Managerial Accounting Quiz: Job Order Cost Flows
20 questions · exam conditions
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Job Order Cost FlowsQuestion 1 of 20

Job #210 incurred $500 of spoilage, which is considered normal and specific to the demanding requirements of this particular job. The spoiled goods have a disposal value of $50. The journal entry to account for this spoilage would include a:

Credit to Work in Process for $500.
Debit to Manufacturing Overhead for $450.
Debit to Loss from Abnormal Spoilage for $450.
Credit to Work in Process for $50.
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Managerial Accounting Quiz

Managerial Accounting Quiz: Job Order Cost Flows

Practice Job Order Cost Flows in Managerial Accounting 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 Job Order Cost Flows, giving you a quick way to practice the rules, question types, and explanations that matter most for Managerial Accounting.

How to use this quiz

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

Job #210 incurred $500 of spoilage, which is considered normal and specific to the demanding requirements of this particular job. The spoiled goods have a disposal value of $50. The journal entry to account for this spoilage would include a:

  1. Credit to Work in Process for $500.
  2. Debit to Manufacturing Overhead for $450.
  3. Debit to Loss from Abnormal Spoilage for $450.
  4. Credit to Work in Process for $50. (correct answer)
Explanation: Normal spoilage that is specific to a job is absorbed by the cost of that job. The cost of the spoiled units is removed from Work in Process only to the extent of its disposal value. The spoiled goods are moved to a separate inventory account at their disposal value. The entry is a debit to Spoiled Goods Inventory for $50 and a credit to Work in Process for 50.Theremainingcost(50. The remaining cost (450) stays in the Work in Process account for Job #210, increasing the per-unit cost of the good units produced.

Question 2

Lima Manufacturing had one job, #45, in process at the beginning of May with a cost of $12,000. During May, the company started Job #46. Data for May:

  • Direct materials used: Job #45, $8,000; Job #46, $20,000.
  • Direct labor incurred: Job #45, $15,000; Job #46, $25,000.
  • Overhead is applied at 80% of direct labor cost.
  • Job #45 was completed and transferred out during May.

What is the balance in the Work in Process account at the end of May?

  1. $45,000
  2. $47,000
  3. $65,000 (correct answer)
  4. $112,000
Explanation: The ending balance in Work in Process consists of the costs of all incomplete jobs. In this case, only Job #46 is still in process. The cost of Job #46 is the sum of its direct materials, direct labor, and applied overhead. Applied overhead for Job #46 is 80% of its direct labor cost, or 0.80 * $25,000 = $20,000. Total cost for Job #46 = $20,000 (DM) + $25,000 (DL) + $20,000 (MOH) = $65,000. The costs for Job #45 were transferred out to Finished Goods.

Question 3

At the end of the fiscal year, a company's records showed actual manufacturing overhead costs of $780,000 and applied manufacturing overhead of $810,000. The company closes the overhead balance to Cost of Goods Sold. Which statement accurately describes the required year-end journal entry?

  1. A credit to Manufacturing Overhead for $30,000 is required.
  2. A debit to Cost of Goods Sold for $30,000 is required.
  3. A debit to Manufacturing Overhead for $30,000 is required. (correct answer)
  4. No entry is needed as the difference is carried forward to the next period.
Explanation: Applied overhead (810,000)isgreaterthanactualoverhead(810,000) is greater than actual overhead (780,000), resulting in $30,000 of overapplied overhead. This creates a credit balance in the Manufacturing Overhead account. To close this account, a debit to Manufacturing Overhead for $30,000 is required. The corresponding credit will be to Cost of Goods Sold, reducing its balance.

Question 4

Bravo Company completed Job #B52 at a total cost of $68,000. The job was sold to a customer on account for $95,000. Which of the following journal entries correctly reflects the cost flow associated with the sale of Job #B52?

  1. A debit to Accounts Receivable for $95,000 and a credit to Sales Revenue for $95,000.
  2. A debit to Cost of Goods Sold for $95,000 and a credit to Finished Goods for $95,000.
  3. A debit to Finished Goods for $68,000 and a credit to Cost of Goods Sold for $68,000.
  4. A debit to Cost of Goods Sold for $68,000 and a credit to Finished Goods for $68,000. (correct answer)
Explanation: The sale of a job requires two entries: one for revenue and one for cost. The question specifically asks for the cost flow entry. This entry moves the cost of the job from the balance sheet (Finished Goods inventory) to the income statement (Cost of Goods Sold). The amount used is the job's cost ($68,000), not its selling price.

Question 5

Zulu Co. closes its over- and underapplied overhead to Cost of Goods Sold. At year-end, the Cost of Goods Sold account had a balance of $855,000 after an adjustment for $45,000 of underapplied overhead was posted. What was the Cost of Goods Sold balance before the year-end adjustment?

  1. $810,000 (correct answer)
  2. $855,000
  3. $900,000
  4. $800,000
Explanation: Underapplied overhead means that not enough overhead was applied to jobs, so the initial Cost of Goods Sold was understated. The adjustment for underapplied overhead increases the Cost of Goods Sold balance. To find the balance before the adjustment, we must reverse this effect. Adjusted COGS = Unadjusted COGS + Underapplied Overhead. Therefore, $855,000 = Unadjusted COGS + $45,000. Solving for Unadjusted COGS gives $855,000 - $45,000 = $810,000.

Question 6

Victor Corp. had $30,000 of overapplied overhead at year-end. The company prorates this balance based on the ending balances (before proration) in the relevant accounts.

  • Work in Process: $50,000
  • Finished Goods: $100,000
  • Cost of Goods Sold: $350,000

What is the amount of overapplied overhead that will be allocated to the Finished Goods account?

  1. $3,000
  2. $6,000 (correct answer)
  3. $10,000
  4. $21,000
Explanation: To prorate the overapplied overhead, first find the total of the account balances: $50,000 (WIP) + $100,000 (FG) + $350,000 (COGS) = $500,000. Next, determine the proportion of the total that resides in Finished Goods: $100,000 / $500,000 = 20%. Finally, allocate this proportion of the overapplied overhead to the Finished Goods account: $30,000 * 20% = $6,000.

Question 7

A manager reviews a materials requisition form for Job #113 totaling $5,000 (all direct) and an employee time ticket for a worker on that same job for 40 hours at $20/hour. The company's predetermined overhead rate is $15 per direct labor hour. The journal entries to record these activities for Job #113 would include:

  1. A debit to Manufacturing Overhead for $600.
  2. A debit to Wages Expense for $800.
  3. A credit to Work in Process for $5,800.
  4. A credit to Manufacturing Overhead for $600. (correct answer)
Explanation: The activities described involve adding direct materials ($5,000), direct labor (40 hrs * $20/hr = $800), and applied overhead to Work in Process. The entry for direct materials is Dr. WIP, Cr. Raw Materials. The entry for direct labor is Dr. WIP, Cr. Wages Payable. The entry to apply overhead is Dr. Work in Process and Cr. Manufacturing Overhead. The amount of applied overhead is 40 direct labor hours * $15/hr = $600. Therefore, the entries include a credit to Manufacturing Overhead for $600.

Question 8

At year-end, Delta Corp. had a $25,000 debit balance in its Manufacturing Overhead account. The company's policy is to close any immaterial balance directly to Cost of Goods Sold. The journal entry to dispose of this overhead balance will:

  1. Decrease Cost of Goods Sold by $25,000.
  2. Increase Cost of Goods Sold by $25,000. (correct answer)
  3. Increase Work in Process by $25,000.
  4. Decrease net income by crediting the Manufacturing Overhead account.
Explanation: A debit balance in the Manufacturing Overhead account means that actual overhead costs exceeded applied overhead costs, resulting in underapplied overhead. To close this debit balance, the Manufacturing Overhead account must be credited. When closing to Cost of Goods Sold, the corresponding debit is to the Cost of Goods Sold account, which increases its balance and decreases net income.

Question 9

A manufacturing company's material requisitions for the month totaled $150,000. An analysis of these requisitions revealed that $120,000 was for direct materials used in production and the remainder was for indirect materials used in the factory.

  1. A debit to Work in Process for $150,000 and a credit to Raw Materials Inventory for $150,000.
  2. A debit to Work in Process for $120,000, a debit to Manufacturing Overhead for $30,000, and a credit to Raw Materials Inventory for $150,000. (correct answer)
  3. A debit to Work in Process for $120,000, a debit to Supplies Expense for $30,000, and a credit to Raw Materials Inventory for $150,000.
  4. A debit to Work in Process for $120,000 and a credit to Raw Materials Inventory for $120,000.
Explanation: The correct journal entry to record the use of materials requires assigning costs to the appropriate accounts. Direct materials (120,000)aretraceddirectlytojobsandaredebitedtoWorkinProcess.Indirectmaterials(120,000) are traced directly to jobs and are debited to Work in Process. Indirect materials (150,000 - $120,000 = $30,000) are part of manufacturing overhead and are debited to the Manufacturing Overhead control account. The total amount is credited to Raw Materials Inventory as the materials are removed from storage.

Question 10

Sierra Corp. uses a job order costing system. The following data pertains to June operations:

  • Beginning Work in Process: $35,000
  • Direct Materials Issued to Production: $90,000
  • Direct Labor Cost Incurred: $120,000
  • Manufacturing Overhead Applied: $150,000
  • Ending Work in Process: $40,000

What was the Cost of Goods Manufactured for June?

  1. $360,000
  2. $395,000
  3. $320,000
  4. $355,000 (correct answer)
Explanation: Cost of Goods Manufactured (COGM) is calculated as: Beginning WIP + Total Manufacturing Costs Added - Ending WIP. First, calculate the Total Manufacturing Costs Added: $90,000 (DM) + $120,000 (DL) + $150,000 (Applied MOH) = $360,000. Then, calculate COGM: $35,000 (Beg WIP) + $360,000 (Costs Added) - $40,000 (End WIP) = $355,000.

Question 11

A company calculates its predetermined overhead rate annually based on estimated direct labor hours. At the beginning of the year, management revises its estimate of total direct labor hours for the upcoming year downward by 10%, but the estimate for total manufacturing overhead costs remains unchanged. This revision will have what effect on the predetermined overhead rate and the total cost of a labor-intensive job?

  1. Decrease the rate and decrease the total job cost.
  2. Increase the rate and increase the total job cost. (correct answer)
  3. Increase the rate and have no effect on the total job cost.
  4. Decrease the rate and increase the total job cost.
Explanation: The predetermined overhead rate is calculated as: Estimated Total Manufacturing Overhead / Estimated Allocation Base. If the allocation base (estimated direct labor hours) decreases while the estimated overhead cost remains the same, the rate will increase. A higher rate means that more overhead will be applied to each job based on its usage of the allocation base. Therefore, the total cost of a labor-intensive job will increase.

Question 12

Job #77 had a beginning Work in Process balance of $4,500. During the period, $12,000 of direct materials and $8,000 of direct labor were added. Manufacturing overhead was applied at a rate of 150% of direct labor cost. The job was completed at the end of the period. What is the journal entry to record the completion of Job #77?

  1. A debit to Finished Goods for $32,000 and a credit to Work in Process for $32,000.
  2. A debit to Cost of Goods Sold for $36,500 and a credit to Work in Process for $36,500.
  3. A debit to Finished Goods for $36,500 and a credit to Work in Process for $36,500. (correct answer)
  4. A debit to Finished Goods for $24,500 and a credit to Work in Process for $24,500.
Explanation: First, calculate the total cost of Job #77. Applied overhead is 150% of direct labor cost, or $8,000 * 1.50 = $12,000. The total cost is the sum of beginning WIP, direct materials, direct labor, and applied overhead: $4,500 + $12,000 + $8,000 + $12,000 = $36,500. The journal entry to transfer a completed job from Work in Process to Finished Goods is a debit to Finished Goods and a credit to Work in Process for the total cost of the job.

Question 13

In a job order costing system, the issuance of direct materials to a production department and indirect materials to the factory maintenance department requires which of the following accounting entries?

  1. A debit to Work in Process and a credit to Raw Materials Inventory only.
  2. Debits to both Work in Process and Factory Wages Payable.
  3. A debit to Work in Process and a debit to Manufacturing Overhead. (correct answer)
  4. Credits to both Work in Process and Manufacturing Overhead.
Explanation: When materials are issued, Raw Materials Inventory is credited. The debit depends on the material's use. Direct materials are traced to specific jobs, so Work in Process is debited. Indirect materials cannot be traced to specific jobs and are considered part of overhead, so Manufacturing Overhead is debited. Therefore, the complete entry involves debits to both WIP and MOH, and a credit to Raw Materials Inventory.

Question 14

The completed job cost sheet for Job #A-1 shows $22,000 in direct materials and 800 direct labor hours at a rate of $30 per hour. Overhead is applied at a rate of $25 per direct labor hour. The job was later sold for $80,000. Upon completion of Job #A-1, what amount is transferred from the Work in Process account to the Finished Goods account?

  1. $66,000 (correct answer)
  2. $80,000
  3. $46,000
  4. $14,000
Explanation: The amount transferred from WIP to Finished Goods upon a job's completion is the total manufacturing cost of that job. The total cost is the sum of direct materials, direct labor, and applied manufacturing overhead. Direct Materials = $22,000. Direct Labor = 800 hours * $30/hour = $24,000. Applied Overhead = 800 hours * $25/hour = $20,000. Total Cost = $22,000 + $24,000 + $20,000 = $66,000. The selling price is irrelevant for this calculation.

Question 15

During an audit, it was discovered that $10,000 of indirect materials had been erroneously requisitioned and charged as direct materials to Job #501, which was still in process at year-end. No other errors were found. Before considering any adjustment for total company-wide over- or underapplied overhead, what is the effect of this single error?

  1. Work in Process is overstated by $10,000 and actual Manufacturing Overhead is understated by $10,000. (correct answer)
  2. Only the Work in Process account is overstated by $10,000.
  3. Work in Process is understated by $10,000 and actual Manufacturing Overhead is overstated by $10,000.
  4. The error has no effect on total product costs, only on the classification between individual jobs.
Explanation: The error caused a $10,000 cost to be debited to Work in Process that should have been debited to Manufacturing Overhead. As a result, the Work in Process account for Job #501 is overstated by $10,000. Concurrently, since the cost was not charged to Manufacturing Overhead where it belonged, the total of actual Manufacturing Overhead costs is understated by $10,000.

Question 16

Kilo Corp. applies manufacturing overhead based on direct labor hours. At the beginning of the year, it estimated total overhead costs of $400,000 and 20,000 direct labor hours. During March, Job #305 required $15,000 of direct materials and its employees worked 500 direct labor hours at a rate of $25 per hour. What is the total manufacturing cost recorded for Job #305 in March?

  1. $27,500
  2. $35,500
  3. $37,500 (correct answer)
  4. $42,500
Explanation: This is a three-step calculation. First, calculate the predetermined overhead rate (POHR): $400,000 estimated overhead / 20,000 estimated direct labor hours = $20 per direct labor hour. Second, calculate the costs for Job #305: Direct Materials = $15,000; Direct Labor = 500 hours * $25/hour = $12,500; Applied Overhead = 500 hours * $20/hour POHR = $10,000. Third, sum the costs: $15,000 (DM) + $12,500 (DL) + $10,000 (MOH) = $37,500.

Question 17

At the start of the quarter, Foxtrot Inc. had a Finished Goods inventory balance of $50,000. During the quarter, the only job completed was Job #808, which had a total manufacturing cost of $220,000. The unadjusted Cost of Goods Sold for the quarter was $240,000. What is the ending balance in the Finished Goods inventory account?

  1. $10,000
  2. $30,000 (correct answer)
  3. $70,000
  4. $270,000
Explanation: The flow through the Finished Goods account is: Beginning Balance + Cost of Goods Manufactured - Cost of Goods Sold = Ending Balance. Here, the Cost of Goods Manufactured is the cost of the job completed, $220,000. Therefore, Ending Balance = $50,000 (Beg FG) + $220,000 (COGM) - $240,000 (COGS) = $30,000.

Question 18

Riverside Company's payroll for the week included: Direct labor on Job 301 (8,400),DirectlaboronJob302(8,400), Direct labor on Job 302 (6,200), Indirect labor (3,800),Administrativesalaries(3,800), Administrative salaries (5,500), Sales commissions ($2,100). Manufacturing-related payroll taxes and benefits are 28% of manufacturing wages. What is the correct journal entry to record the allocation of labor costs to production?

  1. Debit Work in Process $14,600; Debit Manufacturing Overhead $3,800; Credit Wages Payable $18,400
  2. Debit Work in Process $18,688; Debit Manufacturing Overhead $4,864; Credit Wages Payable $23,552
  3. Debit Work in Process $14,600; Debit Manufacturing Overhead $4,864; Credit Wages Payable $19,464 (correct answer)
  4. Debit Work in Process $18,688; Debit Manufacturing Overhead $3,800; Credit Wages Payable $22,488
Explanation: Direct labor costs (Job 301 $8,400 + Job 302 $6,200 = $14,600) are debited to Work in Process. Indirect labor of $3,800 plus manufacturing payroll taxes of 1,064(1,064 (3,800 × 28%) totaling $4,864 are debited to Manufacturing Overhead. The credit to Wages Payable is $14,600 + $4,864 = $19,464. Note that payroll taxes apply only to manufacturing wages in this allocation entry.

Question 19

Coastal Construction began Job 308 in January and Job 312 in February. By February 28th, Job 308 had accumulated costs of $45,000 and was 80% complete. Job 312 had accumulated costs of $28,000 and was 60% complete. In March, additional costs of $12,000 were incurred on Job 308 (which was completed), and $18,000 on Job 312 (which remained in process at 85% completion).

What journal entry should be recorded when Job 308 is completed in March?

  1. Debit Finished Goods $57,000; Credit Work in Process $57,000 (correct answer)
  2. Debit Finished Goods $45,000; Credit Work in Process $45,000
  3. Debit Finished Goods $12,000; Credit Work in Process $12,000
  4. Debit Cost of Goods Sold $57,000; Credit Finished Goods $57,000
Explanation: When Job 308 is completed, the total accumulated cost ($45,000 from prior months + $12,000 from March = $57,000) is transferred from Work in Process to Finished Goods. Choice B only transfers the February balance. Choice C only transfers March costs. Choice D shows the sale entry, not completion.

Question 20

Martinez Company uses job order costing with predetermined overhead rates. During April, raw materials costing $85,000 were purchased on credit. Of these materials, $72,000 were requisitioned for specific jobs, and the remainder went to general factory supplies. If the company's policy is to record materials purchases net of available cash discounts, which were 2% in this case, what is the correct journal entry for the materials requisition?

  1. Debit Work in Process $72,000; Debit Manufacturing Overhead $13,000; Credit Raw Materials Inventory $85,000
  2. Debit Work in Process $70,560; Debit Manufacturing Overhead $12,740; Credit Raw Materials Inventory $83,300 (correct answer)
  3. Debit Work in Process $72,000; Debit Manufacturing Overhead $13,000; Credit Raw Materials Inventory $83,300; Credit Purchase Discounts $1,700
  4. Debit Work in Process $70,560; Debit Manufacturing Overhead $12,740; Credit Raw Materials Inventory $85,000; Credit Cash $1,700
Explanation: Since materials are recorded net of discounts, the inventory was recorded at 83,300(83,300 (85,000 × 98%). The requisition maintains these net amounts: Direct materials 70,560(70,560 (72,000 × 98%) to Work in Process, indirect materials 12,740(12,740 (13,000 × 98%) to Manufacturing Overhead. Choice A uses gross amounts. Choice C incorrectly mixes net recording with discount credits. Choice D incorrectly credits Cash.