Costing mcqs

✅ The correct answer is D.
Method, which allocates cost of support department for operating departments by recognizing all mutual services provided is classified as reciprocal method. In the reciprocal method, the relationship between the service departments is recognized. This means service department costs are allocated to and from the other service departments.

✅ The correct answer is A.
Sales volume variance = Flexible budget amount – Static budget amount
= $15000 – $6000 = $9,000

✅ The correct answer is A.
In linear cost function which is y=a + bx, objective is to find the values of a and b.

✅ The correct answer is A.
Relationship based on unrelated level of activity and past data of cost is measured with help of cost estimation. Cost estimation is the art of assigning value.

✅ The correct answer is A.
Costs, which consist of interdepartmental cost allocations plus cost of support department are classified as complete reciprocal costs. The allocation of service department costs is incomplete if the method used for cost allocation ignores or does not give full recognition to interdepartmental services.

✅ The correct answer is D.
Second step in processing costing system is to compute output in units. Process costing is an accounting methodology that traces and accumulates direct costs, and allocates indirect costs of a manufacturing process.

✅ The correct answer is B.
100 units are introduced in a process in which normal loss is 5% of input If actual output is 97 then there is 2 units of abnormal gain.

✅ The correct answer is C.
Total Overhead = Direct service labour + Idle time wages + Overtime premium
= $7000 + $2000 + $950 = $9,950

✅ The correct answer is D.
Difference between attendance time and job time is idle time. Idle time is unproductive time on the part of employees or machines caused by management or as a result of factors beyond their control. Idle time is the time associated with waiting, or when a piece of machinery is not being used but could be.

✅ The correct answer is D.
In process costing, if an abnormal loss arises, the process account is generally credited with the full production cost of the abnormal loss units. Abnormal loss (a cost) is credited to the process account and abnormal gain (a benefit) is debited to the process account.