Costing mcqs

✅ The correct answer is B.
Budgeted indirect cost = Budgeted annual indirect cost ÷ Budgeted annual quantity of cost allocation base
= $850000 ÷ $7500 = 113.33 per piece

✅ The correct answer is D.
The costing method which can be used in industry where the product pass through different processes is known as process costing. Process costing is used when there is mass production of similar products, where the costs associated with individual units of output cannot be differentiated from each other.

✅ The correct answer is B.
The following that are the characteristics of service costing are High levels of indirect costs as a proportion of total costs and Use of composite cost units.

✅ The correct answer is C.
In an accounting system, document which supports journal entries is classified as source document. A source document is an original record which contains the detail that supports or substantiates a transaction that will be (or has been) entered in an accounting system.

✅ The correct answer is D.
Cost of abnormal spoilage is not treated as non inventoriable costs. Non-inventoriable cost are costs that are not included in the value of inventory, also known as non-manufacturing overhead. It includes Selling, General and Administrative expenses, and Interest expense.

✅ The correct answer is C.
An error term, disturbance term or residual term is calculated as u=Y-y.

✅ The correct answer is B.
Budgeted direct labour cost = Budgeted direct labour cost ÷ Budgeted total direct labour hours
= $755000 ÷ 5500 = $137.27 per hour

✅ The correct answer is D.
Second step, in constant gross margin percentage NRV method, to allocate joint cost is to compute total production cost of each product.

✅ The correct answer is A.
Worse fit between estimated cost and actual observations is shown on regression line with larger residual terms.

✅ The correct answer is A.
Expenditure over and above prime cost is known as overhead. Overhead is those costs required to run a business, but which cannot be directly attributed to any specific business activity, product, or service.