Chapter 2 - test bank of managerial accounting book PDF

Preview

Summary

test bank of managerial accounting book ...

Description

CHAPTER 2 JOB ORDER COSTING SUMMARY OF QUESTIONS BY LEARNING OBJECTIVES AND BLOOM’S TAXONOMY I t e m

L O

BT I t e m

L O

BT I t e m

L O

BT

I t e m

L O

BT

I t e m

L O

BT

4 4 4 5 5 5 5

C K C C K K K

29. 30. sg 31. sg 32. sg 33. sg 34. sg 35.

6 6 1 2 3 4 6

C C C K K K K

105. 106. 107. 108. 109. 110. 111. 112. 113. 114. 115. 116. 117. 118. 119. 120. 121. 122. 123. 124. 125. 126. 127.

5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 6 6 6 6

C AP C C C C AP AP AP C C AP AP AP AP AP AP AP AP AP AP AP C

128. 129. 130. 131. 132. 133. 134. 135. 136. 137. 138. 139. 140. st 141. sg 142. st 143. sg 144. st 145. sg 146. st 147. sg 148. st 149. sg 150.

6 6 6 6 6 6 6 6 6 6 6 6 6 1 2 2 3 3 4 4 6 6 6

C C K C AP C C C C C C C C K K K K K AP K C K K

157. 158.

5 6

AP AP

159. 160.

6 6

AP AP

True-False Statements 1. 2. 3. 4. 5. 6. 7.

1 1 1 1 1 1 1

K C C C C K C

8. 9. 10. 11. 12. 13. 14.

2 2 2 2 2 2 2

K C C C C K C

15. 16. 17. 18. 19. 20. 21.

2 2 3 3 3 3 3

K K K K C C K

22. 23. 24. 25. 26. 27. 28.

Multiple Choice Questions 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58.

1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

K K K C C C C C AP K K C K C C C K C K K AP K K

59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80. 81.

2 2 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 4

C C K K AP K C K K K C C K K C C K AP AP AP AP AP AP

82. 83. 84. 85. 86. 87. 88. 89. 90. 91. 92. 93. 94. 95. 96. 97. 98. 99. 100. 101. 102. 103. 104.

4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 5 5 5

AP AP AP AP AP AP AP C K C C K AP C K AP AP AP AP AP AP C C

Brief Exercises 151. 152. sg st

2 2

AP AP

153. 154.

3 3

AP AP

155. 156.

4,6 4

AP AP

This question also appears in the Study Guide. This question also appears in a self-test at the student companion website.

2-2

Test Bank for Managerial Accounting, Sixth Edition

SUMMARY OF QUESTIONS BY LEARNING OBJECTIVES AND BLOOM’S TAXONOMY Exercises 161. 162. 163. 164. 165. 166.

2 2–4 2–4 2–4 2,3 2–5

AP C AP C AP AP

167. 2–5 168. 2–5 169. 2–5 170. 2,3 171. 2–5 172. 2,5

AP AN AP AP AP AP

173. 2–6 AP 174. 2,3,6 AP 175. 2–6 AP 176. 3 AP 177. 3–5 AN 178. 3,5 AP

179. 3,5 180. 3,4,6 181. 4,6 182. 4,6 183. 4 184. 4,6

AP AP AP AP AP AP

185. 186. 187. 188.

4,6 4,6 5 5

AP AP AP AP

K K

197. 198.

6 6

K K

Completion Statements 189. 190.

1 1

199.

1

K K

191. 192.

1 2

K K

193. 194.

2 3

K AP

195. 196.

3 4

Matching Statements K

Short-Answer Essay 200. 201.

1 2

S S

202. 203.

4 4

S S

204. 205.

3 4

S S

SUMMARY OF LEARNING OBJECTIVES BY QUESTION TYPE I t e m T y p e I t e m

T y p e I t e m

T y p e I t e m

T y pe I t e m

T y p e I t e m

T y pe I t e m

MC C C C

199. 200.

MA SA

T y pe

1. 2. 3. 4.

TF TF TF TF

5. 6. 7. 31.

TF TF TF TF

36. 37. 38. 39.

Learning Objective 1 MC 40. MC 141. MC 41. MC 189. MC 42. MC 190. MC 43. MC 191.

8. 9. 10. 11. 12. 13. 14.

TF TF TF TF TF TF TF

15. 16. 32. 44. 45. 46. 47.

TF TF TF MC MC MC MC

48. 49. 50. 51. 52. 53. 54.

Learning Objective 2 MC 55. MC 143. MC 56. MC 151. MC 57. MC 152. MC 58. MC 161. MC 59. MC 162. MC 60. MC 163. MC 142. MC 164.

MC BE BE Ex Ex Ex Ex

165. 166. 167. 168. 169. 170. 171.

Ex Ex Ex Ex Ex Ex Ex

172. 173. 175. 192. 193. 201.

Ex Ex Ex C C SA

71. 72. 73. 74. 75. 76. 77. 78.

Learning Objective 3 MC 79. MC 164. MC 80. MC 165. MC 144. MC 166. MC 145. MC 167. MC 153. BE 168. MC 154. BE 169. MC 162. Ex 170. MC 163. Ex 171.

Ex Ex Ex Ex Ex Ex Ex Ex

173. 174. 175. 176. 177. 178. 179. 180.

Ex Ex Ex Ex Ex Ex Ex Ex

194. 195. 204.

C C SA

17. 18. 19. 20. 21. 33. 61. 62.

TF TF TF TF TF TF MC MC

63. 64. 65. 66. 67. 68. 69. 70.

MC MC MC MC MC MC MC MC

Job Order Costing

22. 23. 24. 34. 81. 82. 83. 84.

TF TF TF TF MC MC MC MC

85. 86. 87. 88. 89. 90. 91. 92.

MC MC MC MC MC MC MC MC

93. 94. 95. 96. 97. 98. 99. 100.

25. 26. 27. 28. 102. 103.

TF TF TF TF MC MC

104. 105. 106. 107. 108. 109.

MC MC MC MC MC MC

110. 111. 112. 113. 114. 115.

Learning Objective 4 MC 101. MC 166. MC 146. MC 167. MC 147. MC 168. MC 155. BE 169. MC 156. BE 171. MC 162. Ex 173. MC 163. Ex 175. MC 164. Ex 177. Learning Objective 5 MC 116. MC 122. MC 117. MC 123. MC 118. MC 157. MC 119. MC 166. MC 120. MC 167. MC 121. MC 168.

133. 134. 135. 136. 137. 138.

Learning Objective 6 MC 139. MC 159. MC 140. MC 160. MC 148. MC 173. MC 149. MC 175. MC 150. MC 180. MC 158. BE 181.

29. TF 30. TF 35. TF 124. MC 125. MC 126. MC

127. 128. 129. 130. 131. 132.

MC MC MC MC MC MC

Note: TF = True-False MC = Multiple Choice SA = Short-Answer Essay

BE = Brief Exercise Ex = Exercise

2-3

Ex Ex Ex Ex Ex Ex Ex Ex

180. 181. 182. 183. 184. 185. 186. 196.

Ex Ex Ex Ex Ex Ex Ex C

202. 203. 205.

SA SA SA

MC MC BE Ex Ex Ex

169. 171. 172. 173. 175. 177.

Ex Ex Ex Ex Ex Ex

178. 179. 187. 188.

Ex Ex Ex Ex

BE BE Ex Ex Ex Ex

182. 184. 185. 186. 197. 198.

Ex Ex Ex Ex C C

C = Completion MA = Matching

CHAPTER LEARNING OBJECTIVES 1. Explain the characteristics and purposes of cost accounting. Cost accounting involves the procedures for measuring, recording, and reporting product costs. From the data accumulated, companies determine the total cost and the unit cost of each product. The two basic types of cost accounting systems are job order cost and process cost. 2. Describe the flow of costs in a job order cost system. In job order costing, companies first accumulate manufacturing costs in three accounts: Raw Materials Inventory, Factory Labor, and Manufacturing Overhead. They then assign the accumulated costs to Work in Process Inventory and eventually to Finished Goods Inventory and Cost of Goods Sold. 3. Explain the nature and importance of a job cost sheet. A job cost sheet is a form used to record the costs chargeable to a specific job and to determine the total and unit costs of the completed job. Job cost sheets constitute the subsidiary ledger for the Work in Process Inventory control account. 4. Indicate how the predetermined overhead rate is determined and used. The predetermined overhead rate is based on the relationship between estimated annual overhead costs and expected annual operating activity. This is expressed in terms of a

2-4

Test Bank for Managerial Accounting, Sixth Edition

common activity base, such as direct labor cost. Companies use this rate to assign overhead costs to work in process and to specific jobs.

Job Order Costing

2-5

5. Prepare entries for jobs completed and sold. When jobs are completed, companies debit the cost to Finished Goods Inventory and credit it to Work in Process Inventory. When a job is sold the entries are: (a) Debit Cash or Accounts Receivable and credit Sales Revenue for the selling price, and (b) Debit Cost of Goods Sold and credit Finished Goods Inventory for the cost of the goods. 6. Distinguish between under- and overapplied manufacturing overhead. Underapplied manufacturing overhead indicates that the overhead assigned to work in process is less than the overhead incurred. Overapplied overhead indicates that the overhead assigned to work in process is greater than the overhead incurred.

TRUE-FALSE STATEMENTS 1.

Cost accounting is primarily concerned with accumulating information about product costs.

Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

2.

A job order cost system is most appropriate when a large volume of uniform products are produced.

Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Reporting

3.

A process cost accounting system is appropriate for similar products that are continuously mass produced.

Ans: T, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Reporting

4.

The perpetual inventory method cannot be used in a job order cost system.

Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Reporting

5.

A job order cost system and a process cost system are two alternative methods for valuing inventories.

Ans: T, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

6.

A job order cost system identifies costs with a particular job rather than with a set time period.

Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

7.

A company may use either a job order cost system or a process cost system, but not both.

Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

8.

Raw Materials Inventory, Factory Labor, and Manufacturing Overhead are all control accounts in the general ledger when a job order cost accounting system is used.

Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

9.

Accumulating and assigning manufacturing costs are two important activities in a job order cost system.

Ans: T, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

2-6 10.

Test Bank for Managerial Accounting, Sixth Edition Recording the acquisition of raw materials is a part of accumulating manufacturing costs.

Ans: T, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

11.

Manufacturing costs are generally incurred in one period and recorded in a subsequent period.

Ans: F, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

12.

The Purchases account is credited for all raw materials purchase returns and allowances.

Ans: F, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

13.

When raw materials are received, there is no effort at this point to associate the cost of materials with specific jobs.

Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

14.

When raw materials are purchased, the Work in Process Inventory account is debited.

Ans: F, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

15.

Factory labor should be assigned to selling and administrative expenses on a proportionate basis.

Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

16.

Fringe benefits and payroll taxes associated with factory workers should be accumulated as a part of Factory Labor.

Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

17.

Job order cost sheets constitute the subsidiary ledger of the control account Work In Process Inventory.

Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

18.

In a job order cost system, each entry to the Work In Process Inventory account should be accompanied by a posting to one or more job cost sheets.

Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

19.

Direct materials requisitioned from the storeroom should be charged to the Work In Process Inventory account and the job cost sheets for the individual jobs on which the materials were used.

Ans: T, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

20.

Manufacturing overhead is the only product cost that can be assigned to jobs as soon as the costs are incurred.

Ans: F, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective , AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

21.

There should be a separate job cost sheet for each job.

Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

Job Order Costing 22.

2-7

Actual manufacturing overhead costs are assigned to each job by tracing each overhead cost to a specific job.

Ans: F, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: FSA

23.

The formula for the predetermined overhead rate is estimated annual overhead costs divided by an expected annual operating activity.

Ans: T, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

24.

Actual manufacturing overhead costs should be charged to the Work in Process Inventory account as they are incurred.

Ans: F, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

25.

A good system of internal control requires that the job order cost sheet be destroyed as soon as the job is complete.

Ans: F, LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Risk Management, AICPA PC: None, IMA: Internal Controls

26.

Finished Goods Inventory is charged for the cost of jobs completed during a period.

Ans: T, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

27.

When goods are sold, the Cost of Goods Sold account is debited and Work in Process Inventory account is credited.

Ans: F, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: FSA

28.

Total manufacturing costs for a period consists of the costs of direct materials used, the cost of direct labor incurred, and the manufacturing overhead applied during the period.

Ans: T, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

29.

Overapplied overhead means that actual manufacturing overhead costs were greater than the manufacturing overhead costs applied to jobs.

Ans: F, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

30.

At the end of the year, the accountant credits the amount of the overapplied overhead to Cost of Goods Sold.

Ans: T, LO: 6, Bloom: C, Difficulty: Medium, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

31.

A cost accounting system consists of manufacturing cost accounts that are fully integrated into the general ledger of a company.

Ans: T, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

32.

The cost of raw materials purchased is credited to Raw Materials Inventory when materials are received.

Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA

33.

Requisitions for direct materials are posted daily to the individual job cost sheets.

Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: None, AICPA PC: None, IMA: Business Economics

2-8 34.

Test Bank for Managerial Accounting, Sixth Edition The predetermined overhead rate is based on the relationship between estimated annual overhead costs and expected annual operating activity expressed in terms of a common activity base.

Ans: T, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics

35.

At the end of the year, underapplied overhead is usually credited to Cost of Goods Sold.

Ans: F, LO: 6, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

Answers to True-False Statements Item

1. 2. 3. 4. 5.

Ans.

T F T F T

Item

6. 7. 8. 9. 10.