Tag: fundamental concepts of cost

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Multiple choice commercial applications fundamental concepts of cost meaning, elements and classification of cost methods of costing cost accounting: an introduction

Absorption costing technique is also termed as ___________________.

  1. Traditional or full cost method

  2. Contribution in Marginal costing

  3. Direct costing technique

  4. Incremental costing technique
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Absorption costing, is also termed as Traditional or full costing method , it includes everything that is a direct cost in producing a good in its cost centre.

Multiple choice commercial applications fundamental concepts of cost meaning, elements and classification of cost methods of costing cost accounting: an introduction

Cost, which is related to specific cost object and economically traceable, will be classified as ____________.

  1. direct cost

  2. indirect cost

  3. line cost

  4. staff cost
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

 A direct cost is a cost that can be completely attributed to the production of specific goods or services.

Multiple choice commercial applications fundamental concepts of cost meaning, elements and classification of cost methods of costing cost accounting: an introduction

Variable cost per unit ___________________.

  1. Remains fixed

  2. Fluctuates with volume of production

  3. Varies in consideration with the volume of sales

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Cost may be classified as fixed cost and variable cost.  


Fixed cost is that cost which remains constant in terms of value. It does not change with the level of production. For example, rent or salary.

Variable cost is just opposite to fixed cost. Its fixed in terms of per unit but fluctuate with the level of production. For example, raw material cost.

Multiple choice commercial applications fundamental concepts of cost meaning, elements and classification of cost methods of costing cost accounting: an introduction

The work of factory employees that can be physically associated with converting raw material into finished goods is classified as ________________.

  1. Manufacturing overhead

  2. Indirect materials

  3. Indirect labour

  4. Direct labour
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Employees who are involved directly in to the production activity are direct labor. The cost of labor is directly associated to a specific unit or cost or product.

Multiple choice commercial applications fundamental concepts of cost meaning, elements and classification of cost methods of costing cost accounting: an introduction

The principle types of inventories are raw materials, ___________ and finished goods.

  1. Processed materials

  2. Goods-in-progress

  3. Stored goods

  4. Goods for dispatch
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Inventories may be classified as raw material, work in progress and finished goods. Goods which is partly finished is considered as goods in progress or work in progress. 

Multiple choice commercial applications fundamental concepts of cost meaning, elements and classification of cost methods of costing cost accounting: an introduction

When factory overhead control account has an ending debit balance, factory overhead was ___________.

  1. Over applied

  2. Under applied

  3. Both A and B

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

This is the situation in which the overheads applied to a product is less than the actual overhead incurred. This results in the overheads having a debit balance.

Multiple choice commercial applications fundamental concepts of cost meaning, elements and classification of cost methods of costing cost accounting: an introduction

When _________ is used on the basis of budgeted overheads and the rate is applied to the actual base, the actual overhead expenses may be different from the charged overheads.

  1. A predetermined rate

  2. Actual rate method of absorption

  3. Both A and B

  4. None of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A predetermined rate of overhead is calculated by dividing the estimated overhead cost by the estimated number of hours. It refers to the estimation hence actual overheads may be different from the charged overheads.

Multiple choice commercial applications fundamental concepts of cost meaning, elements and classification of cost methods of costing cost accounting: an introduction

________ forms part of cost of production.

  1. Abnormal waste

  2. Normal waste

  3. Both A and B

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Wastage can be classified as normal waste and abnormal waste. There is a part of input which constitutes as waste in the normal course of production. This kind of waste is considered as normal waste, the value of which should be recorded as part of cost of production.

Multiple choice commercial applications fundamental concepts of cost meaning, elements and classification of cost methods of costing cost accounting: an introduction

A flexible budget requires careful study and classification of expenses into_____________.

  1. Product expenses and period expenses

  2. Past and current expenses

  3. Administrative, selling and factory expenses

  4. Fixed, semi-variable and variable expenses
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A flexible budget requires careful study and classification of expenses into Fixed, semi-variable and variable expense. A flexible budget is a budget which changes with the change in level of activity.