Costing mcqs

✅ The correct answer is B.
Direct manufacturing labour cost = Conversion cost – Manufacturing overhead cost
= $20000 – $7000 = $13000

✅ The correct answer is D.
In quantitative analysis to estimate cost function, fourth step is to plot data.

✅ The correct answer is B.
Labour turnover is defined as the rate of change of labour force in an organization during a specified period.

✅ The correct answer is A.
In cause and effect relationship between cost level and cost driver, inflationary price effects are removed by dividing cost through price index. A price index is a normalized average (typically a weighted average) of price relatives for a given class of goods or services in a given region, during a given interval of time.

✅ The correct answer is A.
Second step for estimation of cost function by using quantitative analysis is to choose independent variable. An independent variable is the variable that is changed or controlled in a scientific experiment to test the effects on the dependent variable.

✅ The correct answer is B.
Operating costing is more suitable for Services industries. Operating costs are expenses associated with the maintenance and administration of a business on a day-to-day basis.

✅ The correct answer is C.
In a joint process of production, a product which yields high volume of sales as compared to total sales volume of other products is known as main product. A main product is a joint output that generates a significant portion of the net realizable value within a joint production process.

✅ The correct answer is B.
Costing system, in which individual activities are identified as cost object is considered as activity based costing. The ABC system of cost accounting is based on activities, which is any event, unit of work, or task with a specific goal, such as setting up machines for production, designing products, distributing finished goods, or operating machines.

✅ The correct answer is C.
Production units that do not meet customer specification, but can be sold to other customers as finished goods are classified as rework. Rework refers to the correction of a product that does not initially meet an entity’s minimum quality standards.

✅ The correct answer is D.