Question 1

Fancy packing is an example of .................. expenses.
A)selling
B)distribution
C)administration
D)factory

Accepted Answer

Fancy packing is considered a selling expense because it is used to attract customers and promote sales.

Question 2

Telephone expense is ......................expense.
A)variable
B)semi-variable
C)fixed
D)none of these

Accepted Answer

Telephone expense is typically considered a semi-variable expense because it often has a fixed base cost plus additional costs that vary with usage.

Question 3

Primary packing is an item of ………………
A)selling overheads
B)prime cost
C)distribution overheads
D)factory overheads

Accepted Answer

Primary packing is considered a part of the prime cost as it is directly associated with the production process, involving the materials and packaging necessary to prepare a product for sale.

Question 4

The Profit/Volume ratio or marginal ratio expresses the relation of ………………
A)profit
B)marginal cost
C)contribution
D)none of these

Accepted Answer

The Profit/Volume ratio or marginal ratio expresses the relation of contribution to sales. Contribution is calculated as sales minus variable costs, and this ratio is a key indicator in marginal costing and decision-making processes.

Question 5

Which of the following measures helps to increase the P/V Ratio ?
A)increasing the selling price per unit
B)reducing the variable or marginal cost
C)changing the sales mixture
D)all of these

Accepted Answer

The P/V Ratio (Profit/Volume Ratio) increases by increasing the selling price per unit, reducing the variable or marginal cost, and optimizing the sales mix to favor more profitable items. All these measures improve the contribution margin per unit or overall, thus enhancing the P/V Ratio.

Question 6

Credit and collection cost is an item of
A)selling overhead
B)office overhead
C)prime cost
D)administrative overhead

Accepted Answer

Credit and collection costs are considered part of selling overhead because they are directly associated with the sales and distribution aspect of a business.

Question 7

Warehousing cost is an item of
A)office overhead
B)distribution overhead
C)material cost
D)works overhead

Accepted Answer

Warehousing cost is considered a part of distribution overhead because it is associated with storing and handling products to prepare them for distribution and sale.

Question 8

In................................ each job is a cost unit to which all costs are assigned.
A)batch costing
B)job costing
C)process costing
D)operation costing

Accepted Answer

In job costing, each job or project is treated as a distinct entity, and all costs (materials, labor, and overhead) are assigned directly to that specific job, making it the cost unit. This method is commonly used in industries where products or services are customized.

Question 9

Material Costs of each job are determined from……………
A)material requisition notes
B)bill of materials
C)both a & b
D)none of these

Accepted Answer

Material costs of each job are determined from both material requisition notes, which track the materials directly drawn from the inventory for a job, and the bill of materials, which lists all the materials and quantities planned for a job.

Question 10

Printers use ......................... costing.
A)process
B)batch
C)job
D)contract

Accepted Answer

Printers typically use job costing because each printing job is unique and can be separately identified, allowing costs to be assigned to each job individually.

Question 11

Each job has a ..................... prepared for it that bears the job number and which is used to collect all cost data relating to job.
A)job time sheet
B)job cost card
C)job ticket
D)job account

Accepted Answer

A job cost card is specifically prepared for each job to collect all the cost data related to that job, including materials, labor, and overheads, making it a central document for job costing purposes.

Question 12

An automobile service unit uses..........................costing.
A)specific order
B)batch
C)job
D)contract

Accepted Answer

An automobile service unit typically uses job costing because each vehicle's service is considered a unique job with specific requirements and costs.

Question 13

Economic Batch Quantity is an important point to be determined in industries where...................... costing is employed.
A)job
B)batch
C)operation
D)output

Accepted Answer

Economic Batch Quantity is crucial in industries that use batch costing, as it helps determine the most cost-effective quantity of units to produce in a single batch.

Question 14

Economic Batch Quantity depends on...........................and…………..costs.
A)material, labour
B)set-up costs, carrying
C)transportation, carrying
D)warehousing, labour

Accepted Answer

Economic Batch Quantity depends on set-up costs and carrying costs. Set-up costs are the costs involved in setting up equipment or the production process, while carrying costs are the costs associated with holding or storing inventory.

Question 15

The .....................costing is applied when a quantity of similar and identical products are manufactured together as one Job.
A)job
B)batch
C)operation
D)output

Accepted Answer

Batch costing is used when a specific quantity of similar or identical products are produced together, which is referred to as a batch. This method is suitable for such scenarios as it allows for the accumulation and assignment of costs to each batch, making it easier to determine the cost per unit within the batch.

Question 16

The loss incurred on an incomplete contract is transferred to ………….account.
A)costing profit and loss account
B)profit and loss account
C)trading account
D)deferred to next year.

Accepted Answer

The loss incurred on an incomplete contract is transferred to the profit and loss account. This is because the loss is realized and needs to be accounted for in the period it occurs, reflecting the true financial performance of the business.

Question 17

When the completion stage of the contract is more than half, the profit to be credited to Profit and Loss account will be equal to…………..
A)1/3rd of notional profit x cash received work certified
B)½ of notional profit x cash received work certified
C)2/3rd of notional profit x cash received work certified
D)full notional profit.

Accepted Answer

When the completion stage of the contract is more than half, it is common to credit 2/3rd of the notional profit multiplied by the ratio of cash received to work certified to the Profit and Loss account. This method helps in recognizing revenue in a way that reflects the work completed, especially in long-term contracts.

Question 18

When the completion stage of a contract is less than ¼, the total expenditure on the contract is transferred to...............................account.
A)work-in-progress
B)profit and loss account
C)miscellaneous account
D)none of these

Accepted Answer

When the completion stage of a contract is less than ¼, the total expenditure is considered as work-in-progress, reflecting that the project is still in its early stages and not yet generating revenue.

Question 19

If the amount of work certified is less than…......... of the contract price, then no profit should be taken to Profit & Loss Account.
A)20%
B)25%
C)33 1/3%
D)40%

Accepted Answer

The answer of If the amount of work certified is...

Question 20

Contract costing is not used in one of the following industries.
A)ship building
B)civil construction
C)automobiles
D)construction of bridges

Accepted Answer

Contract costing is typically used in industries where large, unique, and identifiable projects are undertaken, such as shipbuilding, civil construction, and the construction of bridges. The automobile industry, however, uses other costing methods like process costing or job costing, as it involves mass production of similar items rather than unique contracts.

Quiz 4: Costing and Expense Analysis

Fancy packing is an example of .................. expenses.

Telephone expense is ......................expense.

Primary packing is an item of ………………

The Profit/Volume ratio or marginal ratio expresses the relation of ………………

Which of the following measures helps to increase the P/V Ratio ?

Credit and collection cost is an item of

Warehousing cost is an item of

In................................ each job is a cost unit to which all costs are assigned.

Material Costs of each job are determined from……………

Printers use ......................... costing.

Each job has a ..................... prepared for it that bears the job number and which is used to collect all cost data relating to job.

An automobile service unit uses..........................costing.

Economic Batch Quantity is an important point to be determined in industries where...................... costing is employed.

Economic Batch Quantity depends on...........................and…………..costs.

The .....................costing is applied when a quantity of similar and identical products are manufactured together as one Job.

The loss incurred on an incomplete contract is transferred to ………….account.

When the completion stage of the contract is more than half, the profit to be credited to Profit and Loss account will be equal to…………..

When the completion stage of a contract is less than ¼, the total expenditure on the contract is transferred to...............................account.

If the amount of work certified is less than…......... of the contract price, then no profit should be taken to Profit & Loss Account.

Contract costing is not used in one of the following industries.