Questions A B C D Solution

The process of charging cost to a cost unit is Apportionme

Absorption Allocation nt Allotment Absorption
_____.
Different
Labour hour rate is followed in _____ intensive groups of None of the Labour
Labour Machine
industry. machine above
Different
Machine hour rate is followed in _____ groups of None of the
Machine Labour Machine
intensive industry. machine above
Recovery of overheads in costing less than Under Over None of the Under
actual is _____ of overheads. Absorption Absorption Application above Absorption
Recovery of overheads in costing more than Over Under None of the Over
actual is _____ of overheads. Absorption Absorption Application above Absorption
Factory overheads are recovered as a % of Direct Indirect None of the Direct
_____ wages. Wages Wages above Wages
Office overheads are recovered as a % of _____ Production None of the
Factory Cost Variable cost cost above Factory Cost
_____ cost. Direct
Overheads, Overheads, Labour, Overheads,
Labour hour rate = _____. Labour Machine Machine None of the Labour
Hours Hours Hours above Hours
Direct Direct
Overheads, Materials, Labour, Overheads,
Machine hour rate = _____. Machine Machine Machine None of the Machine
hours Hours Hours above hours
None of the
Depreciation of machine is _____ expense. Power Salary Machine above Machine

Repairs and maintenance is _____ expense. Direct Indirect Machine Selling Machine
Production overhead rate is suitable when None of the
Uniform Fluctuate Constant above Uniform
output is _____.
% of direct material cost is suitable when None of the
Fluctuate Constant Uniform above Fluctuate
material prices do not _____ much.
% of Direct wages is suitable when direct _____ None of the
Labour Machine Wages above Labour
is major factor of production.
Direct labour hour rate is suitable when labour None of the
Dominant Major Fluctuate above Dominant
is _____ factor of produciton.
Machine hour rate is suitable when machine is a None of the
Fluctuate Dominant Major above Dominant
_____ factor of production.
None of the
Rent is a _____ charge. Standing Dominant Fluctuate above Standing
None of the
Insurance is a _____ charge. Dominant Fluctuate Standing above Standing
None of the
Power is a _____ expense. Machine Labour Office above Machine

Lubricating oil is a _____ expense. Machine Direct Indirect Labour Machine

Machine hour rate takes into account _____ None of the
Time Fact Cost Fact Place Fact above Time Fact
_____.
Underabsorption refers to charging less
overheads in costing than financial accounting. True False True
Overabsorption refers to charging more
overheads in costing than in financial
accounting. True False True

Factory overheads are recorded as a % of cost. True False False

Factory overheads are recoved as a % of Direct
wages. True False True
Office overheads are recovered as a % of Direct
materials. True False False
Machine hour rate is overheads ¸ Machine
hours. True False True
Machine expenses are repairs of building. True False False
Overabsorption of overheads brings down
costing profit. True False True
Overabsorption of overheads increases costing
profit. True False False
In labour intensive industries machine hour rate
is not suitable. True False True
Overabsorption or underabsorption may be due
to defective method of absorption. True False True
Rent is a standing charge. True False True
Heating & lighting is a machine expense. True False False
Power is a machine expense. True False True
Obsolescene occurs due to technological
advancement. True False False
The process by which cost items are charged apportionme
absorption nt allocation allotment allocation
direct to a cost unit is called
A common absorption rate used through out the
following for all jobs and units of output department overall blanket machine
irrespective of the department in which they machine absorption absorption absorption hour rate
were produced is called hour rate rate rate rate
When allocating service department costs to
production departments, the method that does simple rate
not consider different cost behaviour pattern is reciprocal simple rate dual rate method
the step method method method method
most of the most of the overall blanket most of the
Machine hour rate is followed when work is done work is done absorption absorption work is done
by machine by labour rate rate by machine
different
Labour hour rate is followed when most of the groups of None of the labour
work is done by labour machines machines above
When overheads recovered in costing are less underabsorpt over none of the underabsorpt
than actual overheads incurred it is called : ion absorption recovery above ion
When overheads recovered in costing are more underabsorpt over all of the over
than actual overheads incurred it is called : ion absorption application above absorption
% of Direct % of cost of None of the % of Direct
Factory overheads are recovered as a : wages production % of sales above wages
Direct None of the
Office overheads are recovered as a % of : materials Direct wages Factory cost above Factory cost
 Insured value Invoice price Insured value
Insurance is apportioned on machines on the of each of each Cost of of each
basis of : machine machine Area machine machine
Depreciation Rent of Salary of All of the Depreciation
Machine expenses are : on machine premises supervisors above on machine
Depreciation Repairs & both (ii) & both (ii) &
Machine expenses are : of Building maintenance Power (iii) (iii)
XYZ Ltd. budgeted overheads in the last year
was ` 2,40,000. It’s the same period were ` Under
3,60,000 and ` 3,90,000 respectively. What is Under Over Under Over absorption `
the amount of over at under absorption of absorption ` absorption ` absorption ` absorption ` 30,000
overheads? 30,000 1,20,000 25,000 1,00,000
Overheads are ` 36,000 and direct labour hours
36,000, material used ` 54,000, Direct wages `
66.67%
45,000 hours of machine operation 30,000. The
overheads based on material is 66.67% 60% 70% 80%
Refer to Question No. 16. the overheads based
80% 70% 69% 75% 80%
on direct labour is
Refer to Question No. 16. the overheads based
`2 `1 `5 `4 `2
on labour hour is
Refer to Question No. 16. the overheads based
` 1.20 `2 `3 ` 4.50 ` 1.20
on machine hour is