What would be the most appropriate way of apportioning depreciation costs across different manufacturing departments in a business?

Value of buildings and equipment

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

Sales value at the split-off point basis

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

The above statement is incorrect

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

The above statement is incorrect

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

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

. What would be the most appropriate way of apportioning depreciation costs across different manufacturing departments in a business?

Value of buildings and equipment

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

A producer of computer monitors.

A producer of frozen orange juice

Process costing provides a system of costing where the following characteristics occur. Identify which of the following are correct:

Output is continually produced from the manufacturing process. Materials might be added in full at the start of a process or might be added gradually throughout the process.

There might be losses in the process. Process costing provides a method of measuring and costing incomplete WIP.

When more than one product is output, they might be called joint products or a by-product, depending upon the relative value of the products. Process costing offers methods of costing each of the different products.

Variable overhead is overhead that increases as more production work is done. Total variable overhead expenditure therefore depends on the volume of production. Variable overhead is usually calculated as an amount for each direct labour hour worked.

The above statement is incorrect

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

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

of Notional Profit x cash received Work certified

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

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

The above statement is incorrect

. Which of the following is most likely to be an allocated production overhead cost to the finishing cost centre?

Salary of the production manager.

Salary of the finishing cost centre supervisor.

Power used on finishing cost centre machines.

Salary of the production manager.

55 + Mcqs in Cost and Works Accounting 2 in Bachelor of Commerce (B Com) Page 1 McqOptions

1.	Which of the following would not be considered as a component of 'cost' of stock?
A.	Transportation inward cot
B.	Import duties
C.	Purchase price
D.	Salaries of selling staff
Answer» E.

2.	All such expenses which are incurred for creating and enhancing the demands for the products are
A.	Selling expenses
B.	Administrative expenses
C.	Distribution expenses
D.	All of the above
Answer» E.

3.	Which of the following is a valid classification of the salary paid to the foreman in charge of the packing department?
A.	Indirect departmental cost
B.	Direct product cost
C.	Direct departmental cost
D.	Service department cost.
Answer» E.

4.	A cost that changes in total dollar amount with the change in the level of activity is known as:
A.	Direct cost
B.	Indirect cost
C.	Variable cost
D.	Fixed cost
Answer» D. Fixed cost

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

6.	What would be the most appropriate way of apportioning depreciation costs across different manufacturing departments in a business?
A.	Floor space
B.	Numbers of personnel
C.	Value of buildings and equipment
D.	Administration costs
Answer» D. Administration costs

7.	In order to calculate a cost for each joint product, the common costs must be ________ between the joint products.
A.	Identified
B.	Allocated
C.	Apportioned
D.	None
Answer» D. None

8.	Which of the methods of apportionment is normally used for apportioning common costs 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.

9.	In Units basis, Common costs are apportioned between joint products on the basis of the 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

10.	By products are outputs from a joint process that are relatively minor in quantity and/or value.
A.	False
B.	True
C.	none
D.	none
Answer» C. none

11.	Specific order costing methods are appropriate for organizations which produce cost units 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

18.	Wages paid to a office cleaning staff who was engaged in Administration activities a can be termed as.
A.	direct cost.
B.	indirect cost
C.	sunk cost
D.	imputed cost.
Answer» C. sunk cost

21.	Overheads can be absorbed into cost units by means of: Physical unit produced Percentage of prime cost Percentage of direct wages Direct labour hour rate Machine hour rate
A.	All of the above
B.	(I) (IV) and (V) only
C.	(IV) and (V) only
D.	None
Answer» B. (I) (IV) and (V) only

27.	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

28.	If beginning work in process equivalent units are 2500 units, work done in current period 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

12.	It is possible to have abnormal loss and abnormal gain on the same process account in the same period.
A.	False
B.	True
C.	none
D.	none
Answer» B. True

13.	If it is assumed that all losses in process occur at the end of the process, units of abnormal loss are costed in exactly the same way in the as units of finished output.
A.	True
B.	False
C.	none
D.	none
Answer» B. False

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

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

19.	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

20.	The absorption rate may be calculated by the fraction: Total overhead costs Total of absorption basis.
A.	Correct
B.	Incorrect
C.	none
D.	none
Answer» B. Incorrect

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

24.	Overheads are usually added to cost units using a predetermined overhead absorption rate, which is calculated using figures from the budget.
A.	False
B.	True
C.	none
D.	none
Answer» C. none

25.	Predetermined absorption rates is where, the absorption rate calculated in advance 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

26.	Which of the following manufacturers would most likely not use a process-cost accounting 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.

Explore topic-wise MCQs in Bachelor of Commerce (B Com).

Which of the following would not be considered as a component of 'cost' of stock?

All such expenses which are incurred for creating and enhancing the demands for the products are

Which of the following is a valid classification of the salary paid to the foreman in charge of the packing department?

A cost that changes in total dollar amount with the change in the level of activity is known as:

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

What would be the most appropriate way of apportioning depreciation costs across different manufacturing departments in a business?

In order to calculate a cost for each joint product, the common costs must be ________ between the joint products.

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

In Units basis, Common costs are apportioned between joint products on the basis of the 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).

By products are outputs from a joint process that are relatively minor in quantity and/or value.

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

It is possible to have abnormal loss and abnormal gain on the same process account in the same period.

If it is assumed that all losses in process occur at the end of the process, units of abnormal loss are costed in exactly the same way in the as units of finished output.

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

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

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

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

Wages paid to a office cleaning staff who was engaged in Administration activities a can be termed as.

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

Overheads can be absorbed into cost units by means of: Physical unit produced Percentage of prime cost Percentage of direct wages Direct labour hour rate Machine hour rate

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

. What would be the most appropriate way of apportioning depreciation costs across different manufacturing departments in a business?

Overheads are usually added to cost units using a predetermined overhead absorption rate, which is calculated using figures from the budget.

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

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

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

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

If cost incurred for work in process inventory is 350000 and total equivalent units completed till date are 3500, then weighted average cost will be

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

Process costing provides a system of costing where the following characteristics occur. Identify which of the following are correct:

If the amount of production overheads absorbed into product costs is more than the actual production overhead expenditure, there is:

The over-absorbed overhead is accounted for as an adjustment to the profit in the period, and is added to profit in the cost accounting income statement.

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

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

Variable overhead is overhead that increases as more production work is done. Total variable overhead expenditure therefore depends on the volume of production. Variable overhead is usually calculated as an amount for each direct labour hour worked.

Cost of defective materials should be to costing P/L account and .to contract account.

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

If the amount of work certified is less than of the contract price,then no profit should be taken to Profit & Loss Account.

The sum of value of work certified and uncertified appearing in the Contract Account is called ..

Total costs incur in a production process, is divided by total number of output units to calculate the

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

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

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

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

Batch costing is similar to job costing in that each batch of similar articles is separately identifiable.

. Which of the following is most likely to be an allocated production overhead cost to the finishing cost centre?

The cost per unit manufactured in a batch is the total batch cost divided by the number of units in the batch.

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

30.	If cost incurred for work in process inventory is 350000 and total equivalent units completed till date are 3500, then weighted average cost will be
A.	1,200
B.	1,000
C.	100
D.	10
Answer» D. 10

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

33.	If the amount of production overheads absorbed into product costs is more than the actual production overhead expenditure, there is:
A.	Over-absorbed overhead
B.	Under-absorbed overhead
C.	Neither A or B
D.	None
Answer» B. Under-absorbed overhead

38.	Cost of defective materials should be to costing P/L account and .to contract account.
A.	Debited, Credited
B.	Credited, Debited
C.	Charged, record
D.	Record, Apply
Answer» B. Credited, Debited

40.	If the amount of work certified is less than of the contract price,then no profit should be taken to Profit & Loss Account.
A.	20%
B.	25%
C.	33 1/3%
D.	40%
Answer» C. 33 1/3%

41.	The sum of value of work certified and uncertified appearing in the Contract Account is called ..
A.	Work done.
B.	Work in Process
C.	Work Completed
D.	Work in Progress
Answer» E.

42.	Total costs incur in a production process, is divided by total number of output units to calculate the
A.	unit costs
B.	cost of direct material
C.	cost of direct labour
D.	cost of indirect labour
Answer» B. cost of direct material

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

48.	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