Accounting Theory Challenge - Chapter 5 and 7

The two basic types of cost accounting systems are

• job order and job accumulation systems.

• job order and process cost systems.

• process cost and batch systems.

• job order and batch systems

Which of the following would be accounted for using a job order cost system?

• The production of personal computers

• The production of automobiles.

• The refining of petroleum.

• The construction of a new campus building.

Process costing is used when

• the production process is continuous.

• production is aimed at filling a specific customer order.

• dissimilar products are involved.

• costs are to be assigned to specific jobs.

Process costing is not used when

• similar goods are being produced.

• large volumes are produced.

• jobs have distinguishing characteristics.

• a series of connected manufacturing processes is necessary.

An important feature of a job order cost system is that each job

• must be similar to previous jobs completed.

• has its own distinguishing characteristics.

• must be completed before a new job is accepted.

• consists of one unit of output.

As of December 31, 2017, USAHA BERKAT Industries had RM 2,500 of raw materials inventory. At the beginning of 2017, there was RM 2,000 of materials on hand. During the year, the company purchased RM 375,000 of materials; however, it paid for only RM 312,500. How much inventory was requisitioned for use on jobs during 2017?

• RM362,000

• RM374,500

• RM375,500

• RM363,000

The flow of costs in a job order cost system

• involves accumulating manufacturing costs incurred and assigning the accumulated costs to work done.

• cannot be measured until all jobs are complete.

• measures product costs for a set time period.

• generally follows a LIFO cost flow assumption.

When a job is completed and all costs have been accumulated on a job cost sheet, the journal entry that should be made is

• Dr. Finished Goods Inventory

  Cr. Direct Materials

  Direct Labor

  Manufacturing Overhead

• Dr. Work In Process Inventory

  Cr.Direct Materials

  Direct Labor

  Manufacturing Overhead

• Dr. Raw Materials Inventory

  Cr.Work In Process Inventory

• Dr. Finished Goods Inventory

  Cr.Work In Process Inventory

Cost of raw materials is debited to Raw Materials Inventory when the

• materials are ordered.

• materials are received.

• materials are put into production.

• bill for the materials is paid.

All of the following would be entries in assigning accumulated costs to the Work In Process Inventory except:

• the purchase of raw materials.

• raw materials are used.

• overhead is applied.

• factory labor is used.