Costing mcqs

✅ The correct answer is D.
Costs of undertaken activities is to support individual products are known as product sustaining costs. Product-sustaining costs are cost activities that support a particular product or service line, regardless of the number of units produced.

✅ The correct answer is D.
A light engineering company should not be advised to use service costing. Service costing is a type of operation costing which is used in organizations which provide services instead of producing goods.

✅ The correct answer is A.
Part of master budget, which covers capital expenditures, budgeted statement of cash flows and balance sheet is classified as financial budget.

✅ The correct answer is B.
Method, which uses specific information on products as weights to allocate bundled revenues for each product in bundle is classified as stand-alone revenue allocation method. Revenue Allocation Method uses product-specific information on the products in the bundle as weights for allocating the bundled revenues to the individual products.

✅ The correct answer is A.
Current ratio is also known as working capital ratio. The working capital ratio is commonly used to assess a company’s financial performance. Low working capital ratio values, near one or lower, can indicate serious financial problems with a company. The working capital ratio reveals whether the company has enough short-term assets to pay off its short-term debt.

✅ The correct answer is B.
Last step in developing operating budget is implementing decision. An operating budget is a forecast of the revenues and expenses expected for one or more future periods.

✅ The correct answer is B.
In adjustment issues of costing, database must consider wide range values of cost driver. A cost driver is the unit of an activity that causes the change in activity’s cost.

✅ The correct answer is D.
Budgeting method, which incorporates an improvement anticipated in budgeting period into budget numbers can be classified as kaizen budgeting. Kaizen budgeting takes the concept of continual improvement and applies it to budgets and budget forecasting.

✅ The correct answer is A.
Costing, which explains how and when scrap affects operating income of company is classified as inventory costing. Inventory is merchandise purchased by merchandisers (retailers, wholesalers, distributors) for the purpose of being sold to customers. The cost of the merchandise purchased but not yet sold is reported in the account Inventory or Merchandise Inventory.

✅ The correct answer is D.
In Regression Analysis, testing of assumptions if these are true or not is classified as specification analysis.