Answered: Service companies: Multiple Choice Do…

Service companies: Multiple Choice Do not use job-order costing. Often use job-order costing. Do not cost their services. Produce durable products.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 10DQ: Explain why service companies use different activity bases than manufacturing companies to classify...

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Question

Service companies:
Multiple Choice
Do not use job-order costing.
Often use job-order costing.
Do not cost their services.
Produce durable products.

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Explain why service companies use different activity bases than manufacturing companies to classify costs as fixed or variable.
Which of the following statements is true regarding by products? a. Process costing is the only method that should result in by-products. b. Job order costing systems will never have by-products. c. Job order costing systems may have instances where by-products result from the production process. d. Process costing will never have by-products from the production process.
Which of the following is not a distinction between process costing and job order costing? a. Job costing: Sound production planning; Process costing: Bad production planning b. Job costing: Variety of products; Process costing: Homogeneous c. Job costing: Output not transferred; Process costing: Output is transferred d. Job costing: Cost control is difficult; Process costing: Effective cost control
Which of the following would be more likely to use job-order costing rather than process costing? a.Furniture manufacturer b.Manufacturer of bricks c.Brewery d.Flour mill e.None of these
For which of the following industries would job-order costing most likely not be appropriate? a. Small business printing. b. Cereal production. c. Home construction. d. Aircraft assembly.
Which of the following firms do not use Job-order costing? Law Firms Consulting Firms Refinery Auto Repair Shops.
Which of the following statements describe a primary difference in job costing between service companies and manufacturing companies? Multiple Choice Service companies' overhead accounts have slightly different names. All of these. Service companies' finished goods are charged to Cost of Services Billed. Service companies generally use fewer direct materials.
Which of the following statements is false? (You may select more than one answer.)a. Absorption costing assigns fixed and variable manufacturing overhead costs toproducts.b. Job-order costing systems are used when companies produce many different typesof products.c. A normal costing system assigns costs to products by multiplying the actualo verhead rate by the actual amount of the allocation base.d. A company such as Coca-Cola is more likely to use a process costing system thana job-order costing system.
In a job order cost system, a decrease to Manufacturing Overhead will be accompanied by an increase to Cost of Goods Manufactured. Finished Goods Inventory. Work in Process Inventory. Raw Materials Inventory. Work in process inventory is correct but I do not understand why. Why wouldn't we increase cost of goods manufactured? Is it b/c it's not the same as COGS? And we don't know if the products are exactly sold yet, so we put them into WIP (from raw materials)?
Which of the following is false about activity-based costing? Implementing an activity-based costing system is more costly than implementing a traditional cost allocation system. In ABC, the assumption is that activities use resources or cause costs. An activity-based costing system relies only on volume measures such as direct labor hours to allocate all overhead costs to products. A traditional cost allocation system and an activity-based costing system are used to estimate the profitability of products.
Which of the following statements about activity-based costing (ABC) is false? Group of answer choices Activity-based costing differs from traditional costing systems in that products are not cross-subsidized. Activity-based costing is more likely to result in major differences from traditional costing systems if the firm manufactures only one product rather than multiple products. Activity-based costing is useful for allocating marketing and distribution costs. In activity-based costing, cost drivers are what cause costs to be incurred.
WIP may not exist in job order costing, can you expand on that? What are some examples of times that it would not?