Costing mcqs

✅ The correct answer is B.
Second ranked product in incremental revenue allocation method is termed as First incremental product.

✅ The correct answer is D.
Cost function, in which cost does not change with any change in level of activity is a part of step cost functions. A step cost is a cost that does not change steadily with changes in activity volume, but rather at discrete points.

✅ The correct answer is B.
Merricks multiple piece rate system has three rates. According to this plan, three piece rates for a job is fixed. None of these three piece rates are fixed below the normal level. These three rates are applied in the manner given below:
Rates Bonus Incentive
1. Upto 83 ‘/3% Normal Rate
2. Above 83 1/3 % to 100% 110% of Normal Rate
3. Above 110% 120% of Normal Rate

✅ The correct answer is B.
Variable cost per unit remains constant. Variable costs are the costs that change in total each time an additional unit is produced or sold. With a variable cost, the per unit cost stays the same, but the more units produced or sold, the higher the total cost. Direct materials is a variable cost.

✅ The correct answer is D.
Budgeted income statement and supporting budget schedules are categorized under operating budget. An operating budget is a forecast of the revenues and expenses expected for one or more future periods.

✅ The correct answer is C.
Conversion cost is subtracted from manufacturing overhead cost is to calculate the direct manufacturing labour costs. Conversion costs is a term used in cost accounting that represents the combination of direct labor costs and manufacturing overhead costs.

✅ The correct answer is A.
Type of plan of a company, which quantities expectations of cash flows, income and financial position is known as budget. A budget is a financial plan for a defined period, often one year. It may also include planned sales volumes and revenues, resource quantities, costs and expenses, assets, liabilities and cash flows.

✅ The correct answer is C.
Difference between flexible budget amount and corresponding actual result is called flexible budget variance. A flexible budget is a budget that adjusts or flexes with changes in volume or activity. The flexible budget is more sophisticated and useful than a static budget.

✅ The correct answer is A.

✅ The correct answer is B.
An allocation approach, in which all overhead entries are restated using actual cost rates in place of budgeted rates is called adjusted allocation rate approach. The adjusted allocation-rate approach restates or corrects estimated overhead costs booked throughout the year, so that the actual overhead costs are recorded properly.