Question 1

A job order costing system would be appropriate for a manufacturer of automobile tires.

Accepted Answer

A job order costing system is typically used for customized orders, not for standardized products like automobile tires, which are better suited for a process costing system due to their mass production.

Question 2

There are two basic types of cost accounting systems: job order costing and process costing.

Accepted Answer

Job order costing and process costing are the two basic types of cost accounting systems.

Question 3

The total costs on job cost sheets for jobs that are completed but not yet sold equals the balance in the Work in Process Inventory account.

Accepted Answer

The total costs on job cost sheets for jobs that are completed but not yet sold equals the balance in the Finished Goods Inventory account, not the Work in Process Inventory account. Work in Process Inventory reflects the costs of jobs that are still in production and not yet completed.

Question 4

Job order costing would be appropriate for companies that produce training films for a specific customer or custom-made furniture.

Accepted Answer

Job order costing is suitable for companies that make customized products, such as training films or custom-made furniture, that may require unique materials and labor quantities. Each project can receive its own unique job order number and be costed separately, allowing for accurate pricing and cost control.

Question 5

The total costs on job cost sheets for jobs that are completed but not yet sold equals the balance in the Finished Goods Inventory account.

Accepted Answer

This is true because the costs of completed but unsold jobs are included in the Finished Goods Inventory account, which represents the cost of goods manufactured that are available for sale. Once the goods are sold, the costs are transferred from Finished Goods Inventory to Cost of Goods Sold. Therefore, the balance in the Finished Goods Inventory account should represent the total costs of completed but unsold jobs.

Question 6

Job order costing would be appropriate for companies that produce pencils.

Accepted Answer

Job order costing is used for unique, custom orders, not standardized products like pencils which are typically produced in large quantities, making process costing a more appropriate method.

Question 7

The total costs on job cost sheets for jobs that are not yet completed equals the balance in the Work in Process Inventory account.

Accepted Answer

This is because the Work in Process Inventory account is a control account that reflects the total cost of all jobs that are currently in progress and have not yet been completed. The job cost sheets contain detailed information about the costs incurred on each individual job, which are used to update the Work in Process Inventory account. Once a job is completed, its total cost is transferred from Work in Process Inventory to Finished Goods Inventory or Cost of Goods Sold depending on whether the goods or services produced have been sold or not.

Question 8

Job cost sheets are used to track all of the costs assigned to a job,including direct materials,direct labor,overhead,and all selling and administrative costs.

Accepted Answer

Job cost sheets track the direct materials, direct labor, and overhead costs assigned to a job, but they do not typically include selling and administrative costs.

Question 9

Cost accounting systems accumulate production costs and then assign them to products and services.

Accepted Answer

Cost accounting systems track and allocate all production costs to the products and services that they relate to. This helps companies understand the true cost of producing each item and can inform pricing decisions and other strategic choices.

Question 10

A company that uses a cost accounting system normally has only two inventory accounts: Finished Goods Inventory and Work in Process Inventory.

Accepted Answer

A company that uses a cost accounting system typically has three inventory accounts: raw materials inventory, work in process inventory, and finished goods inventory.

Question 11

The total manufacturing costs on job cost sheets for unfinished jobs equals the total amount in the Work in Process Inventory account in the general ledger.

Accepted Answer

This statement is correct. The Work in Process Inventory account in the general ledger represents the total cost of all the unfinished jobs, which should match the total manufacturing costs recorded on the job cost sheets for those jobs.

Question 12

The direct materials section of a job cost sheet shows the materials costs assigned to a specific job,but the direct labor section only shows the total hours of labor allocated to the job.

Accepted Answer

The direct labor section of a job cost sheet shows both the total hours of labor allocated to a job and the labor cost per hour, allowing for the calculation of the total direct labor cost for the job.

Question 13

When a job involves producing more than one unit of a custom product,it is often called a job lot.

Accepted Answer

A job lot refers to producing multiple units of a custom product in a single job.

Question 14

A job cost sheet does not contain information that is useful for managing the production process.

Accepted Answer

A job cost sheet contains information such as labor and material costs, as well as details about the job itself, which can be used to monitor and manage the production process. This information can be used to ensure that the job is completed on time and within budget, as well as to identify areas for improvement or cost savings.

Question 15

A company that produces a large number of standardized units would normally use a job order costing system.

Accepted Answer

A job order costing system is typically used for customized or unique products, while a company producing a large number of standardized units would likely use a process costing system.

Question 16

There are two basic types of cost accounting systems: job order costing and periodic costing.

Accepted Answer

The two basic types of cost accounting systems are job order costing and process costing, not periodic costing. Job order costing is used for unique or custom orders, while process costing is used for homogeneous products.

Question 17

Cost accounting information is helpful to management for pricing decisions but has no effect on controlling costs.

Accepted Answer

Cost accounting information is not only helpful for pricing decisions but also plays a crucial role in controlling costs. It helps management to identify and analyze cost behaviors and patterns, set budgets and standards, make cost-effective decisions, and monitor and reduce costs. Therefore, cost accounting information is important for both pricing decisions and cost control.

Question 18

The total costs on job cost sheets for jobs that are not yet completed equals the balance in the Finished Goods Inventory account.

Accepted Answer

The Finished Goods Inventory account contains costs of completed jobs that are ready for sale, not costs of jobs that are still in production. Therefore, the total costs on job cost sheets for completed jobs should equal the balance in the Finished Goods Inventory account.

Question 19

Job order costing would be appropriate for companies that produce custom homes and specialized equipment.

Accepted Answer

Job order costing is suitable for companies that produce unique, custom-made products or offer specialized services, such as custom homes and equipment. This is because the costs associated with each job can be easily tracked and assigned to that specific job.

Question 20

A company that produces products individually designed to meet the needs of a specific customer,would normally use a job order costing system.

Accepted Answer

Job order costing is used in industries where customized or unique products are produced according to the specific requirements of the customer. Each job is treated as a separate entity with its own unique production process, direct materials, direct labor, and overhead costs. Examples of industries that use job order costing include furniture manufacturing, construction, and printing.

Quiz 15: Job Order Costing and Analysis