Saint Vincent College of Cabuyao

Brgy. Mamatid, City of Cabuyao, Laguna

Cost Accounting

QUIZ- JOB ORDER COSTING

Name: Score:
Course and Section: Date:

I. True/False

1. Job-order costing would be more likely to be used than process costing in situations
where many different products or services are produced each period to customer
specifications.

2. Job-order costing is used in manufacturing companies and process costing is used in

service firms.

3. In a job-order costing system, costs are traced to departments and then allocated to
units of product using an average process.

4. Normally a job cost sheet is not prepared for a job until after the job has been
completed.

5. Job cost sheets contain entries for actual direct material, actual direct labor, and actual
manufacturing overhead cost incurred in completing a job.

6. In order to improve the accuracy of unit costs, most companies recompute the
predetermined overhead rate each month.

7. The following journal entry would be made to apply overhead cost to jobs in a job-
order costing system:

Work in Process ............... XXX

Manufacturing Overhead ... XXX

8. When the predetermined overhead rate is based on direct labor-hours, the amount of
overhead applied to a job is proportional to the amount of actual direct labor-hours
incurred on the job.

9. When completed goods are sold the transaction is recorded as a debit to Cost of
Goods Sold and a credit to Work in Process.

10. The most common accounting treatment of underapplied manufacturing overhead is

to transfer it to the Manufacturing Overhead control account.
 11. In job-order costing, the Work in Process inventory account contains the actual costs
of direct labor, direct materials, and manufacturing overhead incurred on partially
completed jobs.

12. Nonmanufacturing costs are expensed as incurred, rather than going into the Work in
Process account.

13. A credit balance in the Manufacturing Overhead account at the end of the year means
that overhead was under- applied.

14. Indirect materials are not charged to a specific job but rather are included in
manufacturing overhead.

15. The labor time ticket contains a detailed summary of the direct and the indirect labor
hours of an employee.

II. Multiple Choice

16. Which of the following companies would be most likely to use a job-order costing
system rather than a process costing system?

a. fast food restaurant

b. shipbuilding
c. crude oil refining
d. candy making

17. The computation of unit product costs involves an averaging process in:

Job-order costing Process costing

a. Yes No
b. Yes Yes
c. No Yes
d. No No

18. Work in Process is a control account supported by detailed cost data contained in:

a. Job cost sheets.

b. The Manufacturing Overhead account.
c. The Finished Goods inventory account.
d. Purchase requisitions.

19. In job-order costing, all of the following statements are correct with respect to labor
time and cost except:
 a. Time tickets are kept by employees showing the amount of work on specific jobs.
b. The job cost sheet for a job will contain all direct labor charges to that particular
job.
c. Labor cost that can be traced to a job only with a great deal of effort is treated as
part of manufacturing overhead.
d. A machine operator performing routine annual maintenance work on a piece of
equipment would charge the maintenance time to a specific job.

20. In a job order cost system, the journal entry to record the application of overhead cost
to jobs would include:

a. A credit to the Manufacturing Overhead account.

b. A credit to the Work in Process inventory account.
c. A debit to Cost of Goods Sold.
d. A debit to the Manufacturing Overhead account.

21. In a job-order cost system, the use of indirect materials would usually be recorded as
a debit to:

a. Raw Materials.
b. Work in Process.
c. Manufacturing Overhead.
d. Finished Goods.

22. In a job order cost system, the use of direct materials previously purchased usually is
recorded as a debit to:

a. Work in Process inventory.

b. Finished Goods inventory.
c. Manufacturing Overhead.
d. Raw Materials inventory.

23. In a job-order cost system, direct labor costs usually are recorded initially with a debit
to:

a. Manufacturing Overhead.
b. Finished Goods inventory.
c. Direct Labor Expense.
d. Work in Process.

24. If a company applies overhead to jobs on the basis of a predetermined overhead rate,
a credit balance in the Manufacturing Overhead account at the end of any period
means that:

a. More overhead cost has been charged to jobs than has been incurred during the
period.
 b. More overhead cost has been incurred during the period than has been charged to
jobs.
c. The amount of overhead cost charged to jobs is greater than the estimated cost for
the period.
d. The amount of overhead cost charged to jobs is less than the estimated overhead
cost for the period.

25. In a job order cost system, the amount of overhead cost that has been applied to a job
that remains incomplete at the end of a period:

a. Is deducted on the Income Statement as over- applied overhead.

b. Is closed to Cost of Goods Sold.
c. Is transferred to Finished Goods at the end of the period.
d. Is part of the ending balance of the Work in Process inventory account.

26. The Work in Process inventory account of a manufacturing company shows a balance
of P2,400 at the end of an accounting period. The job cost sheets of the two
uncompleted jobs show charges of P400 and P200 for direct materials, and charges of
P300 and P500 for direct labor. From this information, it appears that the company is
using a predetermined overhead rate, as a percentage of direct labor costs, of:

a. 80%.
b. 125%.
c. 300%.
d. 240%.

27. LZP Company uses a predetermined overhead rate based on direct labor hours to
apply manufacturing overhead to jobs. At the beginning of the year, the company
estimated manufacturing overhead would be P150,000 and direct labor hours would
be 10,000. The actual figures for the year were P186,000 for manufacturing overhead
and 12,000 direct labor hours. The cost records for the year will show:

a. Over- applied overhead of P30,000.

b. Under- applied overhead of P30,000.
c. Under- applied overhead of P6,000.
d. Over- applied overhead of P6,000.

28. Davidson Company uses a predetermined overhead rate based on direct labor hours to
apply manufacturing overhead to jobs. At the beginning of the year the company
estimated its total manufacturing overhead cost at P400,000 and its direct labor-hours
at 100,000 hours. The actual overhead cost incurred during the year was P350,000
and the actual direct labor hours incurred on jobs during the year was 90,000 hours.
The manufacturing overhead for the year would be:

a. P10,000 under- applied.

b. P10,000 over- applied.
 c. P50,000 under- applied.
d. P50,000 over- applied.

29. For the current year, Fax Company incurred P150,000 in actual manufacturing
overhead cost. The Manufacturing Overhead account showed that overhead was over-
applied in the amount of P6,000 for the year. If the predetermined overhead rate was
P8.00 per direct labor hour, how many hours were worked during the year?

a. 19,500 hours
b. 18,000 hours
c. 18,750 hours
d. 17,750 hours

30. Daniels Company uses a predetermined overhead rate based on direct labor hours to
apply manufacturing overhead to jobs. The company estimated manufacturing
overhead at P255,000 for the year and direct labor-hours at 100,000 hours. Actual
manufacturing overhead costs incurred during the year totaled P270,000. Actual
direct labor hours were 105,000. What was the over- applied or under- applied
overhead for the year?

a. P2,250 over- applied.

b. P2,250 under- applied.
c. P15,000 over- applied.
d. P15,000 under- applied.

31. Hack Manufacturing Company uses a predetermined overhead rate based on direct
labor hours to apply manufacturing overhead to jobs. Last year, the company worked
57,000 actual direct labor hours and incurred P345,000 of actual manufacturing
overhead cost. The Company had estimated that it would work 55,000 direct labor
hours during the year and incur P330,000 of manufacturing overhead cost. The
company's manufacturing overhead cost for the year was:

a. Over- applied by P15,000.

b. Under- applied by P15,000.
c. Over- applied by P3,000.
d. Under- applied by P3,000.

32. The Volts Company uses predetermined overhead rates to apply manufacturing
overhead to jobs. The predetermined overhead rate is based on labor cost in Dept. A
and on machine hours in Dept. B. At the beginning of the year, the company made the
following estimates:
Dept. A Dept. B
Direct labor cost ........ P30,000 P40,000
Manufacturing overhead ... 60,000 50,000
Direct labor hours ....... 6,000 8,000
Machine hours ............ 2,000 10,000
What predetermined overhead rates would be used in Dept A and Dept B, respectively?

a. 50% and P8.00

b. 50% and P5.00
c. P15 and 110%
d. 200% and P5.00

33. Black Company uses a predetermined overhead rate in applying overhead to

production orders on a labor cost basis in Department A and on a machine hours basis
in Department B. At the beginning of the most recently completed year, the company
made the following estimates:

Dept. A Dept. B
Direct labor cost ........ P56,000 P33,000
Factory overhead ......... 67,200 45,000
Direct labor hours ....... 8,000 9,000
Machine hours ............ 4,000 15,000

What predetermined overhead rate would be used in Department A and Department B,

respectively?

a. 83% and P5
b. 83% and P3
c. 120% and P3
d. 83% and P3

34. Clark Company uses a predetermined overhead rate based on machine hours to apply
manufacturing overhead to jobs. The company has provided the following estimated
costs for next year:

Direct materials .................. P10,000

Direct labor ...................... 30,000
Sales commissions ................ 40,000
Salary of production supervisor ... 20,000
Indirect materials ................ 4,000
Advertising expense ............... 8,000
Rent on factory equipment ......... 10,000

Clark estimates that 5,000 direct labor hours and 10,000 machine hours will be worked
during the year. The predetermined overhead rate per hour will be:

a. P6.80.
b. P6.40.
c. P3.40.
d. P8.20.
35. Complex Company has the following estimated costs for next year:

Direct materials .................... P15,000

Direct labor ........................ 55,000
Sales commissions ................... 75,000
Salary of production supervisor ..... 35,000
Indirect materials .................. 5,000
Advertising expense ................. 11,000
Rent on factory equipment ........... 16,000

Complex 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 overhead rate
per hour will be:

a. P8.56.
b. P7.63.
c. P6.94.
d. P3.50.

36. RC Company has the following estimated costs for the next year:

Direct materials ..................... P 4,000

Direct labor ......................... 20,000
Rent on factory building ............. 15,000
Sales salaries ....................... 25,000
Depreciation on factory equipment .... 8,000
Indirect labor ....................... 10,000
Production supervisor’s salary ....... 12,000

RC Company estimates that 20,000 labor hours will be worked during the year. If
overhead is applied on the basis of direct labor hours, the overhead rate per hour will
be:

a. P2.25.
b. P3.25.
c. P3.45.
d. P4.70.

37. Richard Sportswear manufactures a specialty line of T-shirts. The company uses a
job-order costing system. During March, the following costs were incurred on Job
ICU2: direct materials P13,700 and direct labor P4,800. In addition, selling and
shipping costs of P7,000 were incurred on the job. Manufacturing overhead was
applied a the rate of P25 per machine-hour and Job ICU2 required 800 machine-
hours. If Job ICU2 consisted of 7,000 shirts, the Cost of Goods Sold per shirt was:
 a. P6.50
b. P6.00
c. P5.70
d. P5.50

38. Matthew Co. has a job order cost system. For the month of April, the following debits
(credits) appeared in the Work in Process account:

April
1 Balance .................. P 24,000
30 Direct materials ......... 80,000
30 Direct labor ............. 60,000
30 Manufacturing overhead ... 54,000
30 To finished goods ........ (200,000)

Matthew applies overhead at a predetermined rate of 90% of direct labor cost. Job No.
100, the only job still in process at the end of April, has been charged with manufacturing
overhead of P4,500. The amount of direct materials charged to Job No. 100 was:

a. P18,000.
b. P8,500.
c. P5,000.
d. P4,500.

39. Hetfield Corporation has a job-order cost system. The following debits (credits)
appeared in the Work in Process account for the month of March:

March 1, balance ....................... P 12,000

March 31, direct materials ............. 40,000
March 31, direct labor ................. 30,000
March 31, manufacturing overhead applied 27,000
March 31, to finished goods ............ (100,000)

Hetfield applies overhead at a predetermined rate of 90% of direct labor cost. Job No.
232, the only job still in process at the end of March, has been charged with
manufacturing overhead of P2,250. What was the amount of direct materials charged to
Job No. 232?

a. P2,250
b. P2,500
c. P4,250
d. P9,000

40. The Ulrich Company uses a job-order cost system. The following data were recorded
for June:
 June 1 Added During June
Work in Process Direct Direct
Job Number Inventory Materials Labor
475 P1,000 P 400 P 200
476 P 900 P 600 P 800
477 P 800 P 900 P1,400
478 P 600 P 1,100 P1,900

Overhead is charged to production at 70% of the direct materials cost. Jobs 475, 477, and
478 have been delivered to the customer.

Ulrich’s Work in Process inventory balance on June 30 was:

a. P6,450.
b. P2,860.
c. P2,300.
d. P2,720.

41. Justin Company used a predetermined overhead rate last year of P2 per direct labor
hour, based on an estimate of 25,000 direct labor hours to be worked during the year.
Actual costs and activity during the year were:

Actual manufacturing overhead cost incurred P47,000

Actual direct labor hours worked .......... 24,000

The under- or over- applied overhead last year was:

a. P1,000 under- applied.

b. P1,000 over- applied.
c. P3,000 over- applied.
d. P2,000 under- applied.

42. Mitchell Company uses a predetermined overhead rate based on direct labor hours to
apply manufacturing overhead to jobs. Last year Mitchell Company incurred
P156,600 in actual manufacturing overhead cost. The Manufacturing Overhead
account showed that overhead was underapplied by P12,600 for the year. If the
predetermined overhead rate is P6.00 per direct labor hour, how many hours did the
company work during the year?

a. 26,000 hours
b. 24,000 hours
c. 28,200 hours
d. 25,000 hours
43. McCartney Company used a predetermined overhead rate during the year just
completed of P3.50 per direct labor hour, based on an estimate of 22,000 direct labor
hours to be worked during the year. Actual overhead cost and activity during the year
were:

Actual manufacturing overhead cost incurred .. P90,000

Actual direct labor hours worked ............. 25,000

The under- or over- applied overhead for the year would be:

a. P13,000 under- applied.

b. P10,500 over- applied.
c. P2,500 over- applied.
d. P2,500 under- applied.

44. Sugar Company applies overhead to jobs on the basis of 125% of direct labor cost. If
Job 107 shows P10,000 of manufacturing overhead applied, how much was the direct
labor cost on the job?

a. P8,000
b. P12,500
c. P11,250
d. P10,000

45. Melton Company applies overhead to completed jobs on the basis of 70% of direct
labor cost. If Job 501 shows P21,000 of manufacturing overhead applied, the direct
labor cost on the job was:

a. P14,700.
b. P21,000.
c. P30,000.
d. P27,300.

46. The balance in Purple Company's Work in Process inventory account was P15,000 on
August 1 and P18,000 on August 31. The company incurred P30,000 in direct labor
cost during August and requisitioned P25,000 in raw materials (all direct material). If
the sum of the debits to the Manufacturing Overhead account total P28,000 for the
month, and if the sum of the credits totaled P30,000, then:

a. Finished Goods was debited for P82,000 during the month.

b. Finished Goods was credited for P83,000 during the month.
c. Manufacturing Overhead was under- applied by P2,000 at the end of the month.
d. Finished Goods was debited for P85,000 during the month.
 47. Smoke on a Water Company's job-order costing system, manufacturing overhead is
applied to Work in Process inventory using a predetermined overhead rate. During
January, company’s transactions included the following:

Direct materials issued to production .... P 90,000

Indirect materials issued to production .. 8,000
Manufacturing overhead cost incurred ..... 125,000
Manufacturing overhead cost applied ...... 113,000
Direct labor cost incurred ............... 107,000

The said Company had no beginning or ending inventories. What was the cost of goods
manufactured for January?

a. P302,000
b. P310,000
c. P322,000
d. P330,000

48. Compute the amount of direct materials used during November if P20,000 in raw
materials were purchased during the month and if the inventories were as follows:

Balance Balance
November 1 November 30
Raw materials .... P 4,000 P 3,000
Work in process .. 12,000 15,000
Finished goods ... 24,000 27,000

a. P21,000
b. P19,000.
c. P18,000.
d. P15,000.

49. MCR Company's records show that overhead was over- applied by P10,000 last year.
This over- applied overhead was closed out to the Cost of Goods Sold account at the end
of the year. In trying to determine why overhead was over- applied by such a large
amount, the company has discovered that P6,000 of depreciation on factory equipment
was charged to administrative expense in error. Given the above information, which of
the following statements is true?

a. Manufacturing overhead was actually over- applied by P16,000 for the year.
b. The company's net income is understated by P6,000 for the year.
c. Under the circumstances posed above, the error in recording depreciation would
have no effect on net income for the year.
d. The P6,000 in depreciation should have been charged to Work in Process rather than
to administrative expense.
Commerford company uses a job costing system and applies overhead to jobs using a
predetermined overhead rate based on direct labor-hours. The company had the following
inventories at the beginning and end of March:

March 1 March 31
Direct Materials....... P36,000 P30,000
Work in Process........ 18,000 12,000
Finished Goods......... 54,000 72,000

The following additional data pertain to operations during March:

Direct materials purchased... P84,000

Direct labor cost............ P60,000
Direct labor rate............ P7.50 per direct labor-hour
Overhead rate................ P10.00 per direct labor-hour

50. During March total debits to Work in Process were:

a. P84,000.
b. P220,000.
c. P144,000.
d. P230,000.

51. The Cost of Goods Manufactured for March was:

a. P212,000.
b. P218,000.
c. P230,000.
d. P236,000.

People of the Sun Company uses job-order costing. Manufacturing overhead is applied using a
predetermined rate of 150% of direct labor cost. Any over- or underapplied manufacturing
overhead is closed to the Cost of Goods Sold account at the end of each month. Additional
information is available as follows:

• Job 101 was the only job in process at January 31. The job cost sheet for
this job contained the following costs at the beginning of the month:

Direct materials .................. P4,000

Direct labor ...................... P2,000
Applied manufacturing overhead .... P3,000

• Jobs 102, 103, and 104 were started during February.

• Direct materials requisitions for February totaled P26,000.
• Direct labor cost of P20,000 was incurred for February.
• Actual manufacturing overhead was P32,000 for February.
• The only job still in process at February 28 was Job 104, with costs of
P2,800 for direct materials and P1,800 for direct labor.

52. The cost of goods manufactured for February was:

a. P77,700.
b. P78,000.
c. P79,700.
d. P85,000.

53. For the month of February, the manufacturing overhead was:

a. P700 over- applied.

b. P1,000 over- applied.
c. P2,000 over- applied.
d. P2,000 under- applied.

FOB Company had the following inventory balances at the beginning and end of November:

November 1 November 30
Raw Materials ...... P17,000 P20,000
Finished Goods ..... P50,000 P44,000
Work in Process .... P 9,000 P11,000

During November, P39,000 in raw materials (all direct materials) were drawn from inventory
and used in production. The company's predetermined overhead rate was P8 per direct labor-
hour, and it paid its direct labor workers P10 per hour. A total of 300 hours of direct labor time
had been expended on the jobs in the beginning Work in Process inventory account. The ending
Work in Process inventory account contained P4,700 of direct materials cost. The Company
incurred P28,000 of actual manufacturing overhead cost during the month and applied P26,400
in manufacturing overhead cost.

54. The raw materials purchased during November totaled:

a. P42,000.
b. P45,000.
c. P36,000.
d. P39,000.

55. The direct materials cost in the November 1 Work in Process inventory account
totaled:

a. P6,600.
b. P6,000.
c. P3,600.
d. P3,000.
 56. The actual direct labor hours worked during November totaled:

a. 2,800 hours.
b. 3,300 hours.
c. 3,500 hours.
d. 3,600 hours.

57. The amount of direct labor cost in the November 30 Work in Process inventory was:

a. P2,800.
b. P3,300.
c. P3,500.
d. P6,300.

Mallet Company has only Job 844 in process on March 1 of the current year. The job has been
charged with P2,000 of direct material cost, P2,500 of direct labor cost, and P1,750 of
manufacturing overhead cost. The company assigns overhead cost to jobs at a predetermined rate
of 70% of direct labor cost. Any under- or over- applied overhead cost is closed to Cost of
Goods Sold at the end of the month.

During March, the following activity and amounts were recorded by the company:

Raw materials (all direct materials):

Purchased during the month ..................... P29,500
Used in production ............................. P30,500

Labor:
Direct labor hours worked during the month ..... P2,500
Direct labor cost incurred ..................... P26,500
Indirect labor costs incurred .................. P5,500

Manufacturing overhead costs incurred (total) .. P18,500

Inventories:
Raw materials (all direct) March 31 ............ P7,500
Work in process, March 31 ...................... P14,500

Work in process inventory contains P5,500 of direct labor cost.

58. The amount of direct materials cost in the March 31 work in process inventory
account was:

a. P5,150.
 b. P9,350.
c. P9,000.
d. P3,850.
59. The cost of goods manufactured for March was:

a. P67,300
b. P67,250
c. P81,800
d. P75,550

60. The entry to dispose of the under- or overapplied overhead cost for the month would
include:

a. A debit of P50 to Cost of Goods Sold.

b. A debit of P50 to Manufacturing Overhead.
c. A debit of P5,500 to Manufacturing Overhead.
d. A credit of P5,500 to Cost of Goods Sold.

61. The balance in the March 1 in the Raw Materials inventory was:

a. P10,500.
b. P9,500.
c. P6,500.
d. P8,500.

The Nido Company's records for May contained the following information:

Actual direct labor-hours ....... 9,000 hours

Actual direct labor cost ........ P 47,000
Direct material purchased ....... 16,000
Direct material used ............ 14,000
Cost of goods sold .............. 100,000
Overapplied overhead ............ 5,000
Ending inventories:
Raw materials ................. 30,000
Work in process ............... 50,000
Finished goods ................ 70,000

The company uses a predetermined overhead rate of P5.00 per direct labor hour to apply
manufacturing overhead to jobs.

62. The actual overhead cost incurred during the month was:

a. P50,000.
b. P55,000.
 c. P40,000.
d. P45,000.

63. The total cost added to Work in Process during May was:

a. P101,000.
b. P106,000.
c. P61,000.
d. P111,000.

The information below has been taken from the cost records of Way Company for the past year:

Raw materials used in production ......................... P326,000

Total manufacturing costs charged to jobs during
the year (includes raw materials, direct labor, and
manufacturing overhead applied at the rate of
60 percent of direct labor cost) ............................. 686,000
Cost of goods available for sale ......................... 826,000
Selling and administrative expenses ...................... 25,000

Inventories
Beginning Ending
Raw Materials ............. P75,000 P 85,000
Work in Process ........... 80,000 30,000
Finished Goods ............ 90,000 110,000

64. The cost of raw materials purchased during the year amounted to:

a. P411,000.
b. P360,000.
c. P316,000.
d. P336,000.

65. Direct labor costs charged to production during the year amounted to:

a. P135,000.
b. P225,000.
c. P360,000.
d. P216,000.

66. The Cost of Goods Manufactured during the year was:

a. P636,000.
b. P766,000.
c. P736,000.
 d. P716,000.

67. The Cost of Goods Sold for the year (before disposition of any overhead under- or
over- applied) was:

a. P736,000.
b. P716,000.
c. P691,000.
d. P801,000.

The following data are for Blazers Company:

Beginning Ending
Finished goods inventory ............ P30,000 P40,000
Work in process inventory ........... P20,000 P13,000
Raw materials inventory ............. P21,000 P26,000

Purchases of raw materials .......... P71,000

Factory depreciation ................ P 5,000
Other factory costs ................. P10,000
Direct labor ........................ P27,000
Indirect labor ...................... P 6,000
Selling expense ..................... P12,000
Over- or under- applied overhead ...... -0-

68. The cost of raw materials used in production was:

a. P26,000.
b. P71,000.
c. P76,000.
d. P66,000.

69. The cost of goods manufactured was:

a. P114,000.
b. P133,000.
c. P121,000.
d. P138,000.

70. The cost of goods sold was:

a. P131,000.
b. P91,000.
c. P81,000.
d. P111,000.