Chapter 4 Job Costing

Chapter 4 Job Costing

Objective 4.1

1) Job costing information is used:
A) to develop strategies
B) to make pricing decisions
C) for external financial reporting
D) All of these answers are correct.
Answer: D
Diff: 1
Terms: job
Objective: 1
AACSB: Reflective thinking

2) Product costing information is used by managers:
A) to make decisions and strategy
B) for planning and control
C) for cost management
D) All of these answers are correct.
Answer: D
Diff: 1
Terms: job-costing system
Objective: 1
AACSB: Communication

3) A ________ is a grouping of individual indirect cost items.
A) cost allocation base
B) cost assignment
C) cost pool
D) job-costing system
Answer: C
Diff: 1
Terms: cost pool
Objective: 1
AACSB: Reflective thinking

4) Each indirect-cost pool of a manufacturing firm:
A) utilizes a separate cost-allocation rate
B) is a subset of total indirect costs
C) relates to one cost object
D) All of these answers are correct.
Answer: D
Diff: 1
Terms: cost pool
Objective: 1
AACSB: Reflective thinking

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,5) Direct costs
A) are anything for which a measurement of costs is desired.
B) are costs related to a particular cost object that can be traced to that cost object in an economically
feasible (cost-effective) way
C) focus specifically on the costing needs of the CFO
D) provide all information for management decision needs
Answer: B
Diff: 2
Terms: direct costs of a cost object
Objective: 1
AACSB: Reflective thinking

6) In a costing system:
A) cost tracing allocates indirect costs
B) cost allocation assigns direct costs
C) a cost-allocation base can be either financial or nonfinancial
D) a cost object should be a product and not a department or a geographic territory
Answer: C
Diff: 2
Terms: cost-allocation base
Objective: 1
AACSB: Reflective thinking

7) Assigning direct costs to a cost object is called:
A) cost allocation
B) cost assignment
C) cost pooling
D) cost tracing
Answer: D
Diff: 1
Terms: job-costing system
Objective: 1
AACSB: Reflective thinking

8) ________ is the process of distributing indirect costs to products.
A) Cost allocation
B) Job cost recording
C) Cost pooling
D) Cost tracing
Answer: A
Diff: 1
Terms: cost allocation base
Objective: 1
AACSB: Reflective thinking




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,9) A ________ links an indirect cost to a cost object.
A) cost-allocation base
B) cost pool
C) cost assignment
D) cost tracing
Answer: A
Diff: 1
Terms: cost allocation base
Objective: 1
AACSB: Reflective thinking

10) Which of the following includes both traced direct costs and allocated indirect costs?
A) cost tracing
B) cost pools
C) cost assignments
D) cost allocations
Answer: C
Diff: 1
Terms: job-costing system
Objective: 1
AACSB: Reflective thinking

11) The cost allocation base
A) is a grouping of individual indirect cost items.
B) are costs related to a particular cost object that cannot be traced to that cost object in an economically
feasible way.
C) is anything for which a measurement of costs is desired.
D) is a systematic way to link an indirect cost or group of indirect costs to cost objects.
Answer: D
Diff: 1
Terms: cost allocation base
Objective: 1
AACSB: Reflective thinking

12) Direct costs are allocated to the cost object using a cost-allocation method.
Answer: FALSE
Explanation: Indirect costs are allocated to the cost object using a cost-allocation method.
Diff: 1
Terms: cost-allocation base
Objective: 1
AACSB: Reflective thinking

13) A cost object is anything for which a measurement of costs is desired.
Answer: TRUE
Diff: 1
Terms: direct costs of a cost object, indirect costs of a cost object
Objective: 1
AACSB: Reflective thinking



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, 14) Direct costs of a cost object are costs related to a particular cost object that can be allocated to that
cost object in an economically feasible (cost-effective) way.
Answer: FALSE
Explanation: Direct costs of a cost object -- costs related to a particular cost object that can be traced to
that cost object in an economically feasible (cost-effective) way.
Diff: 1
Terms: fixed cost, variable cost
Objective: 1
AACSB: Reflective thinking

15) The cost-allocation base is a systematic way to link an indirect cost or group of indirect costs to cost
objects.
Answer: TRUE
Diff: 2
Terms: job
Objective: 1
AACSB: Reflective thinking

16) Cost objects may be jobs, products, or customers.
Answer: TRUE
Diff: 1
Terms: job
Objective: 1
AACSB: Reflective thinking

17) The cost driver of an indirect cost is often used as the cost-allocation base.
Answer: TRUE
Diff: 1
Terms: cost-allocation base
Objective: 1
AACSB: Reflective thinking




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