Costing mcqs

✅ The correct answer is C.
The basis for determining profit to be taken into account on incomplete contract is percentage of work certified as done.

✅ The correct answer is B.
Costing technique, in which actual direct rates are multiplied to quantity of direct cost inputs is classified as actual costing. Actual costing is the recording of product costs based on the following factors: Actual cost of materials.

✅ The correct answer is A.
The most important element of cost in manufacturing industries is material. Material is the first and most important element of cost. In most of the manufacturing organisations, materials form the single largest component of cost.

✅ The correct answer is C.
Buying of goods or materials for production in a way that they are delivered directly on manufacturing facility of company is called just in time purchasing. Just-in-time purchasing (JIT purchasing) is a cost accounting purchasing strategy. You purchase goods so that they’re delivered just as they’re needed to meet customer demand.

✅ The correct answer is A.
Means budget expense = Rs. 300000 – Rs. 18000
= Rs. 282000
Budgeted variable overhead = Rs. 282000 – (fixed cost) Rs. 87000
= Rs.195000
Variable cost pr unit is = 195000 / 162500
= Rs. 1.20

✅ The correct answer is D.
Purchase order lead time is multiplied to number of units is sold per unit of time to calculate reorder point. The reorder point (ROP) is the level of inventory which triggers an action to replenish that particular inventory stock.

✅ The correct answer is A.
Inventory turnover ratio = cost of goods sold / average inventory at cost

cost of goods sold is 25% of sales i.e
320000 * 25 % = 8000

average inventory at cost = 31000 – 29000 = 1000.

Stock turnover ratio = 8000/1000 = 8 times.

✅ The correct answer is B.
Slope coefficient = Difference in costs ÷ Difference in machine hours
= $7000 ÷ $18000 = 0.39

✅ The correct answer is D.
Learning curve models include cumulative average time learning model and incremental unit time learning model.

✅ The correct answer is D.
Success of cost reduction initiatives are evaluated by accurate cost estimation. A cost estimate is the approximation of the cost of a program, project, or operation. The cost estimate is the product of the cost estimating process.