McqMate
Chapters
| 1. |
An example of a production overhead would be: |
| A. | Material. |
| B. | Rent |
| C. | Labour cost. |
| D. | Supervisory cost |
| Answer» D. Supervisory cost | |
| 2. |
All such expenses which are incurred for creating and enhancing the demands for the products are |
| A. | Selling expenses |
| B. | Administrative expenses |
| C. | Distribution expenses |
| D. | All of the above |
| Answer» D. All of the above | |
| 3. |
To control costs it is essential to keep control on |
| A. | Prime cost |
| B. | Overheads |
| C. | Indirect materials and tools cost. |
| D. | All of the above |
| Answer» B. Overheads | |
| 4. |
A cost that is easily traceable to a cost object is known as: |
| A. | Direct cost |
| B. | Indirect cost |
| C. | Variable cost |
| D. | Fixed cost |
| Answer» A. Direct cost | |
| 5. |
Which of the following best describes a fixed cost? A cost which: |
| A. | Represents a fixed proportion of total costs |
| B. | Remains at the same level up to a particular level of output |
| C. | Has a direct relationship with output. |
| D. | Remains at the same level when output increases. |
| Answer» A. Represents a fixed proportion of total costs | |
| 6. |
Which of the following is a valid classification of the salary paid to the foreman in charge of the packing department? |
| A. | Indirect departmental cost |
| B. | Direct product cost |
| C. | Direct departmental cost |
| D. | Service department cost. |
| Answer» D. Service department cost. | |
| 7. |
A cost that changes in total dollar amount with the change in the level of activity is known as: |
| A. | Direct cost |
| B. | Indirect cost |
| C. | Variable cost |
| D. | Fixed cost |
| Answer» C. Variable cost | |
| 8. |
Which of the following costs is treated as indirect labour? |
| A. | Idle time |
| B. | Overtime premium |
| C. | Fringe benefits |
| D. | All of the above |
| Answer» D. All of the above | |
| 9. |
Which definition best describes indirect costs? |
| A. | Indirect costs are those costs which are not controlled directly by a manager. |
| B. | Indirect costs are those costs which cannot be directly associated with a product or service. |
| C. | Indirect costs are always fix |
| Answer» B. Indirect costs are those costs which cannot be directly associated with a product or service. | |
| 10. |
What would be the most appropriate way of apportioning depreciation costs across different manufacturing departments in a business? |
| A. | Floor space |
| B. | Numbers of personnel |
| C. | Value of buildings and equipment |
| D. | Administration costs |
| Answer» C. Value of buildings and equipment | |
| 11. |
Which of the following cost is also known as overhead cost or on cost: |
| A. | Cost of direct labour |
| B. | Cost of direct material |
| C. | Direct expenses |
| D. | Indirect expenses |
| Answer» D. Indirect expenses | |
| 12. |
Which of the following calculate the actual cost of product: |
| A. | Cost estimation |
| B. | Costing |
| C. | Both a and b |
| D. | None of these |
| Answer» D. None of these | |
| 13. |
Costing is specialized branch of accounting which deals with: |
| A. | Classification, recording, allocation, and control of asset |
| B. | Classification, processing, allocation and directing |
| C. | Classification, recording, planning and control of asset |
| D. | Classification, recording, allocation and directing |
| Answer» D. Classification, recording, allocation and directing | |
| 14. |
In cinema halls, composite cost unit is ________________: |
| A. | A seat per show |
| B. | Cost of screening |
| C. | Salary of staff |
| D. | Rent of cinema hall |
| Answer» A. A seat per show | |
| 15. |
The stage of production at which separate products are identified is known as _______________: |
| A. | Process costing |
| B. | Reverse cost method |
| C. | Subsequent cost |
| D. | Equivalent production |
| Answer» A. Process costing | |
| 16. |
What item is not included in cost accounting? |
| A. | Product costing |
| B. | Profit-sharing |
| C. | Planning |
| D. | Controlling |
| Answer» B. Profit-sharing | |
| 17. |
A total of all the direct costs is known as |
| A. | Cost of production |
| B. | Cost of sales |
| C. | Prime cost |
| D. | Works cost |
| Answer» C. Prime cost | |
| 18. |
Which of the following is not included in functional classification of overheads? |
| A. | Repairs and maintenance |
| B. | Lubricating oil |
| C. | Consumable stores |
| D. | Chargeable expenses |
| Answer» D. Chargeable expenses | |
| 19. |
The process of distribution of overheads allotted to a particular department or cost center over the units produced is called: |
| A. | Allocation |
| B. | Apportionment |
| C. | Absorption |
| D. | Departmentalization |
| Answer» C. Absorption | |
| 20. |
A product with a high gross profit could be an unprofitable product. |
| A. | True |
| B. | False |
| C. | none |
| D. | none |
| Answer» B. False | |
| 21. |
To control costs it is essential to keep control on |
| A. | Prime cost |
| B. | Overheads |
| C. | Indirect materials and tools cost |
| D. | All of the above |
| Answer» D. All of the above | |
| 22. |
The overhead cost for a particular job = |
| A. | man hour rate x man hours spent on that job |
| B. | man hour rate / man hours spent on that job |
| C. | man hour rate + man hours spent on that job |
| D. | man hour rate – man hours spent on that jab |
| Answer» A. man hour rate x man hours spent on that job | |
| 23. |
The following method is an improvement over the percentage on direct labour cost method. |
| A. | Machine hour rate |
| B. | Percentage on prime cost |
| C. | Percentage on direct material cost |
| D. | Man hour rate |
| Answer» D. Man hour rate | |
| 24. |
Which of the following is/are the basic object/s of job analysis? |
| A. | Determination of wage rates |
| B. | Ascertain the relative worth of each job |
| C. | Breaking up job into its basic elements |
| D. | All of the given options |
| Answer» A. Determination of wage rates | |
| 25. |
An overhead absorption rate is used to: |
| A. | Share out common costs over benefiting cost canters |
| B. | Find the total overheads for a cost centre |
| C. | Charge overheads to products |
| D. | Control overheads |
| Answer» C. Charge overheads to products | |
| 26. |
Economic Batch Quantity depends on ……………….and ……………..costs. |
| A. | Material, labour |
| B. | set-up costs, carrying |
| C. | transportation, carrying |
| D. | warehousing, labour |
| Answer» B. set-up costs, carrying | |
| 27. |
The wages paid to maintenance department workers who do repair work principally for production departments but also on the vehicles in the distribution department should be charged as |
| A. | Service cost |
| B. | Distribution cost |
| C. | General cost |
| D. | Production cost |
| Answer» A. Service cost | |
| 28. |
Which of the following costs of management is likely to have least control? |
| A. | Machine breakdown cost |
| B. | Wages cost |
| C. | Advertising cost. |
| D. | Buildings insurance cost |
| Answer» A. Machine breakdown cost | |
| 29. |
Which of the following best describes a fixed cost? A cost which: |
| A. | Represents a fixed proportion of total costs. |
| B. | Remains at the same level up to a particular level of output. |
| C. | Remains at the same level when output increases |
| D. | Has a direct relationship with output |
| Answer» B. Remains at the same level up to a particular level of output. | |
| 30. |
Which of the following would not be considered as a component of 'cost' of stock? |
| A. | Transportation inward cot |
| B. | Import duties |
| C. | Purchase price |
| D. | Salaries of selling staff |
| Answer» D. Salaries of selling staff | |
| 31. |
. Cost apportionment involves: |
| A. | The sharing out of overheads to service departments |
| B. | The sharing out of common costs to departments |
| C. | The allocation of direct costs to departments |
| D. | The sharing out of costs to products |
| Answer» C. The allocation of direct costs to departments | |
| 32. |
. What would be the most appropriate way of apportioning depreciation costs across different manufacturing departments in a business? |
| A. | Floor space |
| B. | Numbers of personnel |
| C. | Value of buildings and equipment |
| D. | Value of land. |
| Answer» D. Value of land. | |
| 33. |
. Which of the following is a conventional method of ascertaining cost? |
| A. | Absorption costing |
| B. | Full Costing |
| C. | Both a & b |
| D. | None of the above |
| Answer» A. Absorption costing | |
| 34. |
. The total cost of a product will include: |
| A. | Prime costs plus direct production overhead plus indirect-production overhead plus tax |
| B. | Prime cost plus absorbed direct production overhead |
| C. | Prime costs plus direct production overhead plus indirect production overhead |
| D. | Prime cost only |
| Answer» C. Prime costs plus direct production overhead plus indirect production overhead | |
| 35. |
. Which of the following is not considered to be a benefit of activity-based costing? |
| A. | More accurate product costs |
| B. | Reduced complexity of calculating costs |
| C. | Inclusion of non-manufacturing costs |
| D. | More detailed understanding of what drives cost. |
| Answer» D. More detailed understanding of what drives cost. | |
| 36. |
Wages paid to a labour who was engaged in production activities can be termed as. |
| A. | direct cost. |
| B. | indirect cost |
| C. | sunk cost |
| D. | imputed cost. |
| Answer» A. direct cost. | |
| 37. |
. The cost which is to be incurred even when a business unit is closed is a. |
| A. | imputed cost. |
| B. | historical cost. |
| C. | sunk cost. |
| D. | shutdown cost |
| Answer» D. shutdown cost | |
| 38. |
. Which of the following best describes a fixed cost? A cost which: |
| A. | Actual direct labour time per unit being greater than budget. |
| B. | Actual cost of direct labour being greater than budget. |
| C. | Actual overheads incurred being less than budget. |
| D. | The number of units produced being greater than budget. |
| Answer» D. The number of units produced being greater than budget. | |
| 39. |
. Which of the following is most likely to be an allocated production overhead cost to the finishing cost centre? |
| A. | Factory rates. |
| B. | Salary of the finishing cost centre supervisor. |
| C. | Power used on finishing cost centre machines. |
| D. | Salary of the production manager. |
| Answer» C. Power used on finishing cost centre machines. | |
| 40. |
Wages paid to a office cleaning staff who was engaged in Administration activities a can be termed as. |
| A. | direct cost. |
| B. | indirect cost |
| C. | sunk cost |
| D. | imputed cost. |
| Answer» B. indirect cost | |
| 41. |
Overhead is the cost incurred in the course of making a product, providing a service or running a department, but which cannot be traced directly and in full to the product, service or department. |
| A. | Correct |
| B. | Incorrect |
| C. | none |
| D. | none |
| Answer» A. Correct | |
| 42. |
Indirect expenses are also known as overheads. |
| A. | True |
| B. | False |
| C. | none |
| D. | none |
| Answer» A. True | |
| 43. |
Overhead is actually the total of: |
| A. | Indirect materials |
| B. | Indirect expenses |
| C. | Indirect labour |
| D. | All of the above |
| Answer» D. All of the above | |
| 44. |
Overhead costs may be classified according to the function of the organization as: |
| A. | Production/Manufacturing overheads |
| B. | Non-production/Non-manufacturing overheads |
| C. | Both A&B |
| D. | None |
| Answer» C. Both A&B | |
| 45. |
. Production Overheads are costs related to the production process other than direct labour and materials. They are also known as factory overheads since they are incurred inside the factory, other overheads such as selling and administrative overheads are always charged to in the period in which they are incurred |
| A. | The above statement is true |
| B. | The above statement is false |
| C. | none |
| D. | none |
| Answer» A. The above statement is true | |
| 46. |
Production overheads represent indirect materials, indirect wages and indirect expenses attributable to: |
| A. | Production activities |
| B. | Service activities |
| C. | Both A&B |
| D. | None |
| Answer» C. Both A&B | |
| 47. |
Indirect production costs are incurred in three main ways: • Production activities: costs arising in production departments such as fuel, depreciation, supervision • Service activities: the cost of operating non-producing departments such as materials handling, canteen • Establishment costs: general production overheads such as factory rent/rates, heating and lighting |
| A. | True |
| B. | False |
| C. | none |
| D. | none |
| Answer» A. True | |
| 48. |
Which of the following procedure is incorrect for attributing overhead costs to cost units? I. Collecting production overhead costs by item II. Establishing cost centres III. Allocating and apportioning overhead costs to cost centres IV. Apportioning service cost centre costs to production cost centres V. Absorbing production cost centre costs into cost units |
| A. | All of the above are correct |
| B. | All of the above are incorrect |
| C. | (II) and (IV) are incorrect |
| D. | (II) is incorrect |
| Answer» A. All of the above are correct | |
| 49. |
. The total amount of factory overhead represents: |
| A. | Allocated costs |
| B. | Apportioned costs |
| C. | Share of service department costs |
| D. | All of the above |
| Answer» D. All of the above | |
| 50. |
Allocation is where overheads are allocated to cost centres. If a cost centre is responsible for the entire cost of an item of expenditure, the entire cost is charged directly to the cost centre. |
| A. | Correct |
| B. | Incorrect |
| C. | none |
| D. | none |
| Answer» A. Correct | |
| 51. |
Apportionment means sharing on a reasonable basis. Many overhead costs are costs that cannot be allocated directly to one cost centre, because they are shared by two or more cost centres. These costs are apportioned between the cost centres. |
| A. | Incorrect |
| B. | Correct |
| C. | none |
| D. | none |
| Answer» B. Correct | |
| 52. |
Absorption is also called: |
| A. | Allocation |
| B. | Sharing |
| C. | Overhead recovery |
| D. | None |
| Answer» C. Overhead recovery | |
| 53. |
When overheads have been allocated and apportioned to production cost centres, they are charged to the cost of products manufactured in the cost centre. |
| A. | The above statement is correct |
| B. | The above statement is incorrect |
| C. | none |
| D. | none |
| Answer» A. The above statement is correct | |
| 54. |
Production overheads are the overhead costs of both the production departments and the service departments. |
| A. | False |
| B. | True |
| C. | none |
| D. | none |
| Answer» B. True | |
| 55. |
The apportionment of production overhead costs might be in two stages: • sharing (or dividing) general costs between production centres and service centres; and • then sharing the costs of the service centres between the production centres. |
| A. | Correct |
| B. | Incorrect |
| C. | none |
| D. | none |
| Answer» A. Correct | |
| 56. |
Sharing the costs of the service centres between the production centres is called: |
| A. | Reapportionment |
| B. | Reallocation |
| C. | Secondary apportionment |
| D. | None |
| Answer» B. Reallocation | |
| 57. |
The total overhead costs of each production centre should be: |
| A. | Costs allocated directly to the production centre |
| B. | Shared costs apportioned to the production centre |
| C. | A share of the costs of each service department, apportioned to the production centre |
| D. | All of the above |
| Answer» C. A share of the costs of each service department, apportioned to the production centre | |
| 58. |
The absorption rate may be calculated by the fraction: • Total overhead costs • Total of absorption basis. |
| A. | Correct |
| B. | Incorrect |
| C. | none |
| D. | none |
| Answer» A. Correct | |
| 59. |
Overheads can be absorbed into cost units by means of: • Physical unit produced • Percentage of prime cost • Percentage of direct wages • Direct labour hour rate • Machine hour rate |
| A. | All of the above |
| B. | (I) (IV) and (V) only |
| C. | (IV) and (V) only |
| D. | None |
| Answer» A. All of the above | |
| 60. |
The purpose of allocation and apportionment of overheads is to calculate an absorption rate for each production department. |
| A. | False |
| B. | True |
| C. | none |
| D. | none |
| Answer» A. False | |
| 61. |
Absorption rates are used to add overhead costs to: |
| A. | The Admin costs |
| B. | Other expenses |
| C. | The costs of production |
| D. | None |
| Answer» B. Other expenses | |
| 62. |
A situation may arise where both service departments do work for the other service department, as well as the production departments. The secondary apportionment is more complex. The process is called reciprocal apportionment |
| A. | The above statement is correct |
| B. | The above statement is incorrect |
| C. | none |
| D. | none |
| Answer» A. The above statement is correct | |
| 63. |
The reciprocal apportionment and can be done using: |
| A. | Repeated distribution method |
| B. | Simultaneous equations method |
| C. | Both A&B |
| D. | None |
| Answer» B. Simultaneous equations method | |
| 64. |
A single overhead absorption rate might be used for all the production departments in the factory. |
| A. | True |
| B. | False |
| C. | none |
| D. | none |
| Answer» A. True | |
| 65. |
Single overhead absorption rate is also known as: |
| A. | Blanket rate |
| B. | Factory-wide absorption rate |
| C. | Both A&B |
| D. | None |
| Answer» B. Factory-wide absorption rate | |
| 66. |
A blanket overhead absorption rate is an absorption rate used throughout a factory and for all jobs and units of output irrespective of the department in which they were produced. |
| A. | True |
| B. | False |
| C. | none |
| D. | none |
| Answer» A. True | |
| 67. |
Blanket overhead rates are not appropriate in the following circumstances. |
| A. | There is more than one department |
| B. | Jobs do not spend an equal amount of time in each department |
| C. | Both A&B |
| D. | None |
| Answer» B. Jobs do not spend an equal amount of time in each department | |
| 68. |
Administration overheads and sales and distribution overheads are not absorbed into product costs. Instead, they are treated in full as an expense in the financial period to which they relate. |
| A. | The above statement is correct |
| B. | The above statement is incorrect |
| C. | none |
| D. | none |
| Answer» A. The above statement is correct | |
| 69. |
Non-production overhead costs are never added to the value of inventory. |
| A. | False |
| B. | True |
| C. | none |
| D. | none |
| Answer» A. False | |
| 70. |
It is possible to add non-production overheads to the full production cost of units produced and sold (i.e. No cost will be carried forward to the next period in the form of closing stock), to obtain a full cost of sale. |
| A. | True |
| B. | False |
| C. | none |
| D. | none |
| Answer» A. True | |
| 71. |
Overhead absorption is the process whereby overhead costs allocated and apportioned to production cost centres are added to unit, job or batch costs. |
| A. | True |
| B. | False |
| C. | none |
| D. | none |
| Answer» A. True | |
| 72. |
Overhead absorption is sometimes called overhead recovery. |
| A. | False |
| B. | True |
| C. | none |
| D. | none |
| Answer» B. True | |
| 73. |
Overheads are usually added to cost units using a predetermined overhead absorption rate, which is calculated using figures from the budget. |
| A. | False |
| B. | True |
| C. | none |
| D. | none |
| Answer» B. True | |
| 74. |
Predetermined absorption rates is where, the absorption rate calculated in advance using estimates for cost and production volume in the annual financial plan or budget. |
| A. | Correct |
| B. | Incorrect |
| C. | none |
| D. | none |
| Answer» A. Correct | |
| 75. |
A predetermined overhead absorption rate is also known as: |
| A. | Fixed overhead absorption rate |
| B. | The fixed overhead recovery rate |
| C. | The fixed overhead applied |
| D. | All of the above |
| Answer» C. The fixed overhead applied | |
| 76. |
If the amount of production overheads absorbed into product costs is more than the actual production overhead expenditure, there is: |
| A. | Over-absorbed overhead |
| B. | Under-absorbed overhead |
| C. | Neither A or B |
| D. | None |
| Answer» A. Over-absorbed overhead | |
| 77. |
The over-absorbed overhead is accounted for as an adjustment to the profit in the period, and is added to profit in the cost accounting income statement. |
| A. | Correct |
| B. | Incorrect |
| C. | none |
| D. | none |
| Answer» A. Correct | |
| 78. |
Under or over absorption is caused by the actual fixed overhead and production volume being different from those figures used to calculate the predetermined rate. |
| A. | False |
| B. | True |
| C. | none |
| D. | none |
| Answer» B. True | |
| 79. |
Identify the circumstances where under- or over-recovery of overhead will occur: |
| A. | Actual overhead costs are different from budgeted overheads |
| B. | The actual activity level is different from the budgeted activity level |
| C. | Actual overhead costs and actual activity level differ from the budgeted costs and level |
| D. | All of the above |
| Answer» C. Actual overhead costs and actual activity level differ from the budgeted costs and level | |
| 80. |
Variable overhead is overhead that increases as more production work is done. Total variable overhead expenditure therefore depends on the volume of production. Variable overhead is usually calculated as an amount for each direct labour hour worked. |
| A. | The above statement is correct |
| B. | The above statement is incorrect |
| C. | none |
| D. | none |
| Answer» A. The above statement is correct | |
| 81. |
The loss incurred on an incomplete contract is transferred to …………….account. |
| A. | Costing profit and loss account |
| B. | profit and loss account |
| C. | trading account |
| D. | deferred to next year. |
| Answer» A. Costing profit and loss account | |
| 82. |
When the completion stage of the contract is more than half, the profit to be credited to Profit and Loss account will be equal to………….. |
| A. | 1/3rd of Notional Profit x cash received Work certified |
| B. | ½ of Notional Profit x cash received Work certified |
| C. | 2/3rd of Notional profit x cash received Work certified |
| D. | full Notional Profit. |
| Answer» C. 2/3rd of Notional profit x cash received Work certified | |
| 83. |
If the amount of work certified is less than………of the contract price,then no profit should be taken to Profit & Loss Account. |
| A. | 20% |
| B. | 25% |
| C. | 33 1/3% |
| D. | 40% |
| Answer» B. 25% | |
| 84. |
Contract costing is not used in one of the following industries. |
| A. | Ship building |
| B. | Civil Construction |
| C. | Automobiles |
| D. | Construction of Bridges |
| Answer» C. Automobiles | |
| 85. |
The sum of value of work certified and uncertified appearing in the Contract Account is called …………….. |
| A. | Work done. |
| B. | Work in Process |
| C. | Work Completed |
| D. | Work in Progress |
| Answer» D. Work in Progress | |
| 86. |
Total costs incur in a production process, is divided by total number of output units to calculate the |
| A. | unit costs |
| B. | cost of direct material |
| C. | cost of direct labour |
| D. | cost of indirect labour |
| Answer» A. unit costs | |
| 87. |
If beginning work in process equivalent units are 2500 units, work done in current period equivalent units are 3800 units and ending work in process equivalent units are 5000, then complete equivalent units in current period are |
| A. | 1500 units |
| B. | 1300 units |
| C. | 1500 units |
| D. | 1800 units |
| Answer» B. 1300 units | |
| 88. |
WIP in contract means: |
| A. | Work certified |
| B. | Work certified and work uncertified |
| C. | Cash received |
| D. | None of these |
| Answer» B. Work certified and work uncertified | |
| 89. |
Profit remaining as reserve is : |
| A. | Transfer to p/L |
| B. | Deducted from WIP |
| C. | Not taken into account. |
| D. | Deducted from cost of the contract. |
| Answer» C. Not taken into account. | |
| 90. |
Profit in incomplete contract in known as notional profit because: |
| A. | It is not real profits |
| B. | Real profit is ascertain when the contract is complete |
| C. | There is no such incomplete contract. |
| D. | The profit is only an approximation. |
| Answer» D. The profit is only an approximation. | |
| 91. |
The contract undertaken are completed away from the ………………premises. |
| A. | Contractors |
| B. | Contractee |
| C. | Party |
| D. | Builder |
| Answer» A. Contractors | |
| 92. |
A contract is generally of ………………..duration. |
| A. | Long |
| B. | Small |
| C. | Average |
| D. | Very Small |
| Answer» A. Long | |
| 93. |
Escalation clause is generally included in case of …………..contract agreement . |
| A. | Variable Cost |
| B. | Fixed Cost |
| C. | Fixed Price |
| D. | Variable Price |
| Answer» C. Fixed Price | |
| 94. |
Cost -plus- contract are undertaken for production of ……………….products. |
| A. | SSI |
| B. | Small |
| C. | Low value |
| D. | Highly specialized |
| Answer» D. Highly specialized | |
| 95. |
Retention money serves as a ………with the contractee. |
| A. | Security |
| B. | Balance |
| C. | Profit |
| D. | Loss |
| Answer» A. Security | |
| 96. |
When cash ratio is …….. retention money is 13%. |
| A. | 50% |
| B. | 87% |
| C. | 78% |
| D. | 99% |
| Answer» B. 87% | |
| 97. |
Work certified in a subsequent year is always ……………… than that the in preceding year. |
| A. | Greater |
| B. | Less |
| C. | Equal |
| D. | Greater than Equal to |
| Answer» A. Greater | |
| 98. |
Cost of defective materials should be……………………to costing P/L account and……………….to contract account. |
| A. | Debited, Credited |
| B. | Credited, Debited |
| C. | Charged, record |
| D. | Record, Apply |
| Answer» A. Debited, Credited | |
| 99. |
Escalation Clause aims at safeguarding the interest of the ……………….against unforeseen rise in cost. |
| A. | Contractor. |
| B. | Contractee |
| C. | Builder |
| D. | Party |
| Answer» A. Contractor. | |
| 100. |
Sub contract cost is always to be treated as ……………….to the contract. |
| A. | Indirect charge |
| B. | Direct charge |
| C. | Income |
| D. | Revenue |
| Answer» A. Indirect charge | |
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