McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Commerce (B Com) .
Chapters
| 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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