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Multiple Choice Quiz
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1
Which of the following statements is (are) true?
A)Companies that produce many different products or services are more likely to use job-order costing systems than process costing systems.
B)Costs are traced to departments and then allocated to units of product when job-order costing is used.
C)Job-order costing systems are used by service firms and process costing systems are used by manufacturers.
D)All of the above.
2
The Agnew Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead rate is based on machine hours in Department #1 and direct labor cost in Department #2 and. At the beginning of the year, the company made the following estimates:
 
Dept #1
Dept #2
Direct labor hours
16,000
12,000
Machine hours (MHs)
5,000
1,000
Direct labor cost
$20,000
$15,000
Manufacturing overhead
$25,000
$30,000

What predetermined overhead rates would be used in Department #1 and Department #2, respectively?
A)110% and $15
B)$5.00 and 50%
C)$8.00 and 50%
D)$5.00 and 200%
3
Lily Company has the following estimated costs for next year:
Direct materials
$ 30,000
Direct labor
110,000
Indirect materials
10,000
Rent on factory equipment
32,000
Salary of production supervisor
70,000
Advertising expense
22,000
Sales commissions
150,000

The company estimates that 10,000 direct labor and 16,000 machine hours will be worked during the year. If overhead is applied on the basis of machine hours, the predetermined overhead rate per hour will be:
A)$7.00.
B)$13.88.
C)$15.26.
D)$17.12.
4
In a job-order cost system, indirect labor costs would be recorded as a debit to:
A)Finished Goods.
B)Manufacturing Overhead.
C)Raw Materials.
D)Work in Process.
5
In a job order cost system, the use of direct materials would be recorded as a debit to:
A)Finished Goods inventory.
B)Manufacturing Overhead.
C)Raw Materials inventory.
D)Work in Process inventory.
6
Teoh Company's predetermined overhead rate is based on direct labor costs. The company's Work in Process inventory account has a balance of $2,400, which relates to the one job that was not complete at the end of an accounting period. The related job cost sheet includes total charges of $400 for direct materials and $1,000 for direct labor. The company's predetermined overhead rate, as a percentage of direct labor costs, must be:
A)100%.
B)50%.
C)40%.
D)17%.
7
Giovnazzi Company uses a predetermined overhead rate based on direct labor hours (DLHs) to apply manufacturing overhead to jobs. At the beginning of the year, the company estimated manufacturing overhead would be $200,000 and DLHs would be 20,000. The actual figures for the year were $215,000 for manufacturing overhead and 21,000 DLHs. The cost records for the year will show:
A)overapplied overhead of $5,000.
B)underapplied overhead of $5,000.
C)overapplied overhead of $10,000.
D)underapplied overhead of $10,000.
8
McBride Company's predetermined overhead rate is based on direct labor hours (DLHs). At the beginning of the current year, the company estimated that its manufacturing overhead would total $220,000 during the year. During the year, the company incurred $200,000 in actual manufacturing overhead costs. The Manufacturing Overhead account showed that overhead was underapplied by $8,000 during the year. If the predetermined overhead rate was $40.00 per DLH, how many DLHs were worked during the year?
A)5,500 hours
B)5,200 hours
C)5,000 hours
D)4,800 hours
9
Waclawiak Company manufactures a specialty line of silk-screened draperies. The company uses a job-order costing system. During the month, the following costs were incurred on Job A10: direct materials $54,800 and direct labor $19,200. In addition, selling and shipping costs of $28,000 were incurred on the job. Manufacturing overhead was applied at the rate of $25 per machine-hour (MH) and Job A10 required 320 MHs. If Job A10 consisted of 5,000 shirts, the cost of goods sold per shirt was:
A)$50.00
B)$22.00
C)$16.40
D)$14.80
10
Skala Company uses a job-order costing system. Manufacturing overhead is applied to Work in Process inventory using a predetermined overhead rate. During August, the company's transactions included the following:
Direct materials issued to production
$360,000
Indirect materials issued to production
32,000
Direct labor cost incurred
428,000
Manufacturing overhead cost applied
452,000
Manufacturing overhead cost incurred
500,000

The company had no beginning or ending inventories in August. What was the cost of goods manufactured for August?
A)$1,320,000
B)$1,288,000
C)$1,240,000
D)$1,208,000





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