Costing mcqs

✅ ANSWER: C
Starting point in operating budget is revenue budget. Revenue budgets are forecasts of a company’s sales revenues and expenditures, including capital-related expenditures.

✅ ANSWER: D
Product which requires low amount of resources, but incur high per unit cost is classified as product over costing. Product costing is also known as traditional costing. This method seeks to allocate all costs down to individual units of finished product.

✅ ANSWER: C

✅ ANSWER: D
System which measures budget, action and plan of each responsibility center is known as responsibility accounting. Responsibility Accounting is a system of control where responsibility is assigned for the control of costs. The persons are made responsible for the control of costs.

✅ ANSWER: C
Those cost which is incurred to prevent the labour turnover is known as preventive cost. These are costs which are incurred to prevent excessive labour turnover. The aim of these costs is to keep the workers satisfied so that they may not leave the factory.

✅ ANSWER: A
Static budget = Flexible budget – Sales budget variance
= $97000 – $57000 = $40,000

✅ ANSWER: A
Planning of financial aid to coordinate; what is to be done for implementation of plan is classified as budget.

✅ ANSWER: D
Systematic way of linking group of indirect cost to a cost object is classified as cost allocation base. An allocation base is the basis upon which an entity allocates its overhead costs.

✅ ANSWER: B
Direct cost assignment for specific cost object is classified as cost tracing. Cost tracing is the process of directly matching a cost with a product being produced, where cost allocation uses estimates to apply costs to products.

✅ ANSWER: C
Receiving department is a service department. A service department is a cost center that provides services to the rest of a company. The manager of a service department is responsible for keeping costs down, or meeting the costs stated in a budget.