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1 | Job-order costing is used in those situations where units of a product are homogeneous, such as in the manufacture of sugar.
(Learning Objective 1 Ch 3) |
| A) | True |
| B) | False |
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2 | Which of the following documents is used to record the costs charged to each job? (Learning Objective 2 Ch 3) |
| A) | materials requisition |
| B) | Job cost sheet |
| C) | Time ticket |
| D) | Bin card |
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3 | A predetermined overhead rate may be defined as: (Learning Objective 3 Ch3) |
| A) | A rate applied to each job or product in order to share out overhead costs |
| B) | Total fixed costs divided by output |
| C) | The total costs of producing one unit of output |
| D) | Total variable costs divided by output |
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4 | The accounting entries to record raw materials purchase are: (Learning Objective 4 Ch3) |
| A) | DR Raw materials CR Creditors |
| B) | DR Creditors account, CR Raw materials |
| C) | DR Work in progress CR Creditors |
| D) | CR Creditors CR Work in progress |
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5 | In a job order cost system using predetermined manufacturing overhead rates, indirect materials issued into production usually are recorded as an increase in (Learning Objective 4 Ch3) |
| A) | Work in Progress Stock. |
| B) | Finished Goods Stock. |
| C) | Raw Materials Stock. |
| D) | Manufacturing Overhead. |
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6 | The accounting entries to record overhead for a job using 5 labour hours at a predetermined rate of £6 per hour are: (Learning Objective 5 Ch3) |
| A) | DR Manufacturing overhead CR Work in Progress |
| B) | DR Work in Progress CR Manufacturing overhead |
| C) | DR Labour CR Work in Progress |
| D) | DR Work in Progress CR Labour |
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7 | A company uses a predetermined overhead rate based on machine hours. Budgeted overhead for the year was £360,000. Actual overhead incurred was £369,000. During the year, the company applied factory overhead of £357,000 on machine hours used of 59,500. What was the budgeted level of machine hours for the year? (Learning Objective 7 Ch3) |
| A) | 58,049 |
| B) | 59,500 |
| C) | 60,000 |
| D) | 61,500 |
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8 | A business has been using a predetermined overhead rate of £5.60 per machine hour in its Machining Department throughout the year. During the year overhead expenditure was £275,000 and 48,000 machine hours were used. Which one of the following statements is correct?
(Learning Objective 7 Ch3) |
| A) | Overheads were under-applied by £6,200 |
| B) | Overheads were under-applied by £7,600 |
| C) | Overheads were over-applied by £6,200 |
| D) | Overheads were over-applied by £7,600 |
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9 | The effect of basing predetermined overhead rates on capacity rather than activity is to: (more than one answer may be correct) (Learning Objective 8 Ch3) |
| A) | Lower the value of inventory |
| B) | Increase the value of inventory |
| C) | Identify the cost of unused capacity as an expense |
| D) | Increase the cost of goods sold when activity is falling |
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10 | Which of the following statements are true (there may be more than one) (Learning Objective 9 Ch3) |
| A) | Service departments provide support to the operating departments |
| B) | Service departments’ costs should be spread equally over the operating departments |
| C) | Service departments’ costs should be apportioned in proportion to the use that is made of them by the operating departments |
| D) | Service departments sometimes provide services for each other, resulting in interdepartmental re-allocations. |