:
A. absorption
B. job order
C. process
D. actual
E. standard

33. Job order costs are most useful for:

A. determining the cost of a specific project
B. determining the labor cost involved in production
C. determining inventory valuation using lifo
D. estimating overhead costs
E. controlling indirect costs of future production

34. Under a job order cost system, the dollar amount of the entry to transfer the inventory from Finished
Goods to Cost of Goods Sold is the sum of the costs charged to all jobs:
A. completed during the period
B. started in process during the period
C. in process during the period
D. completed and sold during the period
E. sold during the period

35. The industry most likely to use job order costing in accounting for costs is:
A. accounting firms
B. textile manufacturer
C. paint manufacturer
D. oil refinery
E. none of the above
36. Job order cost accounting systems and process accounting systems differ in the way:
A. costs are traced to cost objects
B. orders are taken and in the number of units in the orders
C. product profitability is determined and compared with planned costs
D. manufacturing processes can be accomplished and in the number of production runs that
may be performed in a year
E. none of the above

37. In a job order cost system, the distribution of direct labor costs usually are recorded as an increase in:
A. Cost of Goods Sold
B. Factory Overhead Control
C. Finished Goods
D. Work in Process
E. none of the above
Cost Systems and Cost Accumulation 35

38. Process costing techniques should be used in assigning costs to products:

A. if the product is manufactured on the basis of each order received
B. when production is only partially completed during the accounting period
C. if the product is composed of mass-produced homogeneous units
D. whenever standard costing techniques should not be used
E. none of the above

39. A characteristic of a process costing system is:

A. partially processed inventory is restated in terms of completed units
B. costs are accumulated by order
C. it is used by a company manufacturing custom machinery
D. standard costs are not applicable
E. none of the above

40. The industry most likely to use process costing in accounting for costs is:
A. road builder
B. electrical contractor
C. airlines
D. automobile repair shop
E. none of the above
41. .Ziffel Company had the following account balances and results from operations for the month of July:
direct materials consumed, P10,400; direct labor, P8,000; factory overhead, P8,800; July 1, work
in process inventory, P2,400; July 31, work in process inventory, P1,800; finished goods
inventory, July 1, P1,200; finished goods inventory, July 31, P1,000. The total manufacturing
cost for the month of July was:
A. P27,800
B. P28,000
C. P18,400
D. P27,200
E. none of the above

SUPPORTING CALCULATION: $10,400 + $8,000 + $8,800 = $27,200

42. Ziffel Company had the following account balances and results from operations for the month of July:
direct materials consumed, P10,400; direct labor, P8,000; factory overhead, P8,800; July 1, work
in process inventory, P2,400; July 31, work in process inventory, P1,800; finished goods
inventory, July 1, P1,200; finished goods inventory, July 31, P1,000. The cost of goods
manufactured was:
A. P27,200
B. P28,000
C. P27,800
D. P26,600
E. none of the above

SUPPORTING CALCULATION: $27,200 + $2,400 - $1,800 = $27,800

43. Ziffel Company had the following account balances and results from operations for the month of July:
direct materials consumed, P10,400; direct labor, P8,000; factory overhead, P8,800; July 1, work
in process inventory, P2,400; July 31, work in process inventory, P1,800; finished goods
inventory, July 1, P1,200; finished goods inventory, July 31, P1,000. The cost of goods sold was:
A. P27,200
B. P28,000
C. P27,800
D. P27,600
Cost Systems and Cost Accumulation 36

E. none of the above

SUPPORTING CALCULATION: $27,800 + $1,200 - $1,000 = $28,000

44. Chicago Processing Co. uses the average costing method and reported a beginning inventory of 5,000
units that were 20% complete with respect to materials in one department. During the month,
11,000 units were started; 8,000 units were finished; ending inventory amounted to 8,000 units
that were 60% complete with respect to materials. Total materials cost during the period for
work in process should be spread over:
A. 7,200 units
B. 16,000 units
C. 11,200 units
D. 13,200 units
E. 12,800 units
SUPPORTING CALCULATION: 8,000 + .60(8,000) = 12,800 units

45. Dover Corporation's production cycle starts in the Mixing Department. The following information is
available for April:

Units
Work in process, April 1 (50% complete).................................................................. 40,000
Started in April............................................................................................................. 240,000
Work in process, April 30 (60% complete)................................................................ 25,000

Materials are added at the beginning of the process in the Mixing Department. Using the
average cost method, what are the equivalent units of production for the month of April?

Materials Conversion
A. 255,000 255,000
B. 270,000 280,000
C. 280,000 270,000
D. 305,000 275,000
E. 240,000 250,000

SUPPORTING CALCULATION:

Materials = 40,000 + 240,000 = 280,000

Conversion = (280,000 - 25,000) + .6(25,000) = 270,000

46. Information concerning Department A of Neeley Company for June is as follows:

Materials
Units Costs
Beginning work in process................................................................... 17,000 P12,800
Started in June...................................................................................... 82,000 69,700
Units completed.................................................................................... 85,000
Ending work in process........................................................................ 14,000

All materials are added at the beginning of the process. Using the average cost method, the cost
per equivalent unit for materials is:
A. P0.825
B. P0.833
C. P0.85
D. P0.97
E. P1.01
Cost Systems and Cost Accumulation 37

SUPPORTING CALCULATION: ($12,800 + $69,700)  (85,000 + 14,000) = $.833

Cost Systems and Cost Accumulation 38

47. Kennedy Company adds materials in the beginning of the process in the Forming Department, which is
the first of two stages of its production cycle. Information concerning the materials used in the
Forming Department in October is as follows:

Materials
Units Costs
Work in process, October 1................................................................. 6,000 P 3,000
Units started.......................................................................................... 50,000 25,560
Units completed and transferred out.................................................. 44,000

Using the average cost method, what was the materials cost of work in process at October 31?
A. P3,000
B. P6,120
C. P3,060
D. P5,520
E. P6,000

SUPPORTING CALCULATION:

($3,000 + $25,560)  (44,000 + 12,000) = $.51

$.51 x 12,000 = $6,120

48. Roger Company manufactures Product X in a two-stage production cycle in Departments A and B.
Materials are added at the beginning of the process in Department B. Roger uses the average
costing method. Conversion costs for Department B were 50% complete as to the 6,000 units in
beginning work in process and 75% complete as to the 8,000 units in ending work in process. A
total of 12,000 units were completed and transferred out of Department B during February. An
analysis of the costs relating to work in process and production activity in Department B for
February follows:

Transferred- Materials Conversion

in Costs Costs Costs
Work in process, February 1:
Costs attached................................................... P12,000 P2,500 P1,000
February activity:
Costs added....................................................... 29,000 5,500 5,000

The total cost per equivalent unit transferred out for February of Product X, rounded to the
nearest penny, was:
A. P2.82
B. P2.85
C. P2.05
D. P2.75
E. P2.78
SUPPORTING CALCULATION:

Transferred-in costs = $41,000  20,000 = $2.05

Materials cost = $8,000  20,000 = .40
Conversion cost = $6,000  18,000 = .33
$2.78
Cost Systems and Cost Accumulation 39

49. Simpson Co. adds materials at the beginning of the process in Department M. The following information
pertains to Department M's work in process during April:

Units
Work in process on April 1
(60% complete as to conversion cost).................................................................. 3,000
Started in April............................................................................................................. 25,000
Completed in April....................................................................................................... 20,000
Work in process on April 30
(75% complete as to conversion cost).................................................................. 8,000

Under the average costing method, the equivalent units for conversion cost are:
A. 26,000
B. 25,000
C. 24,000
D. 21,800
E. none of the above
SUPPORTING CALCULATION: 20,000 + .75(8,000) = 26,000

50. During March, Quig Company's Department Y equivalent unit product costs, computed under the
average cost method, were as follows:

Materials................................................. P1
Conversion.............................................. 3
Transferred-in........................................ 5

Materials are introduced at the end of the process in Department Y. There were 4,000 units
(40% complete as to conversion costs) in work in process at March 31. The total costs assigned to
the March 31 work in process inventory should be:
A. P36,000
B. P28,800
C. P27,200
D. P24,800
E. none of the above

SUPPORTING CALCULATION: $5(4,000) + $3(4,000 x .4) = $24,800

Cost Systems and Cost Accumulation 40

Answer: 26. E
1. A 27. C
2. B 28. A
3. B 29. D
4. A 30. A
5. A 31. D
6. B 32. B
7. A 33. A
8. C 34. E
9. B 35. A
10. A 36. A
11. D 37. D
12. E 38. C
13. B 39. A
14. C 40. C
15. C 41. D
16. A 42. C
17. A 43. B
18. A 44. E
19. C 45. C
20. A 46. B
21. A 47. B
22. B 48. E
23. A 49. A
24. C 50. D
25. D