Job Order Costing Questions

1.
In a job order costing system, which of the following documents is primarily used to track the cost of
direct materials issued for a specific job?
A. Purchase order
B. Time ticket
C. Materials requisition form
D. Job cost sheet
Answer: C. Materials requisition form
Explanation: The materials requisition form is used to authorize the withdrawal of direct materials for a
specific job and to record the cost of these materials in the job cost sheet.
---
2. Which inventory account accumulates costs of all resources used in jobs that are not yet complete?
A. Finished Goods Inventory
B. Work-in-Process Inventory
C. Raw Materials Inventory

D. Cost of Goods Sold
Answer: B. Work-in-Process Inventory
Explanation: Work-in-Process (WIP) Inventory holds the costs of jobs in progress, including direct
materials, direct labor, and applied overhead, until the jobs are completed.
---
3. In job-order costing, overhead is typically applied to jobs using:
A. Actual overhead costs
B. Predetermined overhead rate
C. Budgeted overhead costs
D. Estimated direct materials cost
Answer: B. Predetermined overhead rate
Explanation: Job-order costing systems apply overhead using a predetermined rate based on estimates,
as actual overhead is not traced to individual jobs.
---
4. Which of the following best describes the purpose of a job cost sheet in a job-order costing system?
A. It provides a summary of direct and indirect costs for all jobs.
B. It tracks costs associated with specific jobs in progress or completed.
C. It is used to transfer completed job costs to Finished Goods Inventory.
D. It details costs of materials ordered for the storeroom.
Answer: B. It tracks costs associated with specific jobs in progress or completed.
Explanation: The job cost sheet records the direct materials, direct labor, and applied overhead costs for
each job individually.
---
5. What is the primary factor distinguishing job-order costing from process costing?
A. The type of labor used
B. The size of the production run

C. The unit cost computation method
D. The timing of cost recording
Answer: C. The unit cost computation method
Explanation: Job-order costing applies costs to specific jobs, often with smaller denominators, while
process costing applies broad averages over large volumes of homogeneous units.
---
6. Which document is prepared when a storeroom keeper notifies a purchasing agent of additional
materials needed for production?
A. Purchase requisition
B. Bill of materials
C. Purchase order
D. Receiving report
Answer: A. Purchase requisition

Explanation: The storeroom keeper prepares a purchase requisition to inform the purchasing agent of
materials needed for production.
---
7. In a job order costing system, which account is credited when materials are issued to a job?
B. Raw Materials Inventory
C. Work-in-Process Inventory
Answer: B. Raw Materials Inventory
Explanation: When materials are issued, the cost is transferred from Raw Materials Inventory to Work-
in-Process Inventory, crediting the former.
---
8. In which of the following industries is job-order costing least likely to be applied?

A. Automobile repair
B. Oil refining
C. Custom furniture making
D. Printing press
Answer: B. Oil refining
Explanation: Oil refining is a continuous process industry with homogeneous products, making it more
suitable for process costing.
---
9. What role does the predetermined overhead rate play in job-order costing?
A. It calculates the total actual overhead costs.
B. It estimates overhead costs for each job based on activity levels.
C. It determines the fixed portion of job costs.
D. It is used to allocate direct materials costs.

Answer: B. It estimates overhead costs for each job based on activity levels.
Explanation: The predetermined overhead rate allows overhead costs to be applied based on estimated
activity measures, like labor hours or machine hours.
---
10. Which account is debited when a job is completed but not yet sold?
B. Work-in-Process Inventory
C. Raw Materials Inventory
Answer: A. Finished Goods Inventory
Explanation: Once a job is completed, the total cost is transferred from Work-in-Process Inventory to
Finished Goods Inventory until it is sold.
---
11. The bill of materials is used in job order costing primarily for:
A. Requesting additional materials from vendors
B. Authorizing withdrawals from the storeroom
C. Listing all materials needed for a job
D. Tracking direct labor hours
Answer: C. Listing all materials needed for a job
Explanation: The bill of materials specifies the types and quantities of materials needed to complete a
job.
---
12. In a job order costing system, which of the following documents serves as the basis for applying
labor costs to a job?
A. Materials requisition form
B. Time ticket
C. Purchase order
D. Receiving report
Answer: B. Time ticket
Explanation: Time tickets record the amount of labor time spent on each job, allowing direct labor costs
to be assigned accordingly.
---
13. Which costing system would a law firm likely use to allocate costs?
A. Process costing
B. Job-order costing
C. Activity-based costing
D. Standard costing
Answer: B. Job-order costing
Explanation: Law firms provide customized services that vary by client, making job-order costing more
appropriate for tracking specific client cases.
---
14. In a manual job-order costing system, what document is sent to the cost accounting department to
track material costs?
A. Bill of materials
B. Receiving report
C. Materials requisition form
D. Purchase requisition
Answer: C. Materials requisition form
Explanation: The materials requisition form is sent to cost accounting to record the cost of materials
assigned to a specific job.
---
15. The receiving report is used primarily to:
A. Track the cost of materials withdrawn for production

B. Ensure materials delivered match the order specifications
C. Authorize purchase of materials
D. Record labor hours spent on a job
Answer: B. Ensure materials delivered match the order specifications
Explanation: The receiving report confirms that received materials align with the purchase order and are
ready for inventory processing.

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1.

C. Materials requisition form

D. Job cost sheet

Answer: C. Materials requisition form

A. Finished Goods Inventory

C. Raw Materials Inventory

Answer: B. Work-in-Process Inventory

3. In job-order costing, overhead is typically applied to jobs using:

A. Actual overhead costs

B. Predetermined overhead rate

C. Budgeted overhead costs

D. Estimated direct materials cost

Answer: B. Predetermined overhead rate

A. It provides a summary of direct and indirect costs for all jobs.

B. It tracks costs associated with specific jobs in progress or completed.

C. It is used to transfer completed job costs to Finished Goods Inventory.

D. It details costs of materials ordered for the storeroom.

Answer: B. It tracks costs associated with specific jobs in progress or completed.

A. The type of labor used

B. The size of the production run

D. The timing of cost recording

Answer: C. The unit cost computation method

Answer: A. Purchase requisition

A. Finished Goods Inventory

B. Raw Materials Inventory

D. Cost of Goods Sold

Answer: B. Raw Materials Inventory

8. In which of the following industries is job-order costing least likely to be applied?

C. Custom furniture making

Answer: B. Oil refining

A. It calculates the total actual overhead costs.

B. It estimates overhead costs for each job based on activity levels.

C. It determines the fixed portion of job costs.

D. It is used to allocate direct materials costs.

A. Finished Goods Inventory

C. Raw Materials Inventory

D. Cost of Goods Sold

Answer: A. Finished Goods Inventory

A. Requesting additional materials from vendors

B. Authorizing withdrawals from the storeroom

C. Listing all materials needed for a job

D. Tracking direct labor hours

Answer: C. Listing all materials needed for a job

A. Materials requisition form

Answer: B. Time ticket

Answer: B. Job-order costing

C. Materials requisition form

Answer: C. Materials requisition form

15. The receiving report is used primarily to:

A. Track the cost of materials withdrawn for production

C. Authorize purchase of materials

D. Record labor hours spent on a job

Answer: B. Ensure materials delivered match the order specifications

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