Costing mcqs

✅ ANSWER: A
Overhead is also known as ongoing cost. Overhead is those costs required to run a business, but which cannot be directly attributed to any specific business activity, product, or service.

✅ ANSWER: C
Method, which allocates cost of support department to operating and support departments is known as step down method. The step method (also known as step down method) allocates the cost of a service department to other service departments as well as to operating departments. The cost allocation under step method is a sequential process.

✅ ANSWER: C
Second step in developing operating budget is to obtain information. An operating budget is a forecast of the revenues and expenses expected for one or more future periods.

✅ ANSWER: D
Time and motion study is conducted by engineering department. It is a major part of scientific management (Taylorism). After its first introduction, time study developed in the direction of establishing standard times, while motion study evolved into a technique for improving work methods.

✅ ANSWER: C
Method, which considers cost and cost drivers of departments such as employee relations and process engineering is termed as conference method. The conference method is an approach to cost estimation that pools together data, analyses, and knowledge from expert sources in order to make decisions about costs.

✅ ANSWER: D
Wages and other benefits, provided to assembly line workers and operators of machine are classified under indirect manufacturing labour costs. Indirect manufacturing costs are production costs that cannot be directly associated with a produced unit.

✅ ANSWER: B
Mathematical relationships exist between operating and financing activities that affect master budget are called financial planning models. A financial planning model uses certain elements to create a future financial plan for a company.

✅ ANSWER: A
Formula of 1 – unexplained variation / total variation is used to calculate coefficient of determination.

✅ ANSWER: A
Direct manufacturing labour = Prime cost – Direct material cost
= $25000 – $5500 = $19,500

✅ ANSWER: C
When output of earlier process is transferred at a profit to the subsequent process, it is inter process profit. The profit associated with the transfer of goods from one process to another process is called inter-process profit.