Process Costing - Multiple Choice Questions and Answers. However, if the objective is to get information for decision making . 1. b 2. Classification of Cost MCQs. Cost Accounting Solved MCQs | Cost Accounting Multiple Choice Questions and Answers doc 1. Following are the two different kinds of cost unit ascertained under service costing: Determining the billing rate: It is assumed in process costing that the average cost . 1- An example of variable costs-. These Multiple Choice Questions (MCQs) should be practiced to improve the Applied Cost Accounting skills required for various interviews (campus interview, walk-in interview, company interview), placement, entrance exam and other competitive examinations. 5. Labour cost is a second major element of cost. 15,904. Budget is related to a definite future period. Recent Posts. a. Costs can be classified into Element, Function, Nature, Behavior, Controllable or Non-controllable. of material is : Cost Price is not fixed in case of: 600,000? Overview and comparison . (A) Relevant (B) Total (C) Product (D) Period Alternative concepts. The loss incurred on an incomplete contract is transferred to A. Here on MCQs.club we have designed Multiple-Choice Questions (MCQs) that covers the cost behavior, classification of overheads, meaning, types, methods, importance of cost classification with examples. (b) Tax compliance. Answer: Option C. Solution: Toy manufacturing industry should use batch costing. Which of the following industries is Standard Costing most suited for? Standard costing is an approach which involves substituting the estimated cost for an actual cost in the accounting records in accounting terms it presents the difference between the expected and actual costs. Batch Costing: It is a method of costing used to ascertain the cost of making a number of similar units of a customised product. This is suitable for industries where a number of component parts are separately produced and subsequently assembled into a final product. Posted in Cost Accounting • MCQ Questions. True False In Job costing a cost is calculated for each individual job, and this cost can be used to establish the profit or loss from doing the job. Answer Explanation 3) Which of the following standards cannot be used for cost control? Jan 1; finished goods inventory of Manuel Company was Rs.3, 00,000. Answer: A. Costing methods for manufacturing are accounting techniques that are used to help understand the value of inputs and outputs in a production process. Question 23 _____is the excess of sales over marginal cost of sales. Standard costing is the most powerful system ever invented for cost control. Standard Costing Prepared By; Dr. Priya Mandiratta Assistant Professor Mittal School of Business Learning Question 24. Operation costing Service costing Detailed Answer Process costing Job costing 5 In electricity . Applied Cost Accounting MCQs : This section focuses on the "Applied Cost Accounting". The main purpose of Cost Accounting is. . Farm costing. Answer :- to provide information to management for decision making. Activity-based costing (ABC) is a costing method that assigns overhead and indirect costs to related products and services. 224 (A), the standard price per kg. MCQs 2: Which of the following statements are true about Standard Costing? 3. Increase c. Stay the same d. None of the above Answer Explanation This helps a business to plan a budget. (d) deducted from costing profit. A. profit B. margin C. loss D. contribution. This costing method is used in industries like chemicals, textiles, steel, rubber, sugar, shoes, petrol, etc. Also you will get here Sales Budgets MCQs, Production Budget MCQs, Flexible Budget MCQ and cash budget mcqs. Rather than assigning the actual costs of direct materials, direct labor, and manufacturing overhead to a product, some manufacturers . 10. b) to help in inventory valuation. Production cost includes only direct costs related to the production. B. - Published on 04 Sep 15 a. This is because, in such cases, standardization of various elements of cost is not possible. Correct! It can be used effectively to those industries which are producing standardised product and are repetitive in nature , examples are transport for London, Salt industries etc. Process costing is also used in the assembly type of industries. This method can be applied in the industries which are mass producing industries producing standard products. 3. This is suitable for industries where a number of component parts are separately produced and subsequently assembled into a final product. (a) Cost ascertainment. 6) The cost accountant of SIR ltd. has computed labor turnover rate for the year ended on 31st march 2019, as 20%, 10% and 6% respectively under flux method, replacement method and separation method. Which of the following costing method is suitable for Toy Making Industry? c. Standard Cost d. None of the above 3. C. cost ascertainment. 4. The actual costs lose their relevance after that particular accounting period. The correct answer is "estimated expenses of budgeted production" (option 1). The method of costing refers to a system of cost ascertainment and cost accounting. Cost accounting com semester cost accounting multiple choice questions according to cima, england, technique and process of ascertaining is called costing cost . Standard Costing is more widely applied in job order industries and not suitable for engineering industries. How many units would the company have to sell to attain target profits of Rs. WWW.COMMERCEPK.COM http://www.commercepk.com/mcqs-complete-solved-multiple-choice-question-with-answer-key/ Cost and Management Accounting-615A Standard costing is a control system that enables any variances from standard cost or budget to be analysed in some detail. Wrong! Under the present political conditions with a restive labour in organised industry, it is very difficult to reduce labour cost. 1. 8. Which of the following industries would most likely use a process cost accounting system? Answer: C. Standard costing 114. Cost control seeks to attain lowest possible cost under existing conditions. Unscientific system: In case the cost accounting system adopted by a concern is not suitable and adequate, the costing data supplied shall not be reliable. Historically, standard costs have been associated with a manufacturing company's costs of direct materials, direct labor, and manufacturing overhead. FlexABM provides intuitive Costing of activities and processes, and is ideally suited to any sized enterprise or industry segment - large or small, financial or non-financial, private or public sector. Each of . Question 109. It is also one of the most recently developed refinements of cost accounting. It is used commonly in manufacturing units like paper, steel, soaps, medicines, vegetable oils, paints . Cost Per Unit: The cost per unit is mainly calculated in service costing.Here, the cost unit is determined by the type of service industry the business belongs to, and it usually differs from company to company. 4. Cost accounting, performance measurement; budgeting and control . Later, when the actual costs are determined, the company can see if it has a favorable budget variance (meaning, actual costs did not exceed standard costs) or unfavorable . c. Job Costing . d) Depreciation on machinery. D. Work in progress account. Answer the Following Question: Process Costing Is Suitable for a) Hospitals B) Oil Refining Firms C) Transport Firms D) Brick Laying Firms. Industries differ in their nature, in the products they produce and the services they offer. it is the company's policy to value the stocks at standard purchase price. Conversion costs: 20,000 units + (1,000 units × 0.6) = 20,600 units. Standard costs are estimates of the actual costs in a company's production process, because actual costs cannot be known in advance. Budgeting may be said to be an act of determining costing standards. 2. Classification of Cost MCQs. It represents the application of more than one method of costing in respect of the same product. The above statement is incorrect The above statement is correct If the material price variance was Rs. Solve them and see how well you understand the accounting concepts . CAS 9 is for direct expenses as issued by the Cost Accounting Standards Board (CASB) of the Institute of Cost Accountants of India. Under this method, homogeneous products are taken as cost unit. Contract Costing . 5. Multiple costing is suitable for banking industry. 3 A document that records the standard cost of a single unit of product is known as: bill of materials bill of product standard cost card product expense card CORRECT The a. True False. c) to help in the fixation of selling price. Subsequently, variances are recorded to show the difference between the expected and actual costs. Question 11 of 26. 113. True 2. Free Accounting MCQS Tests. The right product costing methods in manufacturing helps to make informed decisions about production levels, pricing, competitive strategy, future investment, and a host of other concerns. Standard costing is not suitable in situations where a variety of different kind of tasks are being done e.g. The correct answer is "21,000 units for materials and 20,600 units for conversion costs" (option 3). Process costing is a form of operations costing which is used where standardized homogeneous goods are produced. True b. Limitations of Standard Costing. (d) Account for the amount of product cost. Standard costing is the practice of substituting an expected cost for an actual cost in the accounting records. Labour cost is the second element of cost. Standard costing is the second cost control technique, the first being budgetary control. 6. The contract costing technique is utilized for the most part by developers, transport manufacturers, and development and mechanical building firms. The correct answer is option (B) Oil Refining Firms. D. profit analysis. The main function of cost accounting is _____ reporting a. . Determining the cost unit in Service Costing: To measure the cost of business operations in a service industry is a complex activity where all the cost parameters are to be considered while deciding a suitable unit for costing. Profit . 6. Process costing is suitable for oil refining firms. If the objective is only to ascertain the cost, a simple system will be sufficient. C. Work certified. Multiple costing. Costing and cost accounting are _____ A. not the same B. one and the same C. not related at all D. none of . 6) Petroleum industries 7) Agricultural and food industries 8) Transport Industries 9) Water Supply Industries 10) Coal mining industries Hence small business concerns do nol show much interest in installing standard costing. Improper handling: The association which manages the comparison scheme should have qualities of effective leadership without which the scheme cannot be a success. You can also go through various links given below in the article for Chapter wise Management Accounting MCQs. Activity-based costing trends to increase the number of cost pools. _____ is the most suitable method in a transport industry. (c) Assign costs to the items completed and items in ending Work in Process inventory. This method is similar to job costing. 10% of input is normal loss. By utilizing a familiar "drag and drop" tree structure, grouping and tagging, and roll up functionality, data modeling is uncomplicated, yet . (vi) The most suitable cost system where the products differ in type of material and work performed is (a) Process Costing (b) Batch Costing (c) Job Costing (d) Operating Costing (vii) In a process 10000 units are introduced during a period. c) Direct materials. During the month of March, 560 kg of material was purchased at a total cost of Rs. False 3. View 30th sept Standard costing (1).ppt from ACC 201 at Lovely Professional University. 18. a) Rs 25. b) Rs.1. MCQs 1: Standard Costing is more widely applied in job order industries and not suitable for engineering industries. The job order costing system is a costing method that is used to calculate the costs attached to an individual job or order. Ans: a) Fixed expenses. The main objective of cost accounting is to provide information to the management for (a) planring (c) policy-making (b) decision-making (d) None of these Ans. Answer (1 of 6): Introduction:— cost accounting has been traditionally associated with manufacturing companies.however in the modern competitive market it has been increasingly applied in service industries like banks , railways, insurance companies, transportation companies, electricity generati. Basic Standard b. Awesome! It challenges all standards and endeavours to better them continuously. Reduce b. Cost reduction is concerned with reducing costs. a) Rent,rates and tax. Standard costing is an important subtopic of cost accounting. The important steps for the installation of a costing system are discussed below: 1. Standard costing is a system of accounting that uses predetermined standard costs for direct material, direct labor, and factory overheads. C. Standard costing. . Standard costing is an important subtopic of cost accounting. 3. Activity based costing, throughput accounting, marginal costing. Paper 6 Laws and Ethics MCQ A. . Normal Standard c. Both a and b d. None of the above Answer Explanation 4) When standard costs are used, the amount of detailed record keeping will normally a. Here on MCQs.club we have designed Multiple-Choice Questions (MCQs) that covers the cost behavior, classification of overheads, meaning, types, methods, importance of cost classification with examples. A) It controls certain elements of cost affecting production and sales. 8. b) Interest on capital. B. financial audit. View Answer. In how many ways cost classification can be done? One Operation (Unit or Output) Costing: This is suitable for industries where manufacture is continuous and units are identical. 1. 3. d) to provide information to management for decision making. Process costing is method of costing wherein the products go through two or more processes and the costs are assigned/charged to individual processes or operations which is averaged over the number of units produced during the said period. to help in the fixation of selling price. Batch costing is another form of job costing. If every unit of production is different in nature and quality, then standard costing is unsuitable. This helps a business to plan a budget. to help in inventory valuation. (b) calculate the cost per equivalent unit. d) to provide information to management for decision making. Depends upon budgetary costing: Standard costing is a viable option only when budgetary techniques are used. D. One-operation costing. 11. Some of the industries where standard costing used are listed below: 1) Sugar Industries 2) Textiles Industries 3) Fertilizers Industries 4) Steel industries 5) Power generation and distribution industries. Less Working Capital: The service costing involves less working capital since the direct cost of raw material and other direct expenses is comparatively low.. Answer & Explanation. Job costing is used when a business entity carries out tasks or jobs to meet specific customer orders. Rs. 1. Standard costing is introduced primarily to ascertain the efficiency of cost performance. This method is not used in automobiles but highly used in construction sectors . c. Standard Costing . (a) Account for the number of physical units. Labour cost is the second element of ________. Hence, there is a need of incurring heavy expenses for fixing above mentioned standards since the . This accounting method of costing recognizes the relationship between costs, overhead activities, and manufactured products, assigning indirect costs to products less arbitrarily than traditional costing . Answer & Solution Discuss in Board Save for Later 2. Sugar industry b . Historically, standard costs have been associated with a manufacturing company's costs of direct materials, direct labor, and manufacturing overhead. Multiple Costing: It is also called as composite costing. Process Costing . 10. 1. 2. It does not provide any 'Norms' or 'Yardsticks' for cost control. Cost Accounting Final exam; Cost Accumulation Systems; Cost Allocation Techniques; . Cost per equivalent unit Function, nature, Behavior, Controllable or.. Which is used in the industries which are mass producing industries producing standard products related to items. 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