CPA Bar Quiz: Apply Job Order And Process Costing
20 questions · exam conditions
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Apply Job Order And Process CostingQuestion 1 of 20

Pinecrest Manufacturing uses job-order costing with a predetermined overhead rate of $15 per direct labor hour. Job #312 incurred direct materials of $4,200, direct labor of 180 hours at $20 per hour, and used 180 direct labor hours for overhead application. What is the total cost of Job #312?

$7,800
$10,500
$9,300
$11,700
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CPA Bar Quiz

CPA Bar Quiz: Apply Job Order And Process Costing

Practice Apply Job Order And Process Costing in CPA Bar with focused quiz questions that help you check what you know, review explanations, and build confidence with test-style prompts.

What this quiz covers

This quiz focuses on Apply Job Order And Process Costing, giving you a quick way to practice the rules, question types, and explanations that matter most for CPA Bar.

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Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

All questions

Question 1

Pinecrest Manufacturing uses job-order costing with a predetermined overhead rate of $15 per direct labor hour. Job #312 incurred direct materials of $4,200, direct labor of 180 hours at $20 per hour, and used 180 direct labor hours for overhead application. What is the total cost of Job #312?

  1. $7,800
  2. $10,500 (correct answer)
  3. $9,300
  4. $11,700

Explanation: Direct labor cost = 180 hours x $20 = $3,600. Applied overhead = 180 hours x $15 = $2,700. Total job cost = $4,200 + $3,600 + $2,700 = $10,500. Option A omits applied overhead entirely. Option C applies only part of the overhead. Option D applies an overhead rate higher than the predetermined rate.

Question 2

Pinecrest Manufacturing has budgeted manufacturing overhead of $360,000 and budgeted direct labor hours of 24,000 for the year. What is the predetermined overhead rate?

  1. $24.00 per DLH
  2. $18.00 per DLH
  3. $15.00 per DLH (correct answer)
  4. $12.00 per DLH

Explanation: Predetermined overhead rate = Budgeted overhead / Budgeted activity = $360,000 / 24,000 = $15.00 per DLH. Option A divides by 15,000 hours. Option B divides by 20,000 hours. Option D divides by 30,000 hours.

Question 3

Pinecrest Manufacturing applies overhead at $15 per direct labor hour. During the year, actual direct labor hours were 22,000 and actual overhead incurred was $345,000. What is the amount and direction of under- or overapplied overhead?

  1. $15,000 overapplied
  2. $30,000 underapplied
  3. $30,000 overapplied
  4. $15,000 underapplied (correct answer)

Explanation: Applied overhead = 22,000 DLH x $15 = $330,000. Under/overapplied = Actual - Applied = $345,000 - $330,000 = $15,000 underapplied. Actual overhead exceeded applied overhead, so overhead was underapplied. Option A has the correct amount but incorrect direction. Option B uses incorrect applied overhead in the calculation. Option C has both an incorrect amount and incorrect direction.

Question 4

Pinecrest Manufacturing reports: beginning WIP $45,000, direct materials added $280,000, direct labor $195,000, overhead applied $165,000, ending WIP $62,000. What is the cost of goods manufactured for the period?

  1. $623,000 (correct answer)
  2. $685,000
  3. $578,000
  4. $640,000

Explanation: Cost of goods manufactured = Beginning WIP + Direct materials + Direct labor + Overhead applied - Ending WIP = $45,000 + $280,000 + $195,000 + $165,000 - $62,000 = $623,000. Option B omits the deduction for ending WIP. Option C omits beginning WIP from the calculation. Option D applies an incorrect ending WIP balance.

Question 5

Riverdale Co. has total conversion costs to account for of $280,000 and equivalent units of production for conversion of 20,000. What is the cost per equivalent unit for conversion costs?

  1. $12.00
  2. $15.50
  3. $16.00
  4. $14.00 (correct answer)

Explanation: Cost per equivalent unit = Total conversion costs / EUP = $280,000 / 20,000 = $14.00. Option A divides by an incorrect equivalent unit count of approximately 23,333. Option B and Option C result from arithmetic errors using incorrect denominators.

Question 6

Riverdale Co. has total direct materials costs of $396,000. Materials are added at the start of the process, so ending WIP is 100% complete for materials. Units completed and transferred: 18,000; ending WIP: 4,000 units. What is the cost per equivalent unit for direct materials?

  1. $18.00 (correct answer)
  2. $16.00
  3. $20.00
  4. $22.00

Explanation: EUP for materials = 18,000 + (4,000 x 100%) = 22,000. Cost per EU for materials = $396,000 / 22,000 = $18.00. Option B divides by 24,750, overstating equivalent units. Option C divides by 19,800. Option D divides by 18,000, treating ending WIP as having zero material content.

Question 7

A company uses job-order costing. Job #445 had a beginning balance of $8,500. During the month, direct materials of $6,200 were requisitioned, 80 direct labor hours were worked at $25 per hour, and overhead is applied at $18 per direct labor hour. What is the ending balance on Job #445's cost sheet?

  1. $16,700
  2. $17,560
  3. $19,580
  4. $18,140 (correct answer)

Explanation: Direct labor = 80 hours x $25 = $2,000. Applied overhead = 80 hours x $18 = $1,440. Ending balance = $8,500 + $6,200 + $2,000 + $1,440 = $18,140. Option A omits applied overhead. Option B applies an incorrect overhead rate. Option C applies overhead to the beginning balance as well as current hours.

Question 8

Sunset Industries uses job-order costing. During the period: Job #201 (cost $42,000) was completed and sold; Job #202 (cost $35,000) was completed and sold; Job #203 (cost $28,000) was completed but not yet sold; Job #204 (cost $19,000) remains in process. What is cost of goods sold for the period?

  1. $105,000
  2. $96,000
  3. $77,000 (correct answer)
  4. $124,000

Explanation: COGS includes only jobs completed and sold: Job #201 $42,000 + Job #202 $35,000 = $77,000. Option A includes Job #203 (finished goods, not sold). Option B includes Jobs 201, 202, and 203 minus Job 204. Option D includes all four jobs regardless of completion or sale status.

Question 9

Using Sunset Industries data: Job #201 (42,000, sold), Job #202 (35,000, sold), Job #203 (28,000, completed not sold), Job #204 (19,000, in process). What is the ending finished goods inventory balance?

  1. $19,000
  2. $47,000
  3. $105,000
  4. $28,000 (correct answer)

Explanation: Finished goods inventory includes only jobs that are complete but not yet sold. Only Job #203 ($28,000) meets this criterion. Option A reports Job #204, which is still in WIP, not finished goods. Option B sums Jobs #203 and #204 together. Option C totals Jobs #201 through #203, incorrectly including sold jobs.

Question 10

A company produces Product X in batches of 10,000 identical units on a continuous assembly line and Product Y as a custom-engineered component with unique specifications for each client order. Which costing systems are most appropriate?

  1. Job-order costing for both products because each production run incurs unique costs
  2. Process costing for Product X and job-order costing for Product Y (correct answer)
  3. Process costing for both products because they are manufactured in the same facility
  4. Job-order costing for Product X and process costing for Product Y

Explanation: Process costing suits Product X because it is produced in homogeneous batches where costs are averaged across identical units. Job-order costing suits Product Y because each unit has unique specifications requiring separate cost accumulation per order. Option A incorrectly applies job-order to a homogeneous product. Option C incorrectly uses the shared facility as the basis for selecting the same system. Option D reverses the appropriate assignment.

Question 11

A company switches one product line from process costing to job-order costing. Which condition most justifies this change?

  1. The product line has become more profitable and management wants more detailed tracking
  2. The company wants to reduce administrative burden by simplifying its costing system
  3. Process costing is required under GAAP for publicly traded manufacturers
  4. The product line has shifted from standardized mass production to customized orders with significantly different resource requirements per unit (correct answer)

Explanation: The choice between costing systems should reflect the nature of the production process. When a product line transitions from homogeneous mass production to differentiated custom orders, the cost accumulation method should change accordingly - averaging costs across dissimilar jobs would distort product costs. Option A confuses profitability tracking with the basis for costing system selection. Option B incorrectly suggests job-order costing reduces administrative burden; it is typically more labor-intensive than process costing. Option C is incorrect; GAAP does not mandate a specific costing system.

Question 12

A job-order costing company applies overhead using a single plantwide rate based on direct labor hours. Department A is labor-intensive (80% of total DLH) and Department B is machine-intensive (20% of DLH, with 60,000 machine hours and $600,000 of department-specific overhead). Which concern does the plantwide rate create?

  1. The plantwide rate always produces more accurate product costs than departmental rates in facilities with two departments
  2. The company should increase direct labor in Department B to equalize the DLH mix between departments
  3. Using a DLH rate overstates overhead applied to jobs processed primarily in Department A
  4. Jobs processed primarily through Department B are likely under-costed because the DLH plantwide rate does not capture the machine-intensive overhead consumption of that department (correct answer)

Explanation: Department B's overhead ($600,000) is driven by machine activity (60,000 hours), but the plantwide DLH rate allocates overhead based on labor hours. Because Department B uses few DLH relative to its machine-heavy overhead, jobs spending significant time in Department B will receive less overhead allocation than their actual resource consumption warrants. A departmental overhead rate using machine hours for Department B would produce more accurate costs. Option A makes an absolute claim without analytical basis. Option B is an operational suggestion unrelated to the costing accuracy question. Option C reverses the direction; Department A, which uses most of the DLH, would absorb a disproportionately high share of machine-related overhead.

Question 13

A process costing company uses the weighted-average method. Beginning WIP had 3,000 units with $18,000 of accumulated conversion costs. Current period conversion costs were $162,000. How does the weighted-average method treat these costs differently from the FIFO method?

  1. Under weighted-average, total conversion costs to account for are $180,000 (beginning WIP costs plus current period); FIFO uses only the $162,000 of current period costs to compute cost per equivalent unit (correct answer)
  2. Under weighted-average, total costs to account for are $162,000 and FIFO uses $180,000
  3. Both methods use $180,000 as total costs, but compute equivalent units differently
  4. Weighted-average and FIFO produce identical cost per unit results when beginning WIP is less than 20% of total units processed

Explanation: The weighted-average method blends beginning WIP costs with current period costs. Total costs to account for = $18,000 + $162,000 = 180,000,andthiscombinedfigureisdividedbyweighted−averageequivalentunits.FIFOkeepsthecostlayersseparate:beginningWIPcosts(180,000, and this combined figure is divided by weighted-average equivalent units. FIFO keeps the cost layers separate: beginning WIP costs (18,000) are assigned to the first units completed using prior-period rates, and only current period costs ($162,000) are divided by FIFO equivalent units to compute the current period rate. This means FIFO preserves cost period purity while weighted-average smooths costs across periods. Option B reverses which method uses which amount. Option C is incorrect; FIFO uses only $162,000 for the rate calculation. Option D is incorrect; the two methods will diverge whenever beginning WIP carries a different cost per unit than current period inputs.

Question 14

A job-order costing company consistently underapplies overhead each year by a significant amount and disposes of the balance to cost of goods sold at year-end. Which concern does this recurring pattern raise?

  1. Underapplied overhead is favorable because actual overhead was less than the amount applied to jobs
  2. The predetermined overhead rate is likely set too low, causing persistent underallocation that overstates profits during the year and requires a large corrective COGS adjustment at year-end (correct answer)
  3. Disposing of underapplied overhead to COGS is prohibited under GAAP
  4. The underapplied balance indicates the company ran below budgeted activity levels, which is unrelated to the rate setting process

Explanation: Underapplied overhead means actual overhead exceeded applied overhead. A consistent pattern suggests the predetermined rate is systematically too low - perhaps based on optimistic activity assumptions - rather than a one-time variance. During the year, job costs are understated (less overhead applied per job), which overstates gross profit and operating income. The year-end adjustment to COGS corrects this but creates volatility in reported results. Option A reverses the definition: underapplied means actual exceeded applied, which is unfavorable. Option C is incorrect; disposing underapplied overhead to COGS is an acceptable simplified treatment under GAAP when immaterial. Option D addresses one possible cause but not the management implication.

Question 15

A manufacturer uses process costing (FIFO method). Beginning WIP: 2,000 units, 40% complete for conversion. Units started: 21,000. Units completed: 20,000. Ending WIP: 3,000 units, 60% complete for conversion. What are equivalent units of production for conversion costs under FIFO?

  1. 21,000 equivalent units (correct answer)
  2. 22,800 equivalent units
  3. 18,000 equivalent units
  4. 23,000 equivalent units

Explanation: FIFO EUP = (Beginning WIP x % remaining) + (Units started and completed) + (Ending WIP x % complete). Units started and completed = 20,000 - 2,000 = 18,000. EUP = (2,000 x 60%) + 18,000 + (3,000 x 60%) = 1,200 + 18,000 + 1,800 = 21,000. Option B uses weighted-average logic by adding all completed units plus ending WIP at full percentage. Option C counts only units started and completed. Option D uses 100% for beginning WIP remaining work.

Question 16

In process costing using the weighted-average method, equivalent units of production are calculated as which of the following?

  1. Units started and completed during the period plus units transferred to finished goods
  2. Units completed and transferred out plus the equivalent units represented by ending work-in-process (correct answer)
  3. Units started during the period minus units remaining in ending work-in-process
  4. Units transferred in plus units started minus units in beginning work-in-process

Explanation: Under the weighted-average method, equivalent units of production (EUP) = Units completed and transferred out + (Ending WIP units x Percentage of completion). This formula counts all units to which costs must be assigned - those fully completed and those partially completed in ending WIP. Option A is redundant because units transferred to finished goods are the completed units. Option C ignores the contribution of partially completed ending WIP units. Option D describes the flow of physical units but not the EUP calculation.

Question 17

Riverdale Co. uses process costing (weighted-average method). During the period, 18,000 units were completed and transferred out. Ending WIP consists of 4,000 units that are 50% complete for conversion costs. What are the equivalent units of production for conversion costs?

  1. 22,000 equivalent units
  2. 18,000 equivalent units
  3. 20,000 equivalent units (correct answer)
  4. 16,000 equivalent units

Explanation: EUP (conversion) = Units completed + (Ending WIP x % complete) = 18,000 + (4,000 x 50%) = 18,000 + 2,000 = 20,000. Option A includes ending WIP at 100% completion rather than 50%. Option B counts only completed units and ignores the partial completion of ending WIP. Option D counts ending WIP at 50% but subtracts rather than adds the result.

Question 18

A job cost sheet shows: direct materials $15,000, direct labor $12,000, applied overhead $9,000 (total $36,000). The job sold for $48,000. At year-end, the company determines the entire year's $8,000 underapplied overhead is allocable to this job. What is the adjusted gross profit after the overhead correction?

  1. $12,000
  2. $8,000
  3. $4,000 (correct answer)
  4. $20,000

Explanation: The $8,000 underapplied overhead is added to COGS, increasing it from $36,000 to $44,000. Adjusted gross profit = $48,000 - $44,000 = $4,000. Option A is the unadjusted gross profit before the overhead correction. Option B represents the overhead adjustment alone, not the gross profit. Option D adds the overhead correction to revenue rather than subtracting it from profit.

Question 19

A process costing company has beginning WIP of 5,000 units (70% complete for conversion), starts 40,000 units, completes and transfers out 38,000 units, and has ending WIP of 7,000 units (30% complete for conversion). Using the weighted-average method, what are equivalent units of production for conversion costs?

  1. 40,100 (correct answer)
  2. 43,000
  3. 38,000
  4. 41,500

Explanation: Weighted-average EUP = Units completed + (Ending WIP x % complete) = 38,000 + (7,000 x 30%) = 38,000 + 2,100 = 40,100. Option B treats ending WIP as fully complete (38,000 + 7,000 = 45,000 and then something else). Option C counts only completed units, ignoring ending WIP. Option D applies the wrong percentage to ending WIP (38,000 + 7,000 x 50% = 41,500).

Question 20

Riverdale Co. has a cost per equivalent unit of $18.00 for materials and $14.00 for conversion. What is the total cost assigned to the 18,000 units completed and transferred out?

  1. $252,000
  2. $576,000 (correct answer)
  3. $504,000
  4. $630,000

Explanation: Cost per completed unit = $18.00 + $14.00 = $32.00. Total cost transferred = 18,000 x $32.00 = $576,000. Option A applies only the conversion cost rate to all 18,000 units. Option C applies only the materials rate to all units. Option D applies an incorrectly higher combined rate.