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

Actual direct labour time per unit being greater than budget.

Actual cost of direct labour being greater than budget.

Actual overheads incurred being less than budget.

The number of units produced being greater than budget.

Which of the methods of apportionment is normally used for apportioning commoncosts between joint products?

Sales value at the split-off point basis

An abnormal gain in a process occurs in which of the following situations?

When actual losses are greater than the normal loss level.

When costs are reduced through increased machine speed

When actual losses are less than the normal level.

When the process output is greater than planned.

The following method is an improvement over the percentage on direct labour costmethod.

Percentage on direct material cost

When overheads have been allocated and apportioned to production cost centres, they are charged to the cost of products manufactured in the cost centre.

The above statement is incorrect

Joint products are two or more products generated simultaneously, by a singlemanufacturing process using common input, and being substantially equal in value.

The above statement is incorrect

Where process scrap is recycled for use in conjunction with new material as well as being so externally, which of. the following is most likely to be the value at which is debited to the process?

At the cost attached to abnormal losses.

At the same price as it sold externally.

At the cost attached to abnormal losses.

Specific order costing methods are appropriate for organizations which produce costunits which are separately identifiable from one another.

The above statement is incorrect

Are the costs of opening WIP, incurred in last period and brought forward as work in progress and the costs that were incurred in the current period, treated the same way?

This question is addressed in the accounting policy adopted for opening work in progress.

The cost of units of abnormal loss is treated as an _________ for the period, and charged as an ___________for the period

Expense, expense in the income statement

If normal loss has a scrap value the company is able to recover some of the input costs to the process. The scrap value reduces the cost of the process.

The above statement is incorrect

What would be the effect of inaccurate estimation of overhead absorption rates on aJob?

If the jobs are over-priced, customers will go elsewhere

If the jobs are under-priced, sales revenue will fail to cover costs and/or provide an adequate return

Costing is specialized branch of accounting which deals with:

Classification, recording, allocation, and control of asset

Classification, processing, allocation and directing

Classification, recording, planning and control of asset

Classification, recording, allocation and directing

An overhead absorption rate is used to:

Share out common costs over benefiting cost canters

Find the total overheads for a cost centre

Which of the following manufacturers would most likely not use a process-costaccounting system?

A producer of computer monitors.

A producer of frozen orange juice

2081 + Mcqs in Accounting in Finance & Accounting Page 5 McqOptions

201.	. Which of the following best describes a fixed cost? A cost which:
A.	Actual direct labour time per unit being greater than budget.
B.	Actual cost of direct labour being greater than budget.
C.	Actual overheads incurred being less than budget.
D.	The number of units produced being greater than budget.
Answer» E.

Discussion

202.	Which of the methods of apportionment is normally used for apportioning commoncosts between joint products?
A.	Units basis
B.	Sales value at the split-off point basis
C.	Net realizable value
D.	Either of the above
Answer» E.

Discussion

203.	Work certified in a subsequent year is always ……………… than that the inpreceding year.
A.	Greater
B.	Less
C.	Equal
D.	Greater than Equal to
Answer» B. Less

Discussion

204.	Identify the types of specific order costing.
A.	Job costing
B.	Batch costing
C.	Process costing
D.	Both A&B only
Answer» E.

Discussion

205.	The point at which joint products and by-products become separately identifiable isknown as:
A.	The split off point
B.	Separation point
C.	Either A or B
D.	None
Answer» D. None

Discussion

206.	An abnormal gain in a process occurs in which of the following situations?
A.	When actual losses are greater than the normal loss level.
B.	When costs are reduced through increased machine speed
C.	When actual losses are less than the normal level.
D.	When the process output is greater than planned.
Answer» E.

Discussion

207.	Which of the following costs is treated as indirect labour?
A.	Idle time
B.	Overtime premium
C.	Fringe benefits
D.	All of the above
Answer» E.

Discussion

208.	Make or But Decisions are involved before and after different……………….
A.	Service.
B.	Contract.
C.	Processes.
D.	Indirect Cost.
Answer» D. Indirect Cost.

Discussion

209.	In Units basis, Common costs are apportioned between joint products on the basis ofthe total number of units produced. The cost per unit is the same for all the joint products. (This is also described as the physical quantities basis).
A.	Correct
B.	Incorrect
C.	none
D.	none
Answer» B. Incorrect

Discussion

210.	The following method is an improvement over the percentage on direct labour costmethod.
A.	Machine hour rate
B.	Percentage on prime cost
C.	Percentage on direct material cost
D.	Man hour rate
Answer» E.

Discussion

211.	Normal loss comes with:
A.	No recovery/scrape value
B.	Recovery/scrape value
C.	Either A or B
D.	None
Answer» D. None

Discussion

212.	When overheads have been allocated and apportioned to production cost centres, they are charged to the cost of products manufactured in the cost centre.
A.	The above statement is correct
B.	The above statement is incorrect
C.	none
D.	none
Answer» B. The above statement is incorrect

Discussion

213.	Production overheads are the overhead costs of both the production departmentsand the service departments.
A.	False
B.	True
C.	none
D.	none
Answer» C. none

Discussion

214.	An example of composite unit in transport costing is:
A.	Per passenger per km
B.	Per passenger per seat
C.	Per km per seat
D.	Per passenger per travel
Answer» B. Per passenger per seat

Discussion

215.	Joint products are two or more products generated simultaneously, by a singlemanufacturing process using common input, and being substantially equal in value.
A.	The above statement is correct
B.	The above statement is incorrect
C.	none
D.	none
Answer» B. The above statement is incorrect

Discussion

216.	Where process scrap is recycled for use in conjunction with new material as well as being so externally, which of. the following is most likely to be the value at which is debited to the process?
A.	At the same price as it sold externally.
B.	At the cost of normal losses.
C.	At the cost attached to abnormal losses.
D.	Nil value.
Answer» C. At the cost attached to abnormal losses.

Discussion

217.	What item is not included in cost accounting?
A.	Product costing
B.	Profit-sharing
C.	Planning
D.	Controlling
Answer» C. Planning

Discussion

218.	Specific order costing methods are appropriate for organizations which produce costunits which are separately identifiable from one another.
A.	The above statement is correct
B.	The above statement is incorrect
C.	none
D.	none
Answer» B. The above statement is incorrect

Discussion

219.	Identify the characteristics of services:I. Intangibility: They do not have a physical substance unlike goods. They cannot be held or seen. II. Inseparability: Consumption and creation of a service cannot be separated. Services are consumed as they are created. III. Variability: Services face the problem of maintaining consistency in the standard of output. IV. Perishability: Services cannot be stored. V. Lack of ownership: Services do not result in the transfer of property in anything.
A.	All of the above
B.	(I) (II) and (V) only
C.	(I) and (V) only
D.	None
Answer» B. (I) (II) and (V) only

Discussion

220.	Which of the following procedure is incorrect for attributing overhead costs to cost units?I. Collecting production overhead costs by item II. Establishing cost centres III. Allocating and apportioning overhead costs to cost centres IV. Apportioning service cost centre costs to production cost centres V. Absorbing production cost centre costs into cost units
A.	All of the above are correct
B.	All of the above are incorrect
C.	(II) and (IV) are incorrect
D.	(II) is incorrect
Answer» B. All of the above are incorrect

Discussion

221.	When there is closing work in progress, costs are shared between finished units andinventory by calculating a cost per equivalent unit.
A.	True
B.	False
C.	none
D.	none
Answer» B. False

Discussion

222.	Absorption is also called:
A.	Allocation
B.	Sharing
C.	Overhead recovery
D.	None
Answer» D. None

Discussion

223.	When actual loss is less than the expected (normal) loss there is:
A.	Extra ordinary loss
B.	Abnormal loss
C.	Abnormal gain
D.	None
Answer» D. None

Discussion

224.	…………… are produced from the same basic raw materials.
A.	Joint Product.
B.	By Product
C.	Main Product
D.	Final Product
Answer» B. By Product

Discussion

225.	Predetermined absorption rates is where, the absorption rate calculated inadvance using estimates for cost and production volume in the annual financial plan or budget.
A.	Correct
B.	Incorrect
C.	none
D.	none
Answer» B. Incorrect

Discussion

226.	In a process costing system loss might be:
A.	Normal
B.	Abnormal
C.	Both A&B
D.	None
Answer» D. None

Discussion

227.	Cost -plus- contract are undertaken for production of ……………….products.
A.	SSI
B.	Small
C.	Low value
D.	Highly specialized
Answer» E.

Discussion

228.	If beginning work in process equivalent units are 2500 units, work done in currentperiod equivalent units are 3800 units and ending work in process equivalent units are 5000, then complete equivalent units in current period are
A.	1500 units
B.	1300 units
C.	1500 units
D.	1800 units
Answer» C. 1500 units

Discussion

229.	Which of the following cost is also known as overhead cost or on cost:
A.	Cost of direct labour
B.	Cost of direct material
C.	Direct expenses
D.	Indirect expenses
Answer» E.

Discussion

230.	The sum of value of work certified and uncertified appearing in the Contract Accountis called ……………..
A.	Work done.
B.	Work in Process
C.	Work Completed
D.	Work in Progress
Answer» C. Work Completed

Discussion

231.	A cost that is easily traceable to a cost object is known as:
A.	Direct cost
B.	Indirect cost
C.	Variable cost
D.	Fixed cost
Answer» B. Indirect cost

Discussion

232.	An equivalent unit means ‘equal to one finished unit of output’.
A.	False
B.	True
C.	none
D.	none
Answer» C. none

Discussion

233.	The production operations of most businesses can be categorized as either being:
A.	Specific orders
B.	Continuous operations
C.	Both A or B
D.	None
Answer» D. None

Discussion

234.	Are the costs of opening WIP, incurred in last period and brought forward as work in progress and the costs that were incurred in the current period, treated the same way?
A.	Yes, treated together
B.	Treated Separately
C.	This question is addressed in the accounting policy adopted for opening work in progress.
D.	None
Answer» D. None

Discussion

235.	Job costing is used when a business entity carries out tasks or jobs to meet specificcustomer orders.
A.	The above statement is false
B.	The above statement is true
C.	none
D.	none
Answer» C. none

Discussion

236.	It is possible to add non-production overheads to the full production cost of units produced and sold (i.e. No cost will be carried forward to the next period in the form of closing stock), to obtain a full cost of sale.
A.	True
B.	False
C.	none
D.	none
Answer» B. False

Discussion

237.	Cost plus pricing means that a desired profit margin is added to total costs to arriveat the selling price.
A.	False
B.	True
C.	none
D.	none
Answer» C. none

Discussion

238.	The cost of units of abnormal loss is treated as an _________ for the period, and charged as an ___________for the period
A.	Product cost, inventory cost
B.	Expense, expense in the income statement
C.	Extra cost, suspense cost
D.	None
Answer» C. Extra cost, suspense cost

Discussion

239.	If normal loss has a scrap value the company is able to recover some of the input costs to the process. The scrap value reduces the cost of the process.
A.	The above statement is correct
B.	The above statement is incorrect
C.	none
D.	none
Answer» B. The above statement is incorrect

Discussion

240.	Indirect production costs are incurred in three main ways:• Production activities: costs arising in production departments such as fuel, depreciation, supervision • Service activities: the cost of operating non-producing departments such as materials handling, canteen • Establishment costs: general production overheads such as factory rent/rates, heating and lighting
A.	True
B.	False
C.	none
D.	none
Answer» B. False

Discussion

241.	Indirect expenses are also known as overheads.
A.	True
B.	False
C.	none
D.	none
Answer» B. False

Discussion

242.	In service costing division is an / a :
A.	Operation
B.	Process
C.	Contract
D.	Department
Answer» B. Process

Discussion

243.	A product with a high gross profit could be an unprofitable product.
A.	True
B.	False
C.	none
D.	none
Answer» C. none

Discussion

244.	What would be the effect of inaccurate estimation of overhead absorption rates on aJob?
A.	If the jobs are over-priced, customers will go elsewhere
B.	If the jobs are under-priced, sales revenue will fail to cover costs and/or provide an adequate return
C.	Both A&B
D.	None
Answer» D. None

Discussion

245.	In Process industries there is a flow of ……………. from one operation to the nextoperation.
A.	Material
B.	Labour
C.	Overhead
D.	Expenses
Answer» B. Labour

Discussion

246.	Costing is specialized branch of accounting which deals with:
A.	Classification, recording, allocation, and control of asset
B.	Classification, processing, allocation and directing
C.	Classification, recording, planning and control of asset
D.	Classification, recording, allocation and directing
Answer» E.

Discussion

247.	IF the profit are 50% of operating cost, it is ……………. of invoice price.
A.	20%
B.	25%
C.	16.66667%
D.	33.33334%
Answer» E.

Discussion

248.	Normal loss is usually expressed as a percentage of the input units of materials.
A.	Correct
B.	Incorrect
C.	none
D.	none
Answer» B. Incorrect

Discussion

249.	An overhead absorption rate is used to:
A.	Share out common costs over benefiting cost canters
B.	Find the total overheads for a cost centre
C.	Charge overheads to products
D.	Control overheads
Answer» D. Control overheads

Discussion

250.	Which of the following manufacturers would most likely not use a process-costaccounting system?
A.	A producer of computer monitors.
B.	A paint manufacturer.
C.	A producer of frozen orange juice
D.	A builder of customized yachts
Answer» E.

Discussion

Explore topic-wise MCQs in Finance & Accounting.

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

Which of the methods of apportionment is normally used for apportioning commoncosts between joint products?

Work certified in a subsequent year is always ……………… than that the inpreceding year.

Identify the types of specific order costing.

The point at which joint products and by-products become separately identifiable isknown as:

An abnormal gain in a process occurs in which of the following situations?

Which of the following costs is treated as indirect labour?

Make or But Decisions are involved before and after different……………….

In Units basis, Common costs are apportioned between joint products on the basis ofthe total number of units produced. The cost per unit is the same for all the joint products. (This is also described as the physical quantities basis).

The following method is an improvement over the percentage on direct labour costmethod.

Normal loss comes with:

When overheads have been allocated and apportioned to production cost centres, they are charged to the cost of products manufactured in the cost centre.

Production overheads are the overhead costs of both the production departmentsand the service departments.

An example of composite unit in transport costing is:

Joint products are two or more products generated simultaneously, by a singlemanufacturing process using common input, and being substantially equal in value.

Where process scrap is recycled for use in conjunction with new material as well as being so externally, which of. the following is most likely to be the value at which is debited to the process?

What item is not included in cost accounting?

Specific order costing methods are appropriate for organizations which produce costunits which are separately identifiable from one another.

When there is closing work in progress, costs are shared between finished units andinventory by calculating a cost per equivalent unit.

Absorption is also called:

When actual loss is less than the expected (normal) loss there is:

…………… are produced from the same basic raw materials.

Predetermined absorption rates is where, the absorption rate calculated inadvance using estimates for cost and production volume in the annual financial plan or budget.

In a process costing system loss might be:

Cost -plus- contract are undertaken for production of ……………….products.

If beginning work in process equivalent units are 2500 units, work done in currentperiod equivalent units are 3800 units and ending work in process equivalent units are 5000, then complete equivalent units in current period are

Which of the following cost is also known as overhead cost or on cost:

The sum of value of work certified and uncertified appearing in the Contract Accountis called ……………..

A cost that is easily traceable to a cost object is known as:

An equivalent unit means ‘equal to one finished unit of output’.

The production operations of most businesses can be categorized as either being:

Are the costs of opening WIP, incurred in last period and brought forward as work in progress and the costs that were incurred in the current period, treated the same way?

Job costing is used when a business entity carries out tasks or jobs to meet specificcustomer orders.

It is possible to add non-production overheads to the full production cost of units produced and sold (i.e. No cost will be carried forward to the next period in the form of closing stock), to obtain a full cost of sale.

Cost plus pricing means that a desired profit margin is added to total costs to arriveat the selling price.

The cost of units of abnormal loss is treated as an _________ for the period, and charged as an ___________for the period

If normal loss has a scrap value the company is able to recover some of the input costs to the process. The scrap value reduces the cost of the process.

Indirect expenses are also known as overheads.

In service costing division is an / a :

A product with a high gross profit could be an unprofitable product.

What would be the effect of inaccurate estimation of overhead absorption rates on aJob?

In Process industries there is a flow of ……………. from one operation to the nextoperation.

Costing is specialized branch of accounting which deals with:

IF the profit are 50% of operating cost, it is ……………. of invoice price.

Normal loss is usually expressed as a percentage of the input units of materials.

An overhead absorption rate is used to:

Which of the following manufacturers would most likely not use a process-costaccounting system?

The cost of units of abnormal loss is treated as an _ for the period, and charged as an ___for the period