190+ Cost and Works Accounting 2 Solved MCQs

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Chapter: Process Costing
101.

The monetary value attributed to normal losses in a process should be

A. A share of the process cost according to the stage of completion of the losses.
B. A nil value with no other monetary adjustment under any circumstances.
C. A full share of process cost on the same as good output.
D. A nil share of process costs which have been reduced by the scrap value of the normal loss.
Answer» D. A nil share of process costs which have been reduced by the scrap value of the normal loss.
discuss
102.

Details for the past month of a continuous process are:

A. Opening W.I.P. (400 units) (60% complete)
B. Closing W.I.P. (600 units) (20% complete)
C. Unit started 1,000
D. Unit finished 800
Answer» A. Opening W.I.P. (400 units) (60% complete)
discuss
103.

An abnormal gain in a process occurs in which of the following situations?

A. When actual losses are greater than the normal loss level.
B. When costs are reduced through increased machine speed
C. When actual losses are less than the normal level.
D. When the process output is greater than planned.
Answer» D. When the process output is greater than planned.
discuss
104.

Where process scrap is recycled for use in conjunction with new material as well as being so externally, which of. the following is most likely to be the value at which is debited to the process?

A. At the same price as it sold externally.
B. At the cost of normal losses.
C. At the cost attached to abnormal losses.
D. Nil value.
Answer» B. At the cost of normal losses.
discuss
105.

The physical flow of units into and out of departments is shown on the:

A. Quantities schedule.
B. Emulgent production schedule.
C. Cost of account for schedule.
D. Cost of Accounted for schedule.
Answer» A. Quantities schedule.
discuss
106.

An equivalent unit of material or conversion cost is equal to

A. The amount of material conversion cost necessary to complete one unit of production.
B. A unit of work-in-process inventory.
C. The amount of material or conversion cost necessary to start a unit of production into work in process inventory.
D. Fifty percent of material or conversion cost of a unit to finished goods inventory
Answer» A. The amount of material conversion cost necessary to complete one unit of production.
discuss
107.

Which of the following manufacturers would most likely not use a process-cost accounting system?

A. A producer of computer monitors.
B. A paint manufacturer.
C. A producer of frozen orange juice
D. A builder of customized yachts
Answer» D. A builder of customized yachts
discuss
108.

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
discuss
109.

First step in process costing system is to

A. compute cost for each equivalent unit
B. summarize total costs
C. compute output in units
D. summarize flow of output
Answer» D. summarize flow of output
discuss
110.

If total incurred cost in a production process are ₹30000 and number of output units are 5000 units, then units cost will be

A. ₹26
B. ₹6
C. ₹60
D. ₹16
Answer» B. ₹6
discuss
111.

If cost incurred for work in process inventory is ₹350000 and total equivalent units completed till date are 3500, then weighted average cost will be

A. ₹1,200
B. ₹1,000
C. ₹100
D. ₹10
Answer» C. ₹100
discuss
112.

In Process industries there is a flow of ……………. from one operation to the next operation.

A. Material
B. Labour
C. Overhead
D. Expenses
Answer» A. Material
discuss
113.

Make or But Decisions are involved before and after different……………….

A. Service.
B. Contract.
C. Processes.
D. Indirect Cost.
Answer» C. Processes.
discuss
114.

In process costing each process is treated as a separate………………

A. Cost Centre
B. Cost Unit
C. Cost Structure
D. Cost Industry
Answer» A. Cost Centre
discuss
115.

…………… are produced from the same basic raw materials.

A. Joint Product.
B. By Product
C. Main Product
D. Final Product
Answer» A. Joint Product.
discuss
116.

Husk produced in the process of Rice milling, is an example of ………………

A. Joint Product.
B. By Product
C. Main Product
D. Final Product
Answer» A. Joint Product.
discuss
117.

Joint Cost are ………………to individual joint products.

A. Non-Traceable
B. Separate
C. Traceable
D. Combined
Answer» A. Non-Traceable
discuss
118.

Subsequent cost are…………to individual product.

A. Non-Traceable
B. Separate
C. Traceable
D. Combined
Answer» C. Traceable
discuss
119.

Skimmed milk and Butter are the example of……………..

A. Joint Product.
B. By Product
C. Main Product
D. Final Product
Answer» A. Joint Product.
discuss
120.

Post separation costs are attributable to each ……. products.

A. Joint Product.
B. By Product
C. Main Product
D. Final Product.
Answer» A. Joint Product.
discuss
121.

Process costing provides a system of costing where the following characteristics occur. Identify which of the following are correct:

A. Output is continually produced from the manufacturing process. Materials might be added in full at the start of a process or might be added gradually throughout the process.
B. There might be losses in the process. Process costing provides a method of measuring and costing incomplete WIP.
C. When more than one product is output, they might be called joint products or a by-product, depending upon the relative value of the products. Process costing offers methods of costing each of the different products.
D. All of the above are correct
Answer» D. All of the above are correct
discuss
122.

Process costing is used when output is produced in a continuous process system, and it is difficult to separate individual units of output.

A. True
B. False
C. none
D. none
Answer» A. True
discuss
123.

Examples of manufacturing where process costing is used include:

A. Chemicals manufacture, Petroleum refining, the manufacture of liquids
B. The continuous processing of high volumes of low-cost food items such as tins of peas or beans, or bottles of tomato ketchup.
C. Both A&B
D. None
Answer» C. Both A&B
discuss
124.

The task that sits at the heart of process costing is always to allocate the costs collected on the debit side of the account to the possible outputs (good output, closing WIP and lost units) on the credit side.

A. The above statement is correct
B. The above statement is incorrect
C. none
D. none
Answer» A. The above statement is correct
discuss
125.

In process costing questions, you will need to:

A. Identify the losses and output
B. Calculate the cost of good output, losses and WIP
C. Use the costs you have calculated to assign values to the good output, losses and WIP
D. All of the above
Answer» D. All of the above
discuss
126.

It is possible to have abnormal loss and abnormal gain on the same process account in the same period.

A. False
B. True
C. none
D. none
Answer» A. False
discuss
127.

In a process costing system loss might be:

A. Normal
B. Abnormal
C. Both A&B
D. None
Answer» C. Both A&B
discuss
128.

Normal loss is usually expressed as a percentage of the input units of materials.

A. Correct
B. Incorrect
C. none
D. none
Answer» A. Correct
discuss
129.

Normal loss is ___________in the normal course of events. It is inherent in the physical and chemical reactions that take place in a process.

A. Avoidable
B. Unavoidable
C. none
D. none
Answer» B. Unavoidable
discuss
130.

The normal loss is something that is unavoidable in order to get the good output. The cost of the lost units is part of the cost of obtaining the good output.

A. True
B. False
C. none
D. none
Answer» A. True
discuss
131.

Normal loss comes with:

A. No recovery/scrape value
B. Recovery/scrape value
C. Either A or B
D. None
Answer» C. Either A or B
discuss
132.

If the normal loss has no scrap value it is given a nil value.

A. False
B. True
C. none
D. none
Answer» B. True
discuss
133.

If normal loss has a scrap value the company is able to recover some of the input costs to the process. The scrap value reduces the cost of the process.

A. The above statement is correct
B. The above statement is incorrect
C. none
D. none
Answer» A. The above statement is correct
discuss
134.

In some cases, a company might have to pay to dispose of losses in a process. The cost of disposal represents an additional cost to the process. To reflect this in the process account the normal loss is measured at zero but the expected costs of disposal are debited to the process account.

A. The above statement is incorrect
B. The above statement is correct
C. none
D. none
Answer» B. The above statement is correct
discuss
135.

The disposal cost of abnormal loss is included in the abnormal loss account and therefore in the transfer of the cost of abnormal loss to the statement of profit or loss.

A. True
B. False
C. none
D. none
Answer» A. True
discuss
136.

When actual loss exceeds normal loss, there is:

A. Abnormal loss
B. Abnormal gain
C. Extra loss
D. None
Answer» A. Abnormal loss
discuss
137.

The difference between total actual loss and normal loss is abnormal loss.

A. Incorrect
B. Correct
C. none
D. none
Answer» B. Correct
discuss
138.

If it is assumed that all losses in process occur at the end of the process, units of abnormal loss are costed in exactly the same way in the as units of finished output.

A. True
B. False
C. none
D. none
Answer» A. True
discuss
139.

The cost of abnormal loss is built into inventory.

A. False
B. True
C. none
D. none
Answer» A. False
discuss
140.

The cost of units of abnormal loss is treated as an _________ for the period, and charged as an ___________for the period

A. Product cost, inventory cost
B. Expense, expense in the income statement
C. Extra cost, suspense cost
D. None
Answer» B. Expense, expense in the income statement
discuss
141.

Abnormal loss comes with:

A. No recovery/scrape value
B. Recovery/scrape value
C. Either A or B
D. None
Answer» C. Either A or B
discuss
142.

When the abnormal has a scrape value the net cost of abnormal loss (cost of abnormal loss minus its scrap value) is then transferred as a cost to the cost accounting income statement at the end of the accounting period.

A. The above statement is correct
B. The above statement is incorrect
C. none
D. none
Answer» A. The above statement is correct
discuss
143.

When actual loss is less than the expected (normal) loss there is:

A. Extra ordinary loss
B. Abnormal loss
C. Abnormal gain
D. None
Answer» C. Abnormal gain
discuss
144.

Identify which of the following statement is correct.

A. Abnormal gain is a benefit rather than a cost. Whereas abnormal loss is written off as a cost at the end of the financial period.
B. Abnormal gain is an adjustment that increases the profit for the period.
C. Abnormal gain is recorded as a debit entry in the process account, because it is a benefit.
D. All of the above are correct
Answer» D. All of the above are correct
discuss
145.

When there is closing work in progress (WIP) the concept of _________ is used.

A. Equivalent units
B. Expected units
C. Fair allocated units
D. None
Answer» A. Equivalent units
discuss
146.

An equivalent unit means ‘equal to one finished unit of output’.

A. False
B. True
C. none
D. none
Answer» B. True
discuss
147.

When there is closing work in progress, costs are shared between finished units and inventory by calculating a cost per equivalent unit.

A. True
B. False
C. none
D. none
Answer» A. True
discuss
148.

When there is opening work in progress there are two types of cost on the debit side of the account. These are the costs that were incurred last period and brought forward as work in progress and the costs that were incurred in the current period.

A. The above statement is correct
B. The above statement is incorrect
C. none
D. none
Answer» A. The above statement is correct
discuss
149.

Are the costs of opening WIP, incurred in last period and brought forward as work in progress and the costs that were incurred in the current period, treated the same way?

A. Yes, treated together
B. Treated Separately
C. This question is addressed in the accounting policy adopted for opening work in progress.
D. None
Answer» C. This question is addressed in the accounting policy adopted for opening work in progress.
discuss
150.

Joint products are two or more products generated simultaneously, by a single manufacturing process using common input, and being substantially equal in value.

A. The above statement is correct
B. The above statement is incorrect
C. none
D. none
Answer» A. The above statement is correct
discuss
151.

In order to calculate a cost for each joint product, the common costs must be ________ between the joint products.

A. Identified
B. Allocated
C. Apportioned
D. None
Answer» C. Apportioned
discuss
152.

Which of the methods of apportionment is normally used for apportioning common costs between joint products?

A. Units basis
B. Sales value at the split-off point basis
C. Net realizable value
D. Either of the above
Answer» D. Either of the above
discuss
153.

In Units basis, Common costs are apportioned between joint products on the basis of the total number of units produced. The cost per unit is the same for all the joint products. (This is also described as the physical quantities basis).

A. Correct
B. Incorrect
C. none
D. none
Answer» A. Correct
discuss
154.

The units basis has the following limitations.

A. Where the products separate during the processes into different states, for example where one product is a gas and another is a liquid, this method is unsuitable.
B. This method does not take into account the relative income-earning potentials of the individual products, with the result that one product might appear very profitable and another appears to be incurring losses.
C. Both A&B
D. None
Answer» C. Both A&B
discuss
155.

The relative sales value method is the most widely used method of apportioning joint costs because (ignoring the effect of further processing costs) it assumes that all products achieve the same profit margin.

A. True
B. False
C. none
D. none
Answer» A. True
discuss
156.

By products are outputs from a joint process that are relatively minor in quantity and/or value.

A. False
B. True
C. none
D. none
Answer» B. True
discuss
157.

Since a by-product does not have any substantial value, there is no sense in charging it with a share of the common processing costs.

A. False
B. True
C. none
D. none
Answer» B. True
discuss
158.

Which of the following statement is correct?

A. A joint product is regarded as an important sale-able item, and so it should be separately costed. The profitability of each joint product should be assessed in the cost accounts.
B. A by-product is not important as a sale-able item, and whatever revenue it earns is a ‘bonus’ for the organisation. Because of their relative insignificance, by-products are not separately costed.
C. Both A&B are correct
D. None
Answer» C. Both A&B are correct
discuss
159.

The point at which joint products and by-products become separately identifiable is known as:

A. The split off point
B. Separation point
C. Either A or B
D. None
Answer» C. Either A or B
discuss
Chapter: Service Costing
160.

Service costing is also called as:

A. Operating Costing
B. Non-Operating Costing
C. Overhead Costing
D. Product Costing
Answer» A. Operating Costing
discuss
161.

In service cost sheet costs are classified into :

A. Indirect charges.
B. Overheads.
C. Standing charges.
D. Fixed expenses.
Answer» C. Standing charges.
discuss
162.

In service costing division is an / a :

A. Operation
B. Process
C. Contract
D. Department
Answer» A. Operation
discuss
163.

In transport service, cost sheet depreciation cost are grouped under:

A. Fixed Cost.
B. Stand by cost.
C. Semi-variable cost.
D. Variable cost.
Answer» B. Stand by cost.
discuss
164.

An example of composite unit in transport costing is:

A. Per passenger per km
B. Per passenger per seat
C. Per km per seat
D. Per passenger per travel
Answer» A. Per passenger per km
discuss
165.

Operating cost is the cost incurred for providing:

A. Job.
B. Operation.
C. Service.
D. Product.
Answer» B. Operation.
discuss
166.

Number of passenger kilometer= Number of passengers X………………

A. Number of kms.
B. Number of seats.
C. Number of buses.
D. Number of distances.
Answer» A. Number of kms.
discuss
167.

IF the profit are 50% of operating cost, it is ……………. of invoice price.

A. 20%
B. 25%
C. 16.66667%
D. 33.33334%
Answer» D. 33.33334%
discuss
168.

Operating costing system is more suitable to :

A. Product industries.
B. Contraction industries.
C. Service industries.
D. Manufacturing industries.
Answer» C. Service industries.
discuss
169.

Per kilometer is an example of……………..cost unit used in transport undertakings.

A. Simple
B. Composite
C. Dual
D. Joint
Answer» A. Simple
discuss
170.

The production operations of most businesses can be categorized as either being:

A. Specific orders
B. Continuous operations
C. Both A or B
D. None
Answer» C. Both A or B
discuss
171.

Specific order costing methods are appropriate for organizations which produce cost units which are separately identifiable from one another.

A. The above statement is correct
B. The above statement is incorrect
C. none
D. none
Answer» A. The above statement is correct
discuss
172.

Identify the types of specific order costing.

A. Job costing
B. Batch costing
C. Process costing
D. Both A&B only
Answer» D. Both A&B only
discuss
173.

Job costing is used when a business entity carries out tasks or jobs to meet specific customer orders.

A. The above statement is false
B. The above statement is true
C. none
D. none
Answer» B. The above statement is true
discuss
174.

A job is a cost unit which consists of a single order or contract.

A. True
B. False
C. none
D. none
Answer» A. True
discuss
175.

Job costing is used when a business entity carries out tasks or jobs to meet specific customer orders.

A. True
B. False
C. none
D. none
Answer» A. True
discuss
176.

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.

A. The above statement is incorrect
B. The above statement is correct
C. none
D. none
Answer» B. The above statement is correct
discuss
177.

Which of the following statement is correct with regard to job costing?

A. Job costing differs from most other types of costing system because each cost unit is a job, and no two jobs are exactly the same. Each job is costed separately.
B. The expected cost of a job has to be estimated so that a price for the job can be quoted to a customer.
C. A costing system should also calculate the actual cost of each job that has been carried out to work out the relative profitability of relevant jobs.
D. All of the above are correct
Answer» D. All of the above are correct
discuss
178.

A job costing system is usually based on absorption costing principles, and in addition a cost is included for non-production overheads.

A. False
B. True
C. none
D. none
Answer» B. True
discuss
179.

Non-production overheads might be added to the cost of the job:

A. As a percentage of the prime cost of the job
B. As a percentage of the production cost of the job
C. Either A or B
D. None
Answer» C. Either A or B
discuss
180.

In job costing each job is given a unique:

A. Identity number, or job number
B. Account name
C. Costing system
D. None
Answer» C. Costing system
discuss
181.

In a costing system, a job account is similar to a work in progress account, except that it is for one job only. In a company that specialises in jobbing work, the work in progress account is the total of all the individual job accounts.

A. The above statement is correct
B. The above statement is incorrect
C. none
D. none
Answer» A. The above statement is correct
discuss
182.

Job costing is a costing method applied where work is undertaken to customers’ special requirements and each order is of comparatively short duration.

A. True
B. False
C. none
D. none
Answer» A. True
discuss
183.

Costs for each job are collected on a:

A. Job cost sheet
B. Job card
C. Either A or B
D. None
Answer» C. Either A or B
discuss
184.

A separate record must therefore be maintained to show the details of individual jobs. Such records are often known as job cost sheets or job cost cards.

A. Correct
B. Incorrect
C. none
D. none
Answer» A. Correct
discuss
185.

The items recorded on job cost sheet would include:

A. Job number, description of job, specifications, etc.
B. Customer details, estimated costs, selling price, estimated profit
C. Delivery date promised, actual delivery date, delivery note number
D. All of the above
Answer» D. All of the above
discuss
186.

The usual method of fixing prices in a jobbing concern is cost plus pricing.

A. True
B. False
C. none
D. none
Answer» A. True
discuss
187.

Cost plus pricing means that a desired profit margin is added to total costs to arrive at the selling price.

A. False
B. True
C. none
D. none
Answer» B. True
discuss
188.

A computerised job accounting system contain which of the following features:

A. Every job will be given a job code number, which will determine how the data relating to the job is stored.
B. A separate set of codes will be given for the type of costs that any job is likely to incur. Thus ‘direct wages’, say, will have the same code whichever job they are allocated to.
C. In a sophisticated system, costs can be analysed both by job (for example all costs related to Job 456), but also by type (for example direct wages incurred on all jobs). It is therefore easy to perform control analysis and to make comparisons between jobs.
D. All of the above
Answer» D. All of the above
discuss
189.

It is possible to use a job costing system to control the costs of an internal service department, such as the maintenance department and the printing department.

A. The above statement is correct
B. The above statement is incorrect
C. none
D. none
Answer» A. The above statement is correct
discuss
190.

What would be the effect of inaccurate estimation of overhead absorption rates on a Job?

A. If the jobs are over-priced, customers will go elsewhere
B. If the jobs are under-priced, sales revenue will fail to cover costs and/or provide an adequate return
C. Both A&B
D. None
Answer» C. Both A&B
discuss
191.

Batch costing is similar to job costing in that each batch of similar articles is separately identifiable.

A. False
B. True
C. none
D. none
Answer» B. True
discuss
192.

The cost per unit manufactured in a batch is the total batch cost divided by the number of units in the batch.

A. Correct
B. Incorrect
C. none
D. none
Answer» A. Correct
discuss
193.

The job costing method can therefore be applied in costing batches. The only difference is that a number of items are being costed together as a single unit, instead of a single item or service.

A. The above statement is correct
B. The above statement is incorrect
C. none
D. none
Answer» A. The above statement is correct
discuss
194.

Identify the characteristics of services: I. Intangibility: They do not have a physical substance unlike goods. They cannot be held or seen. II. Inseparability: Consumption and creation of a service cannot be separated. Services are consumed as they are created. III. Variability: Services face the problem of maintaining consistency in the standard of output. IV. Perishability: Services cannot be stored. V. Lack of ownership: Services do not result in the transfer of property in anything.

A. All of the above
B. (I) (II) and (V) only
C. (I) and (V) only
D. None
Answer» A. All of the above
discuss

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