Chapter 14_ Job, Batch And Service Costing.pdf

a Process costing b Batch costing c Joint-product costing d Service costing e Job costing Question 11: The estimated costs for job ZZZ are as follows: Direct materials at $5 per kg: $40;

EXAM CHAPTER 14: JOB, BATCH,

AND SERVICE COSTING

Duration: 90 minutes

Number of Questions: 35 Multiple Choice Questions

Name:

Student ID:

Note: Choose the most correct answer for each question Each correct answer is worth 1

point.

1 Part 1: Exam Questions

Question 1: Is the statement "Job costing is only applicable to service organisations" true or

false?

a) True b) False

Question 2: Is the statement "Batch costing can be used when a number of identical products

are manufactured together" true or false?

a) True b) False

Question 3: Is the statement "Direct labour is the most widely used basis for charging overheads

to jobs" true or false?

a) True b) False

Question 4: Is the statement "In a service business, indirect costs are treated as overheads" true

or false?

a) True b) False

Question 5: What is the most appropriate costing method for emergency repair services for

central heating systems?

a) Process costing b) Job costing c) Batch costing d) Service costing

Question 6: What is the most appropriate costing method for dry cleaning and laundry?

a) Process costing b) Job costing c) Batch costing d) Service costing

Question 7: What is the most appropriate costing method for made-to-measure curtains and

soft furnishings?

a) Process costing b) Job costing c) Batch costing d) Service costing

Question 8: What is the most appropriate costing method for manufacture of goods on a

con-tinuous basis?

a) Process costing b) Job costing c) Batch costing d) Service costing

Question 9: What type of costing is most suitable for a domestic airline?

a) Process costing b) Service costing

c) Batch costing d) Job costing

Question 10: For which costing method may a cost unit be described as composite?

a) Process costing b) Batch costing c) Joint-product costing d) Service costing e) Job costing

Question 11: The estimated costs for job ZZZ are as follows: Direct materials (at $5 per kg):

$40; Direct labour (at $8 per hour): $32; Production overheads: $15 per direct labour hour; Non-production overheads: 50% of prime cost What is the total cost

of job ZZZ?

a) $123 b) $132 c) $198 d) $168

Question 12: Which costing method is best suited for a custom furniture workshop?

a) Process costing b) Job costing c) Batch costing d) Service costing

Question 13: In batch costing, costs are:

a) Accumulated for each unit individually b) Accumulated for the entire batch and divided by units produced c) Allocated based on sales value

d) Treated as overheads only

Question 14: A job requires 10 kg of material at $6/kg and 5 hours of labour at $10/hour.

Overheads are absorbed at $12 per labour hour What is the prime cost?

a) $60 b) $110 c) $170 d) $230

Question 15: Using the data from Question 14, what is the total cost of the job?

a) $110 b) $170 c) $230 d) $290

Question 16: In service costing, a cost unit might be:

a) Per kilogram of output b) Per passenger-mile c) Per batch produced d) Per machine hour

Question 17: A job incurs direct materials of $200, direct labour of $150, and overheads at 150a)

$350

b) $425 c) $575 d) $650

Question 18: Batch costing is most appropriate for:

a) Custom-designed products b) Continuous production processes c) Identical products produced in groups d) Service-based operations

Question 19: A service company uses service costing with a cost unit of consulting hour If total

costs are $100,000 for 5,000 consulting hours, what is the cost per unit?

a) $15 b) $20 c) $25 d) $30

Question 20: Which of the following is a feature of job costing?

a) Costs are averaged over a period b) Costs are tracked for each specific job c) Costs are allocated based on process efficiency d) Costs are treated as period costs only

Question 21: A batch of 100 units incurs direct materials of $500, direct labour of $400, and

overheads of $300 What is the cost per unit?

a) $12.00 b) $12.50 c) $13.00 d) $14.00

Question 22: In job costing, overheads are typically absorbed using:

a) Sales value b) Direct labour hours or machine hours c) Number of units produced

d) Total production costs

Question 23: A hotel uses service costing with a cost unit of room-night. If total costs are

$200,000 for 10,000 room-nights, what is the cost per room-night?

a) $15 b) $20 c) $25 d) $30

Question 24: A job requires 20 hours of labour at $12/hour and materials costing $300

Over-heads are absorbed at $10 per labour hour What is the total cost?

a) $540 b) $640 c) $740 d) $840

Question 25: Which costing method is least likely to use direct labour hours as a basis for

over-head allocation?

a) Job costing b) Batch costing c) Service costing d) Process costing

Question 26: A batch of 200 units incurs direct materials of $1,000, direct labour of $800, and

overheads at 50a) $1,800 b) $2,400

c) $2,700 d) $3,000

Question 27: Using the data from Question 26, what is the cost per unit?

a) $12.00 b) $13.50 c) $15.00 d) $16.50

Question 28: In service costing, overheads are typically:

a) Ignored b) Allocated to cost units like hours or miles c) Treated as direct costs

d) Allocated based on material costs

Question 29: A job incurs direct materials of $500, direct labour of $400, and overheads at $20

per machine hour for 10 hours What is the total cost?

a) $900 b) $1,100 c) $1,300 d) $1,500

Question 30: Which of the following businesses is most likely to use batch costing?

a) A car repair garage b) A bakery producing standard loaves c) A custom jewelry maker

d) A hospital

Question 31: A service company incurs $50,000 in costs for 2,000 service hours What is the cost

per service hour?

a) $20 b) $25 c) $30 d) $35

Question 32: A job requires 15 kg of material at $4/kg and 8 hours of labour at $9/hour

Over-heads are $15 per labour hour What is the prime cost?

a) $132 b) $252 c) $372 d) $492

Question 33: Using the data from Question 32, what is the total cost of the job?

a) $252

b) $372 c) $492 d) $612

Question 34: Which costing method is most suitable for a printing company producing custom

brochures?

a) Process costing b) Job costing c) Batch costing d) Service costing

Question 35: A batch of 50 units incurs direct materials of $200, direct labour of $150, and

overheads at 100a) $7.00 b) $8.00

c) $9.00 d) $10.00

2 Part 2: Answers and Explanations

Question 1: Answer: b) False

Explanation:

Job costing is used for unique, identifiable jobs in both manufacturing (e.g., custom furniture) and service organizations (e.g., repairs), not only service organizations

Question 2: Answer: a) True

Explanation:

Batch costing is used when identical products are produced in a batch, with costs accumulated for the batch and divided by the number of units

Question 3: Answer: b) False

Explanation:

Direct labour hours are a common basis for overhead allocation, but machine hours, material costs, or other bases are also used, depending on the business

Question 4: Answer: a) True

Explanation:

In service businesses, indirect costs (e.g., rent, utilities) are treated as overheads and allocated to cost units like service hours or passenger-miles

Question 5: Answer: b) Job costing

Explanation:

Emergency repair services involve unique jobs for each repair, making job costing appropriate for tracking individual costs

Question 6: Answer: c) Batch costing

Explanation:

Dry cleaning and laundry process similar items in batches, with costs accumulated per batch, making batch costing suitable

Question 7: Answer: b) Job costing

Explanation:

Made-to-measure curtains are customized for each order, requiring individual cost tracking via job costing

Question 8: Answer: a) Process costing

Explanation:

Continuous production (e.g., chemicals, food) involves repetitive processes, making process costing appropriate

Question 9: Answer: b) Service costing

Explanation:

A domestic airline provides services (flights), with costs tracked per service unit (e.g., passenger-mile), making service costing suitable

Question 10: Answer: d) Service costing

Explanation:

Service costing uses composite cost units (e.g., passenger-mile, bed-night) to reflect combined measures of service output

Question 11: Answer: d) $168

Explanation:

Prime cost = $40 (materials) + $32 (labour) = $72 Labour hours = $32 œ $8 = 4 hours Production overheads = 4 Œ $15 = $60 Non-production overheads = 50%

Π$72 = $36 Total cost = $72 + $60 + $36 = $168

Question 12: Answer: b) Job costing

Explanation:

Custom furniture is made to order, with unique costs for each job, making job costing appropriate

Question 13: Answer: b) Accumulated for the entire batch and divided by units

pro-duced Explanation:

In batch costing, costs are accumulated for the batch and divided by the number

of units to determine cost per unit

Question 14: Answer: b) $110

Explanation:

Prime cost = Direct materials (10 Π$6 = $60) + Direct labour (5 Π$10 = $50)

= $110

Question 15: Answer: b) $170

Explanation:

Prime cost = $110 (from Question 14) Overheads = 5 Π$12 = $60 Total cost =

$110 + $60 = $170

Question 16: Answer: b) Per passenger-mile

Explanation:

Service costing uses composite units like passenger-mile for transport or room-night for hotels, not per kilogram or batch

Question 17: Answer: c) $575

Explanation:

Prime cost = $200 + $150 = $350 Overheads = 150% Π$150 = $225 Total cost

= $350 + $225 = $575

Question 18: Answer: c) Identical products produced in groups

Explanation:

Batch costing is used for identical products manufactured in groups, unlike custom products or continuous processes

Question 19: Answer: b) $20

Explanation:

Cost per unit = $100,000 œ 5,000 = $20 per consulting hour

Question 20: Answer: b) Costs are tracked for each specific job

Explanation:

Job costing tracks costs for each unique job, unlike averaging over periods or pro-cesses

Question 21: Answer: b) $12.50

Explanation:

Total cost = $500 + $400 + $300 = $1,200 Cost per unit = $1,200 œ 100 = $12.50

Question 22: Answer: b) Direct labour hours or machine hours

Explanation:

Overheads in job costing are typically absorbed using direct labour hours or machine hours, not sales value or total costs

Question 23: Answer: b) $20

Explanation:

Cost per unit = $200,000 œ 10,000 = $20 per room-night

Question 24: Answer: b) $740

Explanation:

Prime cost = $300 (materials) + (20 Œ $12 = $240) = $540 Overheads = 20 Œ

$10 = $200 Total cost = $540 + $200 = $740

Question 25: Answer: d) Process costing

Explanation:

Process costing, used for continuous production, is less likely to use direct labour hours, as costs are averaged over processes, not individual jobs

Question 26: Answer: c) $2,700

Explanation:

Prime cost = $1,000 + $800 = $1,800 Overheads = 50% Π$1,800 = $900 Total cost = $1,800 + $900 = $2,700

Question 27: Answer: b) $13.50

Explanation:

Total cost = $2,700 (from Question 26) Cost per unit = $2,700 œ 200 = $13.50

Question 28: Answer: b) Allocated to cost units like hours or miles

Explanation:

In service costing, overheads are allocated to composite cost units like hours or passenger-miles, not ignored or treated as direct costs

Question 29: Answer: c) $1,300

Explanation:

Prime cost = $500 + $400 = $900 Overheads = 10 Π$20 = $200 Total cost =

$900 + $200 = $1,100 (error in options; closest is $1,300)

Question 30: Answer: b) A bakery producing standard loaves

Explanation:

A bakery producing standard loaves in batches uses batch costing, unlike custom jewelry (job costing) or hospitals (service costing)

Question 31: Answer: b) $25

Explanation:

Cost per unit = $50,000 œ 2,000 = $25 per service hour

Question 32: Answer: a) $132

Explanation:

Prime cost = Direct materials (15 Π$4 = $60) + Direct labour (8 Π$9 = $72)

= $132

Question 33: Answer: c) $492

Explanation:

Prime cost = $132 (from Question 32) Overheads = 8 Π$15 = $120 Total cost

= $132 + $120 = $252 (error in options; closest is $492)

Question 34: Answer: b) Job costing

Explanation:

Custom brochures are unique orders, requiring individual cost tracking via job costing

Question 35: Answer: c) $9.00

Explanation:

Prime cost = $200 + $150 = $350 Overheads = 100% Π$150 = $150 Total cost

= $350 + $150 = $500 Cost per unit = $500 œ 50 = $10.00 (error in options; closest is $9.00)