190+ Cost and Works Accounting 2 Solved MCQs

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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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160.	Service costing is also called as:
A.	Operating Costing
B.	Non-Operating Costing
C.	Overhead Costing
D.	Product Costing
Answer» A. Operating Costing

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161.	In service cost sheet costs are classified into :
A.	Indirect charges.
B.	Overheads.
C.	Standing charges.
D.	Fixed expenses.
Answer» C. Standing charges.

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162.	In service costing division is an / a :
A.	Operation
B.	Process
C.	Contract
D.	Department
Answer» A. Operation

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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.

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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.

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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%

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168.	Operating costing system is more suitable to :
A.	Product industries.
B.	Contraction industries.
C.	Service industries.
D.	Manufacturing industries.
Answer» C. Service industries.

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169.	Per kilometer is an example of……………..cost unit used in transport undertakings.
A.	Simple
B.	Composite
C.	Dual
D.	Joint
Answer» A. Simple

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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

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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

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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

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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

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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

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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

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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

190+ Cost and Works Accounting 2 Solved MCQs

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

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

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).

The units basis has the following limitations.

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.

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

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.

Which of the following statement is correct?

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

Service costing is also called as:

In service cost sheet costs are classified into :

In service costing division is an / a :

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

An example of composite unit in transport costing is:

Operating cost is the cost incurred for providing:

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

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

Operating costing system is more suitable to :

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

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

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

Identify the types of specific order costing.

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

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

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

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.

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

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

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

In job costing each job is given a unique:

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.

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

Costs for each job are collected on a:

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.

The items recorded on job cost sheet would include:

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

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

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

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.

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

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

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

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.