Which cost component is generally included in calculating the predetermined overhead rate for job costing?
(a) Direct material costs
(b) Direct labour costs
(c) Estimated manufacturing overhead costs
(d) Variable selling expenses
In process costing, what does the reciprocal method essentially do when service department costs are apportioned to production departments?
(a) Allocates costs in proportion to prime cost of production departments
(b) Ignores mutual services among service departments
(c) Uses repeated distribution until balances reduce to zero
(d) Recognizes inter-service department support by solving simultaneous equations
Which one is correct?
(a) Rent, lighting and supervision cost are common costs
(b) ‘Joint Costs’ cannot be apportioned only by adopting a basis of apportionment
(c) Cost ascertainment does not involve allocation and apportionment of the expenditure to the cost centres
(d) Production Cost does not include the cost of the primary packing of the product
Classification of overheads as indirect materials, indirect labour and indirect expenses is known as :
(a) Functional Classification
(b) Element-wise Classification
(c) Behavioural Classification
(d) Both functional as well as element-wise classification
If machine hours are 8000 and factory overhead absorption rate per machine hour is Rs.8, then the absorbed factory overheads will be
(a) Rs.1,000
(b) Rs.8,000
(c) Rs.64,000
(d) Rs.7,992
6. Which of the following methods of charging service cost centres cost to user cost centres will be compatible with control of the efficiency of the service within the service cost centre?
(a) Charge users with total actual cost incurred
(b) No charge to users.
(c) Charge users with the opportunity cost of the service.
(d) Charge users with total (full) absorption cost.
7. The budgeted fixed overheads amounted to Rs. 84,000. The budgeted and actual production amounted to 20,000 units and 24,000 units respectively. This means there will be:
(a) Under absorption of Rs. 16,800
(b) Under absorption of Rs. 14,000
(c) Over absorption of Rs. 16,800
(d) Over-absorption of Rs. 14,000
8. If an item of overhead expenditure is charged specifically to a single department this would be an example of:
(a) Apportionment
(b) Allocation
(c) Re-apportionment
(d) Absorption
9 . The basis for allocation of ‘Salary to General Manager’ is
(a) Number of workers
(b) Time devoted by General Manager
(c) Profit of the organization
(d) Should not be apportioned
10. Units of production is an appropriate method of assigning overhead when?
(a) Several well differentiated products are manufactured
(b) Direct labour costs are low
(c) Only one product is manufactured
(d) The manufacturing process is complex
