1. The monetary value attributed to normal losses in a process should be
Correct : D. A nil share of process costs which have been reduced by the scrap value of the normal loss.
2. Details for the past month of a continuous process are:
Correct : A. Opening W.I.P. (400 units) (60% complete)
3. An abnormal gain in a process occurs in which of the following situations?
Correct : D. When the process output is greater than planned.
4. Where process scrap is recycled for use in conjunction with new material as well as being so externally, which of. the following is most likely to be the value at which is debited to the process?
Correct : B. At the cost of normal losses.
5. The physical flow of units into and out of departments is shown on the:
Correct : A. Quantities schedule.
6. An equivalent unit of material or conversion cost is equal to
Correct : A. The amount of material conversion cost necessary to complete one unit of production.
7. Which of the following manufacturers would most likely not use a process-cost
accounting system?
Correct : D. A builder of customized yachts
8. If beginning work in process equivalent units are 2500 units, work done in current
period equivalent units are 3800 units and ending work in process equivalent units are 5000, then complete equivalent units in current period are
Correct : B. 1300 units
9. First step in process costing system is to
Correct : D. summarize flow of output
10. If total incurred cost in a production process are ₹30000 and number of output units
are 5000 units, then units cost will be
Correct : B. ₹6
11. If cost incurred for work in process inventory is ₹350000 and total equivalent units
completed till date are 3500, then weighted average cost will be
Correct : C. ₹100
12. In Process industries there is a flow of ……………. from one operation to the next
operation.
Correct : A. Material
13. Make or But Decisions are involved before and after different……………….
Correct : C. Processes.
14. In process costing each process is treated as a separate………………
Correct : A. Cost Centre
15. …………… are produced from the same basic raw materials.
Correct : A. Joint Product.
16. Husk produced in the process of Rice milling, is an example of ………………
Correct : A. Joint Product.
17. Joint Cost are ………………to individual joint products.
Correct : A. Non-Traceable
18. Subsequent cost are…………to individual product.
Correct : C. Traceable
19. Skimmed milk and Butter are the example of……………..
Correct : A. Joint Product.
20. Post separation costs are attributable to each ……. products.
Correct : A. Joint Product.
21. Process costing provides a system of costing where the following characteristics
occur. Identify which of the following are correct:
Correct : D. All of the above are correct
22. Process costing is used when output is produced in a continuous process system, and it is difficult to separate individual units of output.
Correct : A. True
23. Examples of manufacturing where process costing is used include:
Correct : C. Both A&B
24. The task that sits at the heart of process costing is always to allocate the costs collected on the debit side of the account to the possible outputs (good output, closing WIP and lost units) on the credit side.
Correct : A. The above statement is correct
25. In process costing questions, you will need to:
Correct : D. All of the above
26. It is possible to have abnormal loss and abnormal gain on the same process account
in the same period.
Correct : A. False
27. In a process costing system loss might be:
Correct : C. Both A&B
28. Normal loss is usually expressed as a percentage of the input units of materials.
Correct : A. Correct
29. Normal loss is ___________in the normal course of events. It is inherent in the physical and chemical reactions that take place in a process.
Correct : B. Unavoidable
30. The normal loss is something that is unavoidable in order to get the good output. The cost of the lost units is part of the cost of obtaining the good output.
Correct : A. True
31. Normal loss comes with:
Correct : C. Either A or B
32. If the normal loss has no scrap value it is given a nil value.
Correct : B. True
33. If normal loss has a scrap value the company is able to recover some of the input costs to the process. The scrap value reduces the cost of the process.
Correct : A. The above statement is correct
34. In some cases, a company might have to pay to dispose of losses in a process. The cost of disposal represents an additional cost to the process. To reflect this in the process account the normal loss is measured at zero but the expected costs of disposal are debited to the process account.
Correct : B. The above statement is correct
35. The disposal cost of abnormal loss is included in the abnormal loss account and therefore in the transfer of the cost of abnormal loss to the statement of profit or loss.
Correct : A. True
36. When actual loss exceeds normal loss, there is:
Correct : A. Abnormal loss
37. The difference between total actual loss and normal loss is abnormal loss.
Correct : B. Correct
38. If it is assumed that all losses in process occur at the end of the process, units of
abnormal loss are costed in exactly the same way in the as units of finished output.
Correct : A. True
39. The cost of abnormal loss is built into inventory.
Correct : A. False
40. The cost of units of abnormal loss is treated as an _________ for the period, and charged as an ___________for the period
Correct : B. Expense, expense in the income statement
41. Abnormal loss comes with:
Correct : C. Either A or B
42. When the abnormal has a scrape value the net cost of abnormal loss (cost of abnormal loss minus its scrap value) is then transferred as a cost to the cost accounting income statement at the end of the accounting period.
Correct : A. The above statement is correct
43. When actual loss is less than the expected (normal) loss there is:
Correct : C. Abnormal gain
44. Identify which of the following statement is correct.
Correct : D. All of the above are correct
45. When there is closing work in progress (WIP) the concept of _________ is used.
Correct : A. Equivalent units
46. An equivalent unit means ‘equal to one finished unit of output’.
Correct : B. True
47. When there is closing work in progress, costs are shared between finished units and
inventory by calculating a cost per equivalent unit.
Correct : A. True
48. When there is opening work in progress there are two types of cost on the debit side of the account. These are the costs that were incurred last period and brought forward as work in progress and the costs that were incurred in the current period.
Correct : A. The above statement is correct
49. Are the costs of opening WIP, incurred in last period and brought forward as work in progress and the costs that were incurred in the current period, treated the same way?
Correct : C. This question is addressed in the accounting policy adopted for opening work in progress.
50. Joint products are two or more products generated simultaneously, by a single
manufacturing process using common input, and being substantially equal in value.
Correct : A. The above statement is correct
51. In order to calculate a cost for each joint product, the common costs must be
________ between the joint products.
Correct : C. Apportioned
52. Which of the methods of apportionment is normally used for apportioning common
costs between joint products?
Correct : D. Either of the above
53. In Units basis, Common costs are apportioned between joint products on the basis of
the total number of units produced. The cost per unit is the same for all the joint products. (This is also described as the physical quantities basis).
Correct : A. Correct
54. The units basis has the following limitations.
Correct : C. Both A&B
55. The relative sales value method is the most widely used method of apportioning joint costs because (ignoring the effect of further processing costs) it assumes that all products achieve the same profit margin.
Correct : A. True
56. By products are outputs from a joint process that are relatively minor in quantity
and/or value.
Correct : B. True
57. Since a by-product does not have any substantial value, there is no sense in charging it with a share of the common processing costs.
Correct : B. True
58. Which of the following statement is correct?
Correct : C. Both A&B are correct
59. The point at which joint products and by-products become separately identifiable is
known as:
Correct : C. Either A or B
60. Service costing is also called as:
Correct : A. Operating Costing
61. In service cost sheet costs are classified into :
Correct : C. Standing charges.
62. In service costing division is an / a :
Correct : A. Operation
63. In transport service, cost sheet depreciation cost are grouped under:
Correct : B. Stand by cost.
64. An example of composite unit in transport costing is:
Correct : A. Per passenger per km
65. Operating cost is the cost incurred for providing:
Correct : B. Operation.
66. Number of passenger kilometer= Number of passengers X………………
Correct : A. Number of kms.
67. IF the profit are 50% of operating cost, it is ……………. of invoice price.
Correct : D. 33.33334%
68. Operating costing system is more suitable to :
Correct : C. Service industries.
69. Per kilometer is an example of……………..cost unit used in transport undertakings.
Correct : A. Simple
70. The production operations of most businesses can be categorized as either being:
Correct : C. Both A or B
71. Specific order costing methods are appropriate for organizations which produce cost
units which are separately identifiable from one another.
Correct : A. The above statement is correct
72. Identify the types of specific order costing.
Correct : D. Both A&B only
73. Job costing is used when a business entity carries out tasks or jobs to meet specific
customer orders.
Correct : B. The above statement is true
74. A job is a cost unit which consists of a single order or contract.
Correct : A. True
75. Job costing is used when a business entity carries out tasks or jobs to meet specific
customer orders.
Correct : A. True
76. In Job costing a cost is calculated for each individual job, and this cost can be used
to establish the profit or loss from doing the job.
Correct : B. The above statement is correct
77. Which of the following statement is correct with regard to job costing?
Correct : D. All of the above are correct
78. A job costing system is usually based on absorption costing principles, and in addition a cost is included for non-production overheads.
Correct : B. True
79. Non-production overheads might be added to the cost of the job:
Correct : C. Either A or B
80. In job costing each job is given a unique:
Correct : C. Costing system
81. In a costing system, a job account is similar to a work in progress account, except that it is for one job only. In a company that specialises in jobbing work, the work in progress account is the total of all the individual job accounts.
Correct : A. The above statement is correct
82. Job costing is a costing method applied where work is undertaken to customers’
special requirements and each order is of comparatively short duration.
Correct : A. True
83. Costs for each job are collected on a:
Correct : C. Either A or B
84. A separate record must therefore be maintained to show the details of individual
jobs. Such records are often known as job cost sheets or job cost cards.
Correct : A. Correct
85. The items recorded on job cost sheet would include:
Correct : D. All of the above
86. The usual method of fixing prices in a jobbing concern is cost plus pricing.
Correct : A. True
87. Cost plus pricing means that a desired profit margin is added to total costs to arrive
at the selling price.
Correct : B. True
88. A computerised job accounting system contain which of the following features:
Correct : D. All of the above
89. It is possible to use a job costing system to control the costs of an internal service department, such as the maintenance department and the printing department.
Correct : A. The above statement is correct
90. What would be the effect of inaccurate estimation of overhead absorption rates on a
Job?
Correct : C. Both A&B
91. Batch costing is similar to job costing in that each batch of similar articles is
separately identifiable.
Correct : B. True
92. The cost per unit manufactured in a batch is the total batch cost divided by the
number of units in the batch.
Correct : A. Correct
93. The job costing method can therefore be applied in costing batches. The only difference is that a number of items are being costed together as a single unit, instead of a single item or service.
Correct : A. The above statement is correct
94. Identify the characteristics of services:
I. Intangibility: They do not have a physical substance unlike goods. They cannot be held or seen. II. Inseparability: Consumption and creation of a service cannot be separated. Services are consumed as they are created. III. Variability: Services face the problem of maintaining consistency in the standard of output. IV. Perishability: Services cannot be stored. V. Lack of ownership: Services do not result in the transfer of property in anything.