Costing mcqs

✅ The correct answer is C.
Cost which remains unchanged, in proportion to level total volume of production is classified as fixed cost. A fixed cost is a cost that does not change with an increase or decrease in the amount of goods or services produced or sold. Fixed costs are expenses that have to be paid by a company, independent of any specific business activities.

✅ The correct answer is B.
First step in developing an operating budget is to identify problem. An operating budget is a forecast of the revenues and expenses expected for one or more future periods.

✅ The correct answer is C.
The process of redistribution of service department costs to production departments is secondary distribution.

✅ The correct answer is C.
Technique that examines changes in results if original prediction would not be achieved is called sensitivity analysis. A sensitivity analysis determines how different values of an independent variable affect a particular dependent variable under a given set of assumptions.

✅ The correct answer is D.
A problem which arises because of presence of systematic pattern in residual value sequence is considered as serial correlation and auto correlation.

✅ The correct answer is B.
Total Overhead = Direct service labour + Idle time wages + Overtime premium
= $5000 + $1000 + $450 = $6,450

✅ The correct answer is B.
Slope coefficient = Difference between costs linked to highest and lowest observation of cost driver ÷ Observation of cost driver
= $8000 ÷ 40 = $200

✅ The correct answer is D.
Job costing is best suited for interior decoration. Job costing is defined as a method of recording the costs of a manufacturing job, rather than process.

✅ The correct answer is D.
Relationship between independent variable and dependent variable must be economically plausible. The cost function shows a positive economically plausible relationship between machine-hours and maintenance costs.

✅ The correct answer is B.
Costs of issuing purchase orders, making of delivery records for tracking payments and costs of inspection of items are classified as ordering costs. Ordering costs are the expenses incurred to create and process an order to a supplier.