Costing

21. Chances of cost to be considered as variable are more, if the

time horizons are long
time horizons are short
time horizons are irrelevant
time horizons are relevant

Detailed SolutionChances of cost to be considered as variable are more, if the

22. The stores keeper should initiate a purchase requisition when stock reaches ________.

Average stock level
Minimum stock level
Maximum stock level
Re-order level

Detailed SolutionThe stores keeper should initiate a purchase requisition when stock reaches ________.

23. Relevant incremental costs are added into relevant opportunity cost of capital to calculate

purchase order costs
relevant inventory carrying costs
irrelevant inventory carrying costs
relevant ordering costs

Detailed SolutionRelevant incremental costs are added into relevant opportunity cost of capital to calculate

24. Consider the following statements. 1. Marginal costing and absorption costing are the same. 2. For decision-making, absorption costing is more suitable than marginal costing. 3. Marginal costing is based on the distinction between fixed and variable costs. Which of the statement(s) given above is/are correct?

Both 1 and 2
Both 2 and 3
Both 1 and 3
None of these

Detailed SolutionConsider the following statements. 1. Marginal costing and absorption costing are the same. 2. For decision-making, absorption costing is more suitable than marginal costing. 3. Marginal costing is based on the distinction between fixed and variable costs. Which of the statement(s) given above is/are correct?

25. The statement prepared under process costing is called

cost of goods sold statement
income statement
cost of production report
variance statement

Detailed SolutionThe statement prepared under process costing is called

26. Cost accounting was developed because of the _________.

limitations of the financial accounting
limitations of the management accounting
limitations of the human resource accounting
limitations of the double entry accounting

Detailed SolutionCost accounting was developed because of the _________.

27. A document which provides for the detailed cost centre and cost unit is _______.

tender
cost sheet
invoice
profit statement

Detailed SolutionA document which provides for the detailed cost centre and cost unit is _______.

28. Why is cash budget prepared?

It helps in cash management
It helps in preparing balance sheet
It is legally compulsory
Both A and C

Detailed SolutionWhy is cash budget prepared?

29. The process of setting standards and comparing actual performance with standards with a view to control the cost is ________.

cost reduction
cost control
cost allocation
cost ascertainment

Detailed SolutionThe process of setting standards and comparing actual performance with standards with a view to control the cost is ________.

30. Volume Variance =

Standard rate (Actual output - budgeted output)
Actual output × standard rate - budgeted fixed overheads
Standard rate per hour (Standard hours produced - actual hours)
All of the above

Detailed SolutionVolume Variance =

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