Costing

41. When is a business unit known to be a profit centre?

If its operations or departments are not directly involved in revenue generating activities, but instead focus on elements of cost control
If its management is evaluated not only on revenues and expenses, but also on asset investment
If its management is compensated based on the level of profitability
If its management is held accountable for both revenues and expenses and has the authority to make decision regarding its products, markets and source of supply

Detailed SolutionWhen is a business unit known to be a profit centre?

42. Relationship based on unrelated level of activity and past data of cost is measured with help of

cost estimation
price estimation
unit estimation
production estimation

Detailed SolutionRelationship based on unrelated level of activity and past data of cost is measured with help of

43. In process and job costing system, normal spoilage cost is considered as

conversion costs
sunk costs
inventoriable costs
non inventoriable costs

Detailed SolutionIn process and job costing system, normal spoilage cost is considered as

44. Overhead can be classified according to function-wise as ________.

fixed o/h, variable o/h and semi-variable o/h
controllable o/h and uncontrollable o/h
manufacturing o/h, administration o/h and selling & distribution o/h
past cost and future cost

Detailed SolutionOverhead can be classified according to function-wise as ________.

45. A company makes a single product and incurs fixed costs of Rs 30,000 per annum. Variable cost per unit is Rs 5 and each unit sells for Rs 15. Annual sales demand is 7,000 units. The breakeven point is:

2,000 units
3,000 units
4,000 units
6,000 units

Detailed SolutionA company makes a single product and incurs fixed costs of Rs 30,000 per annum. Variable cost per unit is Rs 5 and each unit sells for Rs 15. Annual sales demand is 7,000 units. The breakeven point is:

46. The contract cost is used in-

Ship building
Aircraft industry
Self-propelled vehicle industry
None of these

Detailed SolutionThe contract cost is used in-

47. The budget relating to . . . . . . . . must be prepared first and the other budgets should be prepared in the light of that factor.

limiting factor
materials
labour
production

Detailed SolutionThe budget relating to . . . . . . . . must be prepared first and the other budgets should be prepared in the light of that factor.

48. Given below are two statement. one labelled as Assertion (A) and other as Reason (R): Assertion (A): Cost accounting is complementary to financial accounting. Reason (R): The result of cost accounting are not trustworthy. Choose the correct answer

Both (A) and (R) are true and (R) is correct explanation of (A)
Both (A) and (R) are true but (R) is not the correct explanation of (R)
(A) is true but (R) is false
(A) is false but (R) is true

Detailed SolutionGiven below are two statement. one labelled as Assertion (A) and other as Reason (R): Assertion (A): Cost accounting is complementary to financial accounting. Reason (R): The result of cost accounting are not trustworthy. Choose the correct answer

49. Direct material Rs 25,000 and wages Rs 15,000 and direct expenses Rs 5,000 What would be the factory cost if factory overhead rate is 20%.

Rs. 45,000
Rs. 50,000
Rs. 54,000
Rs. 60,000

Detailed SolutionDirect material Rs 25,000 and wages Rs 15,000 and direct expenses Rs 5,000 What would be the factory cost if factory overhead rate is 20%.

50. If any by-product is produced and sold it is credited to ________.

profit and loss a/c
by-product a/c
process a/c
abnormal gain a/c

Detailed SolutionIf any by-product is produced and sold it is credited to ________.

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