Multiple Choice Questions
1. Which of the following organizations would be most likely to adopt a job costing system?
a. Custom home contractor
b. Beverage maker
c. Paint manufacturer
d. Bakery

2. Job costing systems require which of the following costs to be tracked to ensure that all related costs are assigned to a specific job?
a. Labor of factory maintenance workers
b. Costs of primary raw materials used in the production process
c. Utilities expense allocation to the manufacturing space
d. Salary paid to factory supervisor

3. Normal spoilage:
a. Results from the regular operation of the production process and is treated as a product cost
b. Results from improper handling, improperly trained employees, or poor equipment conditions and is treated as a period cost
c. Results from the regular operation of the production process and is treated as a period cost
d. Results from improper handling, improperly trained employees, or poor equipment conditions and is treated as a product cost

4. Overtime premiums incurred as a result of receiving a special rush order from a customer should be:
a. Treated as indirect labor and included in manufacturing overhead
b. Treated as direct labor and included in manufacturing overhead
c. Treated as direct labor and included in the product’s cost
d. Treated as indirect labor and included in the product’s cost
5. Costs associated with factory insurance, maintenance, rent, property taxes, and other similar items are typically included in manufacturing overhead and assigned to products:
a. Primarily based on whatever technique is easiest
b. Based on a related cost driver that can be identified and measured
c. If not treated as a period cost
d. Based on the relative sales revenue generated by the product

6. Cost allocation:
a. Is quite useful for direct material and direct labor costs
b. Involves the logical assignment of overhead costs to products and services
c. Is not allowed when a process costing system is selected
d. Is only required when following generally accepted management accounting practices

7. Which of the following statements is correct?
a. Overhead consists of a limited variety of costs that should have the same cost driver.
b. Overhead consists of a wide variety of costs that should have the same cost driver.
c. Overhead consists of a variety of costs that may potentially have different cost drivers.
d. Overhead consists of a limited variety of costs that must each have a unique cost driver.