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Job order costing system Multiple choice questions (MCQs)
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ABOUT THIS QUIZ:
- Chapter: Job order costing system
- Quiz Type: Multiple choice questions (MCQs)
- Number of MCQs: 22
- Total Points: 22
- Approximate Time Required: 20 – 25 minutes
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Question 1 of 22
1. Question
The companies that produce many different products or services usually use:
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Question 2 of 22
2. Question
Which of the following costs is recorded on the job cost sheet?
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Question 3 of 22
3. Question
Which of the following journal entries is correct for the issuance of direct materials to production?
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Question 4 of 22
4. Question
The GSM company uses job order costing system and provides you the following data for the current period:
- Direct materials issued to production: $180,000
- Indirect materials issued to production: $16,000
- Direct labor cost: $214,000
- Manufacturing overhead cost – applied: $226,000
- Manufacturing overhead cost – actual: $250,000
There was no beginning and ending work in process and finished goods inventory. The company uses a predetermined overhead rate to apply manufacturing overhead to work in process (WIP) inventory.
Based on the above information, what is the cost of goods manufactured of GSM Company?
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Question 5 of 22
5. Question
The SK manufacturing company computes predetermined overhead rate on the basis of machine hours in the machining department and direct labor cost in the assembly department. The following estimates were made at the beginning of the year:
Based on the above information, what are the predetermined overhead rates for machining department and assembly department?
Correct
Awesome! Your answer is correct.
Computation:
Machining department:
Estimated manufacturing overhead cost/Estimated machine hours
= $15,000/3,000 hours
= $5 per machine hourAssembly department:
Estimated manufacturing overhead cost/Estimated direct labor cost
= $20,000/$10,000
= 200%Incorrect
Your answer is incorrect. The correct answer is “$5 and 200%” (option 2).
Computation:
Machining department:
Estimated manufacturing overhead cost/Estimated machine hours
= $15,000/3,000 hours
= $5 per machine hourAssembly department:
Estimated manufacturing overhead cost/Estimated direct labor cost
= $20,000/$10,000
= 200% -
Question 6 of 22
6. Question
Which of the following is a correct journal entry to record direct labor cost?
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Question 7 of 22
7. Question
The ABC company has the following estimated costs for the next year:
- Direct materials: $15,000
- Indirect materials: $5,000
- Direct labor: $55,000
- Salary of production supervisor: $35,000
- Rent on factory equipment: $16,000
- Sales commission: $75,000
- Advertising expenses: $11,000
It is estimated that 53,000 machine hours and 8,000 direct labor hours will be worked during the next year. What will be the predetermined overhead rate if company applies manufacturing overhead cost to jobs on the basis of direct labor hours.
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Question 8 of 22
8. Question
Under job order costing system, which of the following costs would be recorded as debit to manufacturing overhead account?
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Question 9 of 22
9. Question
In a job order costing system, which of the following costs is not an example of manufacturing overhead cost?
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Question 10 of 22
10. Question
Which of the following is a correct journal entry to apply manufacturing overhead cost to jobs?
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Question 11 of 22
11. Question
- Estimated manufacturing overhead cost at the beginning of the year: $100,000
- Estimated direct labor hours at the beginning of the year: 10,000
- Actual manufacturing overhead cost incurred during the year: $118,000
- Actual direct labor hours worked during the year: 11,000
Based on the above information, the cost record of the company will show:
Correct
Awesome! Your answer is correct.
Computations:
Predetermined overhead rate = Estimated manufacturing overhead/Estimated direct labor hours
= $100,000/10,000 hours
= $10Overhead applied during the year = Actual direct labor hours × Predetermined overhead rate
= 11,000 hours × $10
= $110,000Underapplied overhead = Actual overhead – Applied overhead
= $118,000 – $110,000
= $8,000 -
Question 12 of 22
12. Question
The following information belongs to Delta Company which uses job order costing system:
- Overapplied balance of manufacturing overhead account: $22,000
- Work in process inventory account – ending balance: $10,000
- Finished goods inventory account – ending balance: $15,000
- Cost of goods sold account – ending balance: $25,000
On the basis of ending balances, which of the following is a correct allocation of overapplied overhead balance among work in process, finished goods and cost of goods sold?
Correct
Awesome! Your answer is correct.
Computation:
Total ending balances:
$10,000 + $15,000 + $25,000 = $50,000
The proportion of ending balances to total ending balance:
- Work in process: $10,000/$50,000 = 20%
- Finished goods: $15,000/$50,000 = 30%
- Cost of goods sold: $25,000/$50,000 = 50%
The allocation of overapplied balance of manufacturing overhead account:
- Work in process: $22,000 × 0.2 = $4,400
- Finished goods: $22,000 × 0.3 = $6,600
- Cost of goods sold: $22,000 × 0.5 = $11,000
Incorrect
Your answer is incorrect. The correct answer is “$4,400, $6,600, $11,000” (option 2).
Computation:
Total ending balances:
$10,000 + $15,000 + $25,000 = $50,000
The proportion of ending balances to total ending balance:
- Work in process: $10,000/$50,000 = 20%
- Finished goods: $15,000/$50,000 = 30%
- Cost of goods sold: $25,000/$50,000 = 50%
The allocation of overapplied balance of manufacturing overhead account:
- Work in process: $22,000 × 0.2 = $4,400
- Finished goods: $22,000 × 0.3 = $6,600
- Cost of goods sold: $22,000 × 0.5 = $11,000
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Question 13 of 22
13. Question
The Robert Company uses a job order costing system and computes its predetermined overhead rate at the beginning of each period on the basis of direct labor cost. At the end of current period, the only job in process is the job number 555B. The cost sheet related to job number 555B shows that the following direct materials and direct labor costs were incurred during the period:
- Direct materials cost: $800
- Direct labor cost: $1,200
The work in process inventory account shows a balance of $2,600 at the end of current period.
One the basis of above information, what is the predetermined overhead rate as a percentage of direct labor cost?
Correct
Awesome! Your answer is correct.
Computations:
Manufacturing overhead applied to job number 555B:
Work in process account balance – (Direct materials cost + Direct labor cost)
= $2,600 – ($800 + $1,200)
= $600Predetermined overhead rate as a percentage of direct labor cost:
Manufacturing overhead applied/Direct labor cost
= $600/$1,200
= 50%Incorrect
Your answer is incorrect. The correct answer is “50%” (option 3).
Computations:
Manufacturing overhead applied to job number 555B:
Work in process account balance – (Direct materials cost + Direct labor cost)
= $2,600 – ($800 + $1,200)
= $600Predetermined overhead rate as a percentage of direct labor cost:
Manufacturing overhead applied/Direct labor cost
= $600/$1,200
= 50% -
Question 14 of 22
14. Question
Manufacturing overhead would be overapplied if:
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Question 15 of 22
15. Question
The Fine Company uses a job order costing system. The following information belongs to current period:
- Estimated manufacturing overhead at the beginning of the period: $440,000
- Actual manufacturing overhead incurred during the period: $400,000
- Manufacturing overhead underapplied: $16,000
- Predetermined overhead rate: $20 per direct labor hour
On the basis of above information, how many direct labor hours were worked during the current period?
Correct
Awesome! Your answer is correct.
Computations:
Manufacturing overhead applied:
Actual manufacturing overhead – Underapplied manufacturing overhead
= $400,000 – $16,000
= $384,000Direct labor hours worked during the period:
Manufacturing overhead applied/Predetermined overhead rate
= $384,000/$20
= 19,200 hoursIncorrect
Your answer is incorrect. The correct answer is “19,200 hours” (option 3).
Computations:
Manufacturing overhead applied:
Actual manufacturing overhead – Underapplied manufacturing overhead
= $400,000 – $16,000
= $384,000Direct labor hours worked during the period:
Manufacturing overhead applied/Predetermined overhead rate
= $384,000/$20
= 19,200 hours -
Question 16 of 22
16. Question
The following cost data relates to job 355C:
- Direct materials: $27,400
- Direct labor cost: $9,600
- Manufacturing overhead cost – applied: $4,000 (160 machine hours @ $25/machine hour)
- Selling and shipping cost: $14,000
The job 355C consists of 2,000 units and has been completed. What is the cost of goods sold per unit of job 355C?
Correct
Awesome! Your answer is correct.
Computations:
Cost of goods sold per unit
($27,400 + $9,600 + $4,000)/2,000 units
= 20.5 per unitSelling and shipping cost is an operating cost. It is not a component of cost of goods sold (COGS) and has therefore been ignored.
Incorrect
Your answer is incorrect. The correct answer is “20.5” (option 1).
Computations:
Cost of goods sold per unit
($27,400 + $9,600 + $4,000)/2,000 units
= 20.5 per unitSelling and shipping cost is an operating cost. It is not a component of cost of goods sold (COGS) and has therefore been ignored.
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Question 17 of 22
17. Question
The total cost assigned to job 777C is $24,000 which includes direct materials cost of $6,000. The factory overhead is applied to work in process @ 150% of direct labor cost. What is the amount of direct labor cost charged and factory overhead applied to job 777C?
Correct
Awesome! Your answer is correct.
Computations:
Total of direct labor cost and manufacturing overhead cost = Total cost – Direct materials cost
= $24,000 – $6,000
= $18,000Suppose, direct labor cost = Y
Manufacturing overhead is applied @ 150% of direct labor cost. Therefore, it must be 1.5Y.
Direct labor cost + Manufacturing overhead cost applied = $18,000
or
Y + 1.5 Y = $18,000
2.5Y = $18,000
Y = $18,000/2.5
Y = $7,200Direct labor cost is $7,200 & manufacturing overhead cost applied is $10,800 ($7,200 × 1.5).
Incorrect
Your answer is incorrect. The correct answer is “$7,200 and $10,800, respectively” (option 3).
Computations:
Total of direct labor cost and manufacturing overhead cost = Total cost – Direct materials cost
= $24,000 – $6,000
= $18,000Suppose, direct labor cost = Y
Manufacturing overhead is applied @ 150% of direct labor cost. Therefore, it must be 1.5Y.
Direct labor cost + Manufacturing overhead cost applied = $18,000
or
Y + 1.5 Y = $18,000
2.5Y = $18,000
Y = $18,000/2.5
Y = $7,200Direct labor cost is $7,200 & manufacturing overhead cost applied is $10,800 ($7,200 × 1.5).
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Question 18 of 22
18. Question
Which of the following is a correct journal entry to record the transfer of finished goods from production department to finished goods store room?
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Question 19 of 22
19. Question
Which of the following is a correct journal entry to record the shipment of a completed job to to customer?
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Question 20 of 22
20. Question
Which of the following journal entries correctly records the cost of the job shipped to a customer?
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Question 21 of 22
21. Question
The correct journal entry to dispose off an underapplied manufacturing overhead balance to cost of goods sold account is:
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Question 22 of 22
22. Question
Which of the following source documents is used to record the amount of direct materials on the job cost sheet?
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