Costing Archives

11. What is the most useful information derived from a break-even chart?

Relationship between revenue and costs at various levels of output

Volume or output level at which the enterprises break-even

Amount of sales revenue needed to cover enterprise variable costs

Amount of sales revenue needed to cover enterprise fixed costs

Detailed SolutionWhat is the most useful information derived from a break-even chart?

12. Individual activities such as machine setups, material handling, customer service and distribution of products are a part of

activity based costing

margin based costing

goodness of costing

handling based costing

Detailed SolutionIndividual activities such as machine setups, material handling, customer service and distribution of products are a part of

13. If the present cost of the car is Rs. 1,00,000 residual value at the end of the 5th year is Rs. 20,000, the monthly depreciation is . . . . . . . .

Rs. 20,000

Rs. 16,000

Rs. 1,333

Rs. 17,333

Detailed SolutionIf the present cost of the car is Rs. 1,00,000 residual value at the end of the 5th year is Rs. 20,000, the monthly depreciation is . . . . . . . .

14. Which of the following organisations should not be advised to use service costing?

Distribution service

Hospital

Maintenance division of a manufacturing company

A light engineering company

Detailed SolutionWhich of the following organisations should not be advised to use service costing?

15. In accounting, cost incurred in past or in historical financial statements is classified as

actual cost

budgeted cost

past cost

incurred cost

Detailed SolutionIn accounting, cost incurred in past or in historical financial statements is classified as

16. Cost-plus pricing is considered appropriate for: (I) Product Tailoring (II) Public Utility Pricing (III) Refusal Pricing (IV) Monopoly Pricing

I and II only

I, II and III only

II, III and IV only

III and IV only

Detailed SolutionCost-plus pricing is considered appropriate for: (I) Product Tailoring (II) Public Utility Pricing (III) Refusal Pricing (IV) Monopoly Pricing

17. 100 units are introduced in a process in which normal loss is 5% of input If actual output is 97 then there is ________.

no abnormal loss and normal gain

2 units of abnormal gain

3 units of abnormal gain

3 units of normal loss

Detailed Solution100 units are introduced in a process in which normal loss is 5% of input If actual output is 97 then there is ________.

18. Support department cost allocation method which makes no difference between variable and fixed costs is classified as

sales mix allocation method

dual-rate cost-allocation method

single rate cost allocation method

quantity variance allocation method

Detailed SolutionSupport department cost allocation method which makes no difference between variable and fixed costs is classified as

19. Which of the following are possible causes of material price variance? 1. Change in market price. 2. Use of poor quality of material. 3. Inefficient buying. 4. Untimely buying. 5. Paying overtime for urgent work. 6. Use of substitute material of different prices. Select the correct answer

1, 3, 4 and 6

2, 3, 5 and 6

3, 4, 5 and 6

1, 3, 5 and 6

Detailed SolutionWhich of the following are possible causes of material price variance? 1. Change in market price. 2. Use of poor quality of material. 3. Inefficient buying. 4. Untimely buying. 5. Paying overtime for urgent work. 6. Use of substitute material of different prices. Select the correct answer

20. Why is profit volume ratio used? 1. To compute the variable cost for any volume of sales. 2. To determine break-even point and the level of output required to earn a desired profit. 3. To decide most profitable sales mix. Select the correct answer

Both 1 and 2

Both 2 and 3

Both 1 and 3

All of these

Detailed SolutionWhy is profit volume ratio used? 1. To compute the variable cost for any volume of sales. 2. To determine break-even point and the level of output required to earn a desired profit. 3. To decide most profitable sales mix. Select the correct answer