Practice Test

Q1) Paras Ltd. has been using an overhead cost rate of Rs 5.60 per machine hour. During the year, overhead of Rs. 2,75,000 were incurred and 48,000 machine hours worked. Therefore, overheads were : Show Answer

Q2) Production overheads are absorbed into production units by the use of overhead cost rates. Which of the following best describes how the overhead cost rate is calculated ? Show Answer

Q3) If there has been an over recovery of overheads at the end of an accounting period, the amount concerned should be : Show Answer

Q4) Which of the following types of cost would not form part of the prime cost of a product? Show Answer

Q5) For week 1, the budgeted labour hours for normal activity are 5,000 hours. The budgeted fixed cost is Rs 15,000.The fixed overhead cost rate is calculated on the basis of budgeted cost and budgeted normal activity. At the end of the week, it is found that only 4,000 hours were worked in practice. What is the amount of fixed overhead applied to jobs in week 1 ? Show Answer

Q6) In week 2, the budgeted labour hours for normal activity are 10,000 hours. The budgeted fixed cost is 15,000 . The fixed overhead cost rate is calculated on the basis of budgeted cost and budgeted normal activity. At the end of the week , it is found that only 11,000 hours were worked in practice. What is the amount of fixed overhead applied to job in week 1 ? Show Answer

Q7) Which of the following are conditions to be met in determining a suitable overhead cost rate ? (i) fair to all parties involved in the allocation process. (ii)Representative of the benefit each party gains from the shared cost. (iii) The most accurate, regardless of the time taken to provide the information. Show Answer

Q8) The accounts department investigates all applications from new customers for credit sales. It has incurred a cost of Rs.2,500 in January to investigate 100 customer applications. The accounts department has apportioned the cost as Rs1,250 each to division A and B because each has the same level of sales. The manager of division A has claimed that this is unfair because she only asked for 20 investigations while division B asked for 80 investigations. Which of the following statements is correct ? (i)Activity based costing would charge Rs. 500 to division A and Rs.2,000 to division B. (ii)Activity based costing forecasts that the customer investigation costs for February will be Rs 500 for division A and Rs.2,000 for division B. (iii) Activity based costing makes managers more aware of the cost incurred by their operations. Show Answer

Q9) For week 1, the budgeted labour hours for normal activity are 4,000 hours.The budgeted fixed cost is Rs 16,000. The fixed overhead cost rate is calculated on the basis of budgeted cost and budgeted normal activity. At the end of the week it is found that 4,200 hours were worked in practice. What is the amount of fixed overhead applied to jobs in week 1 ? Show Answer

Q10) Which of the following is the best description of cost drivers? Show Answer

Q11) An orgnization 3 cost centre. Production overheads are absorbed into production units by the use of overhead cost rates. Which of the following best describes. how the overhead cost rate should be calculated? Show Answer

Q12) If there has been an under-recovery of overhead at end of an accounting period, the amount concerned should be : Show Answer

Q13) Rahul Ltd has been using an overhead cost rate of Rs.6.40 per machine hour. During the year, overheads of Rs.200.000 were incurred and 30,000 machine hour worked. Which of the following statement is correct? Show Answer

Q14) The allotment of whole items of cost to cost centres or cost unit is called: Show Answer

Q15) Packing cost as a : Show Answer

Q16) Director's remuneration and expenses a part of: Show Answer

Q17) Administration overhead are recovered as a Percentage of : Show Answer

Q18) Which of the following is a scientific and accurate method of absorption of factory overheads: Show Answer

Q19) Selling and distribution overheads are absorbed on the basis of : Show Answer

Q20) If raw material used is Rs.8,000 and direct labour cost is Rs 6,000 on a work order carried out, the factory overheads absorbed @ 15% on Prime Cost will be: Show Answer

Q21) If total factory overheads for the month of November were Rs.50,000 and during that period 100 workers worked for 25 days at 8 hours per day, then overhead absorption rate per direct labour hour will be : Show Answer

Q22) If machine hours worked were5,000, factory overhead absorption rate per machine hour was Rs. 3 and under absorption of overheads is Rs.400 then actually incurred factory overheads will be Show Answer

Q23) The actual incurred works overheads are Rs.10,500 and absorbed overheads shows an over absorption of Rs. 500: If direct labour cost is Rs.50,000, then overhead absorption rate based on direct wages will be : Show Answer

Q24) machine hour rate method is the method of absorption of: Show Answer

Q25) Under machine hour rate method a machine is treated as: Show Answer

Q26) In ascertainment of machine hour rate, labour welfare expenses is apportioned: Show Answer

Q27) In ascertainment of machine hour rate, rent, rates and taxes is apportioned: Show Answer

Q28) Overhead is classified according to variability wise into fixed, variable and_________________ Show Answer

Q29) The aggregate of indirect material cost, indirect wages and__________is overhead Show Answer

Q30) with the change in quantum of production ______ cost remains the same per unit. Show Answer

Q31) Increase in total variable cost is due to _____in production. Show Answer

Q32) Directors remuneration and expenses is a part of ______ overhead. Show Answer

Q33) The difference between actual and recovered factory overheads is called__________ Show Answer

Q34) The technical term for charging of overheads to cost units is known as _________ Show Answer

Q35) Allotment of overheads to cost units is known as_________ Show Answer

Q36) The process of grouping cost according to their common characteristics is know as____________ Show Answer

Q37) Overhead refers to : Show Answer

Q38) Which of the following is not a method of cost absorption? Show Answer

Q39) Blanket overhead rate is : Show Answer

Q40) In element-wise classification of overhead which one of the following is not included __________ Show Answer

Q41) A company's service centre costs total Rs.95,000, and are reapportioned to three production departments (A, B and C) in the ratio33:25:17 respectively. What is total amount ( to the nearest pound) apportioned to departments c? Show Answer

Q42) The process by which cost items are charged direct to a cost unit is called ____ Show Answer

Q43) A common absorption rate used throughout the following for all jobs and units of output irrespective of the department in which they were produced is called ____ Show Answer

Q44) When allocating service department costs to production departments, the method that does not consider different cost behaviour pattern is the ___ Show Answer

Q45) Machine hour rate is followed when ____ Show Answer

Q46) Labour hour rate is followed when most of the work is done by ____ Show Answer

Q47) ___ is an indirect cost. Show Answer

Q48) ___ ___ ___ method is followed where the work is machine oriental. Show Answer

Q49) Machine hour rate = Overheads Show Answer

Q50) ___ ___ ___ method is followed when labour is pre-dominent. Show Answer

Q51) Under ___ ___ ___ method cost of material consumed is the basis. Show Answer

Q52) % of Direct Labour = Factory Overheads Show Answer

Q53) The rate of absorption should be ____ Show Answer

Q54) Indirect costs cannot be identified with a particular cost center are shared between cost centre using _____ Show Answer

Q55) The method of apportionment suitable for allocating rent of building between cost centres _____ Show Answer

Q56) The allotment of whole items of cost to cost unit is called ____ Show Answer

Q57) Administration overheads are recovered as a percentage of ____ Show Answer

Q58) Depreciation on machine is apportioned on the basis of ____ Show Answer

Q59) Power is allocated on the basis of ____ Show Answer

Q60) Employee welfare expenses are allocated on the basis of ____ Show Answer

Q61) Electricity charges are allocated on the basis of ___ Show Answer

Q62) Indirect cost is known as ____ Show Answer

Q63) Cost incurred to secure orders is _____ Show Answer

Q64) Material which cannot be charged directly ____ Show Answer

Q65) Rent of building is ____ overheads. Show Answer

Q66) Cost which can be controlled is ____ cost. Show Answer

Q67) Cost of abnormal idle time is ____ overheads. Show Answer

Q68) Depreciation on machinery is charged under ____ overheads. Show Answer

Q69) Royalty on production is a ___ charge. Show Answer

Q70) Costing department expenses are considered as ____ overheads. Show Answer

Q71) Factory overheads cost is always indirect cost. Show Answer

Q72) Allocation and apportionment of overheads means the same thing. Show Answer

Q73) Manufacturing and administrative overheads are different. Show Answer

Q74) Selling and distribution overheads are same as administrative overheads. Show Answer

Q75) Written Down Value Method of depreciation is the best method. Show Answer

Q76) Overheads are also known as chargeable expenses. Show Answer

Q77) Allocation of overheads implies identification of overheads cost with the particular cost centre. Show Answer

Q78) Apportionment of overheads is allotment of whole items of cost to cost centre?s. Show Answer

Q79) Department that assist production departments are called services departments. Show Answer

Q80) Overheads absorption is the allotment of overheads to cost unit. Show Answer

Q81) Overheads absorption rates for fixed overheads are based on normal plant capacity. Show Answer

Q82) Under-absorption of overheads means that actual overheads are more than absorbed overheads. Show Answer

Q83) Under-absorption of overheads decreases profit in costing books. Show Answer

Q84) When actual overheads are more than absorbed overheads, it is known as over-absorption. Show Answer

Q85) Administrative overheads are usually absorbed as a percentage of prime cost. Show Answer

Q86) Departmentalisation of overheads facilitates control objective of cost accounting. Show Answer

Q87) Linking overheads to cost unit is known as overheads absorption. Show Answer

Q88) Variable overheads cost is a period cost. Show Answer