32 Questions
In a job-order costing system, where are manufacturing costs initially added?
Work-in-process inventory
What is the primary purpose of job-order costing in managerial accounting?
Assigning costs to each batch of production
Which type of production environment is most suitable for process costing?
Continuous production
What is the key difference between job-order costing and process costing systems?
Application in different production environments
Why is accurate tracking and assignment of manufacturing costs crucial in a job-costing system?
To allocate costs to each job correctly
What role does product costing play in decision-making processes in managerial accounting?
Evaluating production efficiency
What happens when the actual overhead costs differ from the overhead costs applied to production using the predetermined overhead rate?
A discrepancy arises
How is underapplied or overapplied overhead typically closed at the end of an accounting period?
Into the Cost of Goods Sold account
Which accounts are affected by underestimation or overestimation of the predetermined overhead rate?
COGS, finished goods inventory, and work-in-process inventory
What is an example of a cost that grows over time as mentioned in the text?
Electricity consumption
Why do electricity and labor costs typically have variances according to the text?
Due to fluctuations in consumption and prices or labor skills and work ethic
What is the purpose of determining whether variances in costs are good or bad according to the text?
To assess the accuracy of budget forecasts
What is the purpose of a product costing system in financial accounting?
To value inventory and compute the cost of goods sold
What is the primary difference between job-order costing and process costing?
Job-order costing is for batch-productions, while process costing is for companies that produce identical units in bulk.
What accounts for the flow of costs in the cost of goods sold statement?
Purchase of raw materials and utilization of raw materials
In the context of purchases, what does 'PA' refer to?
Reduction of goods due to damaged or defective items
What comprises the Total Manufacturing Costs (TMC) in a manufacturing process?
Raw Materials Used, Direct Labor, and Factory Overhead
How are underapplied or overapplied overhead costs handled at the end of an accounting period?
Prorating among cost accounts
What is the significance of tracking direct labor costs through time records?
To monitor labor expenses for each job
'RMAL' in the context of a manufacturing process stands for:
Raw Materials Available
'CGM' in the context of manufacturing represents:
Cost of Goods Manufactured
What does 'WIP' stand for with respect to manufacturing operations?
Work-in-Process Inventory
In a job-order costing system, what is the purpose of a material requisition form (MRF)?
To authorize the release of materials from the warehouse
Which department in a manufacturing company is responsible for recording time spent by employees on production jobs?
Cost accounting department
What is the purpose of a predetermined overhead rate (POHR) in a job-costing system?
To determine the amount of the cost driver used for allocating overhead
Why is it crucial to accurately record time spent on production jobs by employees?
To track and allocate direct labor costs to specific jobs
What is the main purpose of allocating manufacturing overhead costs to production jobs in a job-costing system?
To determine the total cost of each job
How does underapplied or overapplied overhead occur in a job-order costing system?
When there are errors in calculating the predetermined overhead rate
Which of the following is NOT considered part of manufacturing overhead costs?
Direct materials used in production
What role does the production department supervisor play in the use of material requisition forms?
Authorizing the release of materials from the warehouse
What is the purpose of using material-requirements planning (MRP) in complex manufacturing operations?
To plan and manage inventory levels efficiently
How are time records used in a job-costing system?
To track and allocate direct labor costs to specific jobs
Test your knowledge on the procedures for accumulating direct material, direct labor, and manufacturing overhead for a job in a job-order costing system. Questions cover topics like materials requisition forms, time records, and the use of material-requirements planning in complex manufacturing operations.
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