. Which of the following is not considered to be a benefit of activity-based costing?

Reduced complexity of calculating costs

Inclusion of non-manufacturing costs

More detailed understanding of what drives cost.

The task that sits at the heart of process costing is always to allocate the costs collected on the debit side of the account to the possible outputs (good output, closing WIP and lost units) on the credit side.

The above statement is incorrect

When there is opening work in progress there are two types of cost on the debit side of the account. These are the costs that were incurred last period and brought forward as work in progress and the costs that were incurred in the current period.

The above statement is incorrect

The units basis has the following limitations.

Where the products separate during the processes into different states, for example where one product is a gas and another is a liquid, this method is unsuitable.

This method does not take into account the relative income-earning potentials of the individual products, with the result that one product might appear very profitable and another appears to be incurring losses.

The total overhead costs of each production centre should be:

Costs allocated directly to the production centre

Shared costs apportioned to the production centre

A share of the costs of each service department, apportioned to the production centre

Overhead costs may be classified according to the function of the organization as:

Production/Manufacturing overheads

Non-production/Non-manufacturing overheads

WIP in contract means:

Work certified and work uncertified

. The total cost of a product will include:

Prime costs plus direct production overhead plus indirect-production overhead plus tax

Prime cost plus absorbed direct production overhead

Prime costs plus direct production overhead plus indirect production overhead

When the completion stage of the contract is more than half, the profit to be creditedto Profit and Loss account will be equal to…………..

1/3rd of Notional Profit x cash received Work certified

½ of Notional Profit x cash received Work certified

2/3rd of Notional profit x cash received Work certified

In process costing questions, you will need to:

Calculate the cost of good output, losses and WIP

Use the costs you have calculated to assign values to the good output, losses and WIP

Profit remaining as reserve is :

Deducted from cost of the contract.

The job costing method can therefore be applied in costing batches. The only difference is that a number of items are being costed together as a single unit, instead of a single item or service.

The above statement is incorrect

In Job costing a cost is calculated for each individual job, and this cost can be usedto establish the profit or loss from doing the job.

The above statement is incorrect

The overhead cost for a particular job =

man hour rate / man hours spent on that job

man hour rate x man hours spent on that job

man hour rate / man hours spent on that job

man hour rate + man hours spent on that job

man hour rate – man hours spent on that jab

Details for the past month of a continuous process are:

Closing W.I.P. (600 units) (20% complete)

Opening W.I.P. (400 units) (60% complete)

Closing W.I.P. (600 units) (20% complete)

Which of the following best describes a fixed cost? A cost which:

Remains at the same level up to a particular level of output

Represents a fixed proportion of total costs

Remains at the same level up to a particular level of output

Has a direct relationship with output.

Remains at the same level when output increases.

Identify which of the following statement is correct.

Abnormal gain is a benefit rather than a cost. Whereas abnormal loss is written off as a cost at the end of the financial period.

Abnormal gain is an adjustment that increases the profit for the period.

Abnormal gain is recorded as a debit entry in the process account, because it is a benefit.

2081 + Mcqs in Accounting in Finance & Accounting Page 4 McqOptions

151.	When actual loss exceeds normal loss, there is:
A.	Abnormal loss
B.	Abnormal gain
C.	Extra loss
D.	None
Answer» B. Abnormal gain

152.	. Which of the following is not considered to be a benefit of activity-based costing?
A.	More accurate product costs
B.	Reduced complexity of calculating costs
C.	Inclusion of non-manufacturing costs
D.	More detailed understanding of what drives cost.
Answer» E.

153.	The task that sits at the heart of process costing is always to allocate the costs collected on the debit side of the account to the possible outputs (good output, closing WIP and lost units) on the credit side.
A.	The above statement is correct
B.	The above statement is incorrect
C.	none
D.	none
Answer» B. The above statement is incorrect

154.	Single overhead absorption rate is also known as:
A.	Blanket rate
B.	Factory-wide absorption rate
C.	Both A&B
D.	None
Answer» C. Both A&B

155.	When there is opening work in progress there are two types of cost on the debit side of the account. These are the costs that were incurred last period and brought forward as work in progress and the costs that were incurred in the current period.
A.	The above statement is correct
B.	The above statement is incorrect
C.	none
D.	none
Answer» B. The above statement is incorrect

156.	The units basis has the following limitations.
A.	Where the products separate during the processes into different states, for example where one product is a gas and another is a liquid, this method is unsuitable.
B.	This method does not take into account the relative income-earning potentials of the individual products, with the result that one product might appear very profitable and another appears to be incurring losses.
C.	Both A&B
D.	None
Answer» D. None

157.	The process of distribution of overheads allotted to a particular department or costcenter over the units produced is called:
A.	Allocation
B.	Apportionment
C.	Absorption
D.	Departmentalization
Answer» D. Departmentalization

158.	In job costing each job is given a unique:
A.	Identity number, or job number
B.	Account name
C.	Costing system
D.	None
Answer» D. None

159.	The total overhead costs of each production centre should be:
A.	Costs allocated directly to the production centre
B.	Shared costs apportioned to the production centre
C.	A share of the costs of each service department, apportioned to the production centre
D.	All of the above
Answer» D. All of the above

160.	Overhead costs may be classified according to the function of the organization as:
A.	Production/Manufacturing overheads
B.	Non-production/Non-manufacturing overheads
C.	Both A&B
D.	None
Answer» D. None

161.	WIP in contract means:
A.	Work certified
B.	Work certified and work uncertified
C.	Cash received
D.	None of these
Answer» C. Cash received

166.	Post separation costs are attributable to each ……. products.
A.	Joint Product.
B.	By Product
C.	Main Product
D.	Final Product.
Answer» B. By Product

167.	Operating costing system is more suitable to :
A.	Product industries.
B.	Contraction industries.
C.	Service industries.
D.	Manufacturing industries.
Answer» E.

173.	Skimmed milk and Butter are the example of……………..
A.	Joint Product.
B.	By Product
C.	Main Product
D.	Final Product
Answer» B. By Product

178.	Non-production overhead costs are never added to the value of inventory.
A.	False
B.	True
C.	none
D.	none
Answer» B. True

162.	A single overhead absorption rate might be used for all the productiondepartments in the factory.
A.	True
B.	False
C.	none
D.	none
Answer» B. False

163.	. The total cost of a product will include:
A.	Prime costs plus direct production overhead plus indirect-production overhead plus tax
B.	Prime cost plus absorbed direct production overhead
C.	Prime costs plus direct production overhead plus indirect production overhead
D.	Prime cost only
Answer» D. Prime cost only

164.	Job costing is a costing method applied where work is undertaken to customers’special requirements and each order is of comparatively short duration.
A.	True
B.	False
C.	none
D.	none
Answer» B. False

165.	When the completion stage of the contract is more than half, the profit to be creditedto Profit and Loss account will be equal to…………..
A.	1/3rd of Notional Profit x cash received Work certified
B.	½ of Notional Profit x cash received Work certified
C.	2/3rd of Notional profit x cash received Work certified
D.	full Notional Profit.
Answer» D. full Notional Profit.

168.	A job costing system is usually based on absorption costing principles, and in addition a cost is included for non-production overheads.
A.	False
B.	True
C.	none
D.	none
Answer» C. none

169.	In process costing questions, you will need to:
A.	Identify the losses and output
B.	Calculate the cost of good output, losses and WIP
C.	Use the costs you have calculated to assign values to the good output, losses and WIP
D.	All of the above
Answer» E.

170.	If total incurred cost in a production process are ₹30000 and number of output unitsare 5000 units, then units cost will be
A.	₹26
B.	₹6
C.	₹60
D.	₹16
Answer» C. ₹60

171.	A total of all the direct costs is known as
A.	Cost of production
B.	Cost of sales
C.	Prime cost
D.	Works cost
Answer» D. Works cost

172.	A blanket overhead absorption rate is an absorption rate used throughout a factory and for all jobs and units of output irrespective of the department in which they were produced.
A.	True
B.	False
C.	none
D.	none
Answer» B. False

174.	. Which of the following is a conventional method of ascertaining cost?
A.	Absorption costing
B.	Full Costing
C.	Both a & b
D.	None of the above
Answer» B. Full Costing

Explore topic-wise MCQs in Finance & Accounting.

When actual loss exceeds normal loss, there is:

. Which of the following is not considered to be a benefit of activity-based costing?

The task that sits at the heart of process costing is always to allocate the costs collected on the debit side of the account to the possible outputs (good output, closing WIP and lost units) on the credit side.

Single overhead absorption rate is also known as:

When there is opening work in progress there are two types of cost on the debit side of the account. These are the costs that were incurred last period and brought forward as work in progress and the costs that were incurred in the current period.

The units basis has the following limitations.

The process of distribution of overheads allotted to a particular department or costcenter over the units produced is called:

In job costing each job is given a unique:

The total overhead costs of each production centre should be:

Overhead costs may be classified according to the function of the organization as:

WIP in contract means:

A single overhead absorption rate might be used for all the productiondepartments in the factory.

. The total cost of a product will include:

Job costing is a costing method applied where work is undertaken to customers’special requirements and each order is of comparatively short duration.

When the completion stage of the contract is more than half, the profit to be creditedto Profit and Loss account will be equal to…………..

Post separation costs are attributable to each ……. products.

Operating costing system is more suitable to :

A job costing system is usually based on absorption costing principles, and in addition a cost is included for non-production overheads.

In process costing questions, you will need to:

If total incurred cost in a production process are ₹30000 and number of output unitsare 5000 units, then units cost will be

A total of all the direct costs is known as

A blanket overhead absorption rate is an absorption rate used throughout a factory and for all jobs and units of output irrespective of the department in which they were produced.

Skimmed milk and Butter are the example of……………..

. Which of the following is a conventional method of ascertaining cost?

Under or over absorption is caused by the actual fixed overhead and productionvolume being different from those figures used to calculate the predetermined rate.

Overhead absorption is the process whereby overhead costs allocated and apportioned to production cost centres are added to unit, job or batch costs.

Profit remaining as reserve is :

Non-production overhead costs are never added to the value of inventory.

The stage of production at which separate products are identified is known as_______________:

The job costing method can therefore be applied in costing batches. The only difference is that a number of items are being costed together as a single unit, instead of a single item or service.

In Job costing a cost is calculated for each individual job, and this cost can be usedto establish the profit or loss from doing the job.

In service cost sheet costs are classified into :

When there is closing work in progress (WIP) the concept of _________ is used.

In transport service, cost sheet depreciation cost are grouped under:

The apportionment of production overhead costs might be in two stages:• sharing (or dividing) general costs between production centres and service centres; and • then sharing the costs of the service centres between the production centres.

The wages paid to maintenance department workers who do repair work principally for production departments but also on the vehicles in the distribution department should be charged as

The overhead cost for a particular job =

Subsequent cost are…………to individual product.

The absorption rate may be calculated by the fraction:• Total overhead costs • Total of absorption basis.

Details for the past month of a continuous process are:

Which of the following best describes a fixed cost? A cost which:

Wages paid to a labour who was engaged in production activities can be termed as.

Number of passenger kilometer= Number of passengers X………………

Overhead is the cost incurred in the course of making a product, providing a service or running a department, but which cannot be traced directly and in full to the product, service or department.

A separate record must therefore be maintained to show the details of individualjobs. Such records are often known as job cost sheets or job cost cards.

Husk produced in the process of Rice milling, is an example of ………………

Retention money serves as a ………with the contractee.

Identify which of the following statement is correct.

Allocation is where overheads are allocated to cost centres. If a cost centre is responsible for the entire cost of an item of expenditure, the entire cost is charged directly to the cost centre.

The usual method of fixing prices in a jobbing concern is cost plus pricing.

175.	Under or over absorption is caused by the actual fixed overhead and productionvolume being different from those figures used to calculate the predetermined rate.
A.	False
B.	True
C.	none
D.	none
Answer» C. none

176.	Overhead absorption is the process whereby overhead costs allocated and apportioned to production cost centres are added to unit, job or batch costs.
A.	True
B.	False
C.	none
D.	none
Answer» B. False

177.	Profit remaining as reserve is :
A.	Transfer to p/L
B.	Deducted from WIP
C.	Not taken into account.
D.	Deducted from cost of the contract.
Answer» D. Deducted from cost of the contract.

179.	The stage of production at which separate products are identified is known as_______________:
A.	Process costing
B.	Reverse cost method
C.	Subsequent cost
D.	Equivalent production
Answer» B. Reverse cost method

180.	The job costing method can therefore be applied in costing batches. The only difference is that a number of items are being costed together as a single unit, instead of a single item or service.
A.	The above statement is correct
B.	The above statement is incorrect
C.	none
D.	none
Answer» B. The above statement is incorrect

181.	In Job costing a cost is calculated for each individual job, and this cost can be usedto establish the profit or loss from doing the job.
A.	The above statement is incorrect
B.	The above statement is correct
C.	none
D.	none
Answer» C. none

182.	In service cost sheet costs are classified into :
A.	Indirect charges.
B.	Overheads.
C.	Standing charges.
D.	Fixed expenses.
Answer» D. Fixed expenses.

183.	When there is closing work in progress (WIP) the concept of _________ is used.
A.	Equivalent units
B.	Expected units
C.	Fair allocated units
D.	None
Answer» B. Expected units

184.	In transport service, cost sheet depreciation cost are grouped under:
A.	Fixed Cost.
B.	Stand by cost.
C.	Semi-variable cost.
D.	Variable cost.
Answer» C. Semi-variable cost.

185.	The apportionment of production overhead costs might be in two stages:• sharing (or dividing) general costs between production centres and service centres; and • then sharing the costs of the service centres between the production centres.
A.	Correct
B.	Incorrect
C.	none
D.	none
Answer» B. Incorrect