Tag: cost accounting: an introduction

Questions Related to cost accounting: an introduction

For the proper appreciation of the material control, which of the following step is not necessary ?

book keeping and accountancy cost accounting: an introduction fundamental concepts of cost meaning, elements and classification of cost methods of costing

  1. Purchasing of materials

  2. Receiving and inspecting of materials

  3. Using of materials

  4. Accounting of materials

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Correct Option: C

Which of the following sets of expenses are the direct expenses of the business?

book keeping and accountancy cost accounting: an introduction fundamental concepts of cost meaning, elements and classification of cost methods of costing

  1. Salaries, wages and shop rent

  2. Stationery, postage and telephone

  3. Wages, carriage inward, local taxes

  4. Advertisement, legal fees, audit fees

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Correct Option: C

A Joint Venture has a life of fixed period of time.

book keeping and accountancy cost accounting: an introduction fundamental concepts of cost meaning, elements and classification of cost methods of costing

  1. True

  2. False

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Correct Option: B

_______ are costs that can be influenced or regulated by the manager or head responsible for it.

book keeping and accountancy cost accounting: an introduction fundamental concepts of cost meaning, elements and classification of cost methods of costing

  1. Uncontrollable costs

  2. Opportunity costs

  3. Controllable costs

  4. Sunk costs

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Correct Option: C
Explanation:

Controllable Costs are the costs that can be influenced by the manager or head responsible for it. It is a cost that the management at its discretion increase or decrease. These are raw material cost, labour cost and some amount of fixed costs also.

_____ are the costs which have been created by a decision that was made in the past and cannot be changed by any decision that will be made in the future.

book keeping and accountancy cost accounting: an introduction fundamental concepts of cost meaning, elements and classification of cost methods of costing

  1. Shutdown costs

  2. Fixed costs

  3. Sunk costs

  4. Variable costs

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Correct Option: C
Explanation:

Sunk costs are the costs which have been created by a decision that was made in the past and cannot be changed by any decisions that will be made in the future. A sunk cost cannot be recovered and are considered irrelevant for future decision making. They are he past expenditures and are also known as retrospective costs.

______ is concerned with the cost of the next best alternative opportunity which was foregone in order to pursue a certain action.

book keeping and accountancy cost accounting: an introduction fundamental concepts of cost meaning, elements and classification of cost methods of costing

  1. Opportunity cost

  2. Outlay cost

  3. Sunk cost

  4. Shutdown cost

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Correct Option: A
Explanation:

Opportunity cost is concerned with the cost of the next best alternative opportunity which was forgone in order to pursue a certain action. In other words it is cost of the next best alternative forgone. 

Which of the following would not cause either an under- or over-absorption of overheads ?

book keeping and accountancy cost accounting: an introduction fundamental concepts of cost meaning, elements and classification of cost methods of costing

  1. Actual direct labour time per unit being greater than budget.

  2. Actual cost of direct labour being greater than budget.

  3. Actual overheads incurred being less than budget.

  4. The number of units produced being grater than budget.

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Correct Option: B

Variable costs are volume related and fixed costs are time related.

book keeping and accountancy cost accounting: an introduction fundamental concepts of cost meaning, elements and classification of cost methods of costing

  1. True

  2. False

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Correct Option: A
Explanation:

Variable costs are the costs which vary with the change in the level of production. Fixed costs are the costs which do not vary with the level of production. Variable cost are fixed per unit whereas fixed cost vary per unit.