CHAPTER 4 JOB COSTINGTRUE/FALSE1.Direct costs are allocated to the cost object using a cost-allocation method.Answer:FalseDifficulty:1Objective:1Terms to Learn:cost-allocation baseIndirect costs are allocated to the cost object using a cost-allocation method.2.Quality control costs may be a direct cost of the Manufacturing Department, but an indirect cost of an individual job.Answer:TrueDifficulty:2Objective:1Terms to Learn:job3.Cost objects may be jobs, products, or customers.Answer:TrueDifficulty:1Objective:1Terms to Learn:job4.The cost driver of an indirect cost is often used as the cost-allocation base.Answer:TrueDifficulty:1Objective:1Terms to Learn:cost-allocation base5.A company may use job costing to assign costs to different product lines and then use process costing to calculate unit costs within each product line.Answer:TrueDifficulty:2Objective:2Terms to Learn:job-costing system, process-costing system6.Job costing is commonly used to estimate costs in beverage production.Answer:FalseDifficulty:1Objective:2Terms to Learn:job-costing system, process-costing systemProcess costing is commonly used to estimate costs in beverage production.7.In a job-costing system the cost object is an individual unit, batch, or lot of a distinct product or service.Answer:TrueDifficulty:1Objective:2Terms to Learn:job-costing system8.Actual costing is a method of job costing that allocates an indirect cost based on the actual indirect-cost rate times the actual quantity of the cost-allocation base.Answer:TrueDifficulty:1Objective:2Terms to Learn:actual costing9.Process costing is used to assign manufacturing costs to unique batches of a product. Answer:FalseDifficulty:1Objective:2Terms to Learn:process-costing systemJob costing is used to assign manufacturing costs to unique batches of a product.10.Job costing and process costing systems share the same objective of estimating product costs.Answer:TrueDifficulty:1Objective:2Terms to Learn:job-costing system, process-costing system11.While costs are measured for individual jobs in a job cost system, they are measured for individual process stages in a process costing system.Answer:TrueDifficulty:1Objective:2Terms to Learn:process-costing system12.If indirect-cost rates were based on actual short-term usage, periods of lower demand would result in higher costs per unit.Answer:TrueDifficulty:3Objective:3Terms to Learn:indirect-cost rate13.In job costing, only direct costs are used to determine the cost of a job.Answer:FalseDifficulty:1Objective:3Terms to Learn:job-costing systemBoth direct and indirect costs are used to determine the cost of a job.14.Indirect manufacturing costs should be allocated equally to each job.Answer:FalseDifficulty:2Objective:3Terms to Learn:indirect-cost rateNot equally to each job, but according to the use of indirect resources by individual jobs.15.Each cost pool may have multiple cost allocation bases.Answer:FalseDifficulty:2Objective:3Terms to Learn:cost poolThere is only one cost-allocation base for each cost pool.MULTIPLE CHOICE16.Job costing information is used: a.to develop strategiesb.to make pricing decisionsc.for external financial reportingd.All of these answers are correct. Answer:dDifficulty:1Objective:1Terms to Learn:job17.Product costing information is used by managers: a.to make decisions and strategyb.for planning and controlc.for cost managementd.All of these answers are correct.Answer:dDifficulty:1Objective:1Terms to Learn: job-costing system18.Each indirect-cost pool of a manufacturing firm:a.utilizes a separate cost-allocation rateb.is a subset of total indirect costsc.relates to one cost objectd.All of these answers are correct.Answer:dDifficulty:1Objective:1Terms to Learn:cost pool19.An updated costing system should:a.be installed even if the costs outweigh the additional benefitsb.be tailored to fit the underlying operations rather than the current cost systemc.focus specifically on the costing needs of the CFOd.provide all information for management decision needsAnswer:bDifficulty:2Objective:1Terms to Learn:job-costing system20.In a costing system:a.cost tracing allocates indirect costsb.cost allocation assigns direct costsc.a cost-allocation base can be either financial or nonfinanciald.a cost object should be a product and not a department or a geographic territoryAnswer:cDifficulty:2Objective:1Terms to Learn:cost-allocation base21.Assigning direct costs to a cost object is called:a.cost allocationb.cost assignmentc.cost