Costing mcqs

✅ The correct answer is D.
An example of shrinkage costs is clerical errors. Shrinkage is the loss of inventory that can be attributed to factors such as employee theft, shoplifting, administrative error, vendor fraud, damage in transit or in store, and cashier errors that benefit the customer.

✅ The correct answer is D.
Cost of contract and profit or loss thereon are determined by preparing separate ledger a/c. A separate contract account is prepared for each contract.

✅ The correct answer is A.
Compelling strategic plan, promoting coordination and providing framework of performance are advantages of budget.

✅ The correct answer is D.
Total cost of producing similar products divided by number of units produced is a technique known as process costing system. Process costing is a type of operation costing which is used to ascertain the cost of a product at each process or stage of manufacture.

✅ The correct answer is D.
A budget which is prepared in a manner so as to give the budgeted cost for any level of activity is known as Flexible budget. A flexible budget is a budget that adjusts or flexes with changes in volume or activity. The flexible budget is more sophisticated and useful than a static budget. (The static budget amounts do not change.

✅ The correct answer is B.
Material or anything for which cost is to be measured is known as cost object. A cost object is any item for which costs are being separately measured. It is a key concept used in managing the costs of a business.

✅ The correct answer is D.
Department which directly adds value to product or service is known as production department and operating department.

✅ The correct answer is C.
An expected future revenue, which diverges in unconventional course of action is classified as relevant revenues. Relevant means that you consider future revenue and expenses.

✅ The correct answer is D.
Under Graduated time rate method the rate of wages are linked with the cost of living index. Under this method the rates of wages are linked up with the cost of living index. Thus, the rate per hour or day fixed initially goes on changing with the changes in the cost of living index.

✅ The correct answer is D.
An actual selling price is subtracted from budgeted selling price, and then multiplied to actual sold units to calculate selling price variance. Sales price variance measures the change in a company’s total budgeted revenue to the actual revenue earned on a product.