Costing mcqs

✅ The correct answer is C.
According to incremental method, party which receives highest ranking in allocation of common cost is classified as primary party.

✅ The correct answer is B.
“FIFO” stands for first-in, first-out, meaning that the oldest inventory items are recorded as sold first but do not necessarily mean that the exact oldest physical object has been tracked and sold. In other words, the cost associated with the inventory that was purchased first is the cost expensed first.

✅ The correct answer is B.
In normal costing, budgeted rate is multiplied to an actual quantity, which have been used as allocation base to calculate manufacturing overhead applied.

✅ The correct answer is B.
Weak relationship between cost and cost driver is indicated on a regression line, which is slightly sloped.

✅ The correct answer is B.
The order in which the budget should be prepared are Sales budget, Finished goods inventory Production budget, Purchase budget and Cash budget.

✅ The correct answer is B.
Allotment of whole item of cost to a cost centre or cost unit is known as Cost Allocation. Cost allocation is the process of identifying, aggregating, and assigning costs to cost objects. A cost object is any activity or item for which you want to separately measure costs.

✅ The correct answer is B.
First step in estimation of cost function by using quantitative analysis is to choose dependent variable. A dependent variable is what you measure in the experiment and what is affected during the experiment. The dependent variable responds to the independent variable. It is called dependent because it “depends” on the independent variable.

✅ The correct answer is A.
Contract costing is most appropriate method of costing for construction industry. Contract costing is the tracking of costs associated with a specific contract with a customer.

✅ The correct answer is B.
Budgeted total cost in indirect cost pool is divided by budgeted total quantity of cost allocation base is to calculate by budgeted indirect cost rate. The budgeted indirect cost rate formula is calculated by dividing the budgeted annual indirect costs by the budgeted annual quantity of the cost allocation base.

✅ The correct answer is B.
Calculation of product cost, gathering information for planning and analyzing information for decisions making are features of cost accounting. Cost accounting is an accounting method that aims to capture a company’s costs of production by assessing the input costs of each step of production as well as fixed costs, such as depreciation of capital equipment.