Costing Archives

21. ABC analysis is an inventory control technique in which:

Inventory levels are maintained

Inventory is classified into A, B and C category with A being the highest quantity, lowest value

Inventory is classified into A, B and C Category with A being the lowest quantity, highest value

Either b or c

Detailed SolutionABC analysis is an inventory control technique in which:

22. Vertical difference, which measures distance between estimated and actual cost for every single observation is classified as

residual term

positive term

negative term

squared term

Detailed SolutionVertical difference, which measures distance between estimated and actual cost for every single observation is classified as

23. Cause and effect relationship between activity and costs is result of

contractual agreement

knowledge of operations

measureable unit relationship

all of above

Detailed SolutionCause and effect relationship between activity and costs is result of

24. Normal loss in the manufacturing process leads to _______.

reduction in unit price of other good units

increase in unit price of other good units

reduction in costing profit

increase in costing profit

Detailed SolutionNormal loss in the manufacturing process leads to _______.

25. If an allocated indirect cost is $1500 and actual incurred indirect cost is $1200, then this is classified as

applied indirect cost

applied direct cost

incurred indirect cost

over allocated indirect cost

Detailed SolutionIf an allocated indirect cost is $1500 and actual incurred indirect cost is $1200, then this is classified as

26. . . . . . . . . budget gives an estimate of the anticipated receipts and payment of cash during the budget period.

Sales

Production

Cash

Master

Detailed Solution. . . . . . . . budget gives an estimate of the anticipated receipts and payment of cash during the budget period.

27. Which of the following is not correct with reference to standard costing?

In standard costing, pre-determined costs control an entire organization

Standard maybe expressed in quantitative and monetary measures

Only adverse variances are investigated intensively

Standard is determined for each element of cost

Detailed SolutionWhich of the following is not correct with reference to standard costing?

28. Buying of goods or materials for production in a way that they are delivered directly on manufacturing facility of company is called

economic order quantity purchasing

annual purchasing

just in time purchasing

both a and b

Detailed SolutionBuying of goods or materials for production in a way that they are delivered directly on manufacturing facility of company is called

29. Line which uses to join observations with lower and highest values of cost driver is called

straight line

curved line

horizontal line

vertical line

Detailed SolutionLine which uses to join observations with lower and highest values of cost driver is called

30. The margin of safety may be defined as

the point at which break-even point sales are achieved

the excess of planned sales over the current actual sales

the extent to which sales revenue exceeds fixed costs

the difference between planned sales and break-even point sales

Detailed SolutionThe margin of safety may be defined as

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