Costing mcqs

✅ The correct answer is D.
Factors that accelerate process of refining a costing system include increase in product diversity, increase in indirect costs and product market competitions.

✅ The correct answer is D.
Manager who is responsible only for revenues of company can be categorized under the revenue center. A revenue center is a distinct operating unit of a business that is responsible for generating sales.

✅ The correct answer is C.
Normal idle time cannot be avoided. The main reasons for the occurrence of normal idle time are as follows:

i. Time taken by workers to travel the distance between the main gate of factory and the place of their work.

ii.Time lost between the finish of one job and starting of next job.

iii. Time spent to overcome fatigue.

iv. Time spent to meet their personal needs like taking lunch, tea etc.

✅ The correct answer is A.
In accounting, cost incurred in past or in historical financial statements is classified as actual cost. Actual cost is the actual expenditure made to acquire an asset, which includes the supplier-invoiced expense, plus the costs to deliver, set up, and test the asset.

✅ The correct answer is B.
Sunk costs are not relevant for decision making. A sunk cost is a cost that cannot be recovered or changed and is independent of any future costs a business may incur. Since decision-making only affects the future course of business, sunk costs should be irrelevant in the decision-making process.

✅ The correct answer is A.
In normal costing, manufacturing overhead allocated is also called manufacturing overhead applied. Manufacturing overhead is all indirect costs incurred during the production process. This overhead is applied to the units produced within a reporting period.

✅ The correct answer is C.
Under absorption of overhead expenses in cost accounting results in increase in costing profit. If overhead is under absorbed, this means that more actual overhead costs were incurred than expected, with the difference being charged to expense as incurred. This usually means that the recognition of expense is accelerated into the current period, so that the amount of profit recognized declines.

✅ The correct answer is A.
Factor which provides hedge to managers in adverse and unexpected circumstances is known as budgetary slack. Budgetary slack is the deliberate under-estimation of budgeted revenue or over-estimation of budgeted expenses.

✅ The correct answer is B.
Overvaluation of opening stock in financial accounting results decreases financial accounts profit. Overvalued opening inventory means understated profit and and undervalued opening inventory means high profit.

✅ The correct answer is C.