Week 2 Quiz -

In job-order costing, all of the following statements are correct with respect to labor time and cost except:

C. A machine operator performing routine annual maintenance work on a piece of equipment would charge the maintenance time to a specific job.

Those hours should be charged to overhead

For which situation(s) below would an organization be more likely to use a job-order costing system of accumulating product costs rather than a process costing system?

B. A costume maker that makes specialty costumes for figure skaters

Each one is unique, therefore a job order system is correct

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

C. shipbuilding

Same reason as the one above

The Work in Process inventory account of a manufacturing company shows a balance of $2,400 at the end of an accounting period. The job cost sheets of the two uncompleted jobs show charges of $400 and $200 for direct materials, and charges of $300 and $500 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:

C. 125%

$2,400 - ($400 + $200) - ($300 + $500) = $1,000

$1,000 / ($300 + $500) = 125%

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:

B. more overhead cost has been charged to jobs than has been incurred during the period.
Source(s):
35 years of accounting