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Monday, 7 September 2015

Product costing Objective Type Questions And Answers

11. In a long term building contract, ‘progress payments’ are:
A. money withheld by the customer as a guarantee against future problems.
B. money withheld by the builder as a guarantee against future problems.
C. the overall value of the contract.
D. a part payment made by the customer as the contract progresses.
Ans: D

12. In a long term contract, a loss recognised on the contract prior to its completion is:
A. estimated at the commencement of the contract and then included in company losses at an even rate over the life of the contract.
B. included only when all payments under the contract have been made.
C. included in full as a ‘foreseeable loss’ when calculating the company’s overall profit or loss for the year.
Ans: C

13. In process costing, wastage caused by unavoidable and expected causes is usually known as:
A. abnormal gain.
B. normal gain.
C. normal loss.
D. abnormal loss.
Ans: C

14. Which of the following organisations would be most likely to use ‘full-time student equivalent’ as an appropriate cost unit?
A. A bookshop selling only to students.
B. A supermarket.
C. A hotel.
D. A university.
Ans: D

15. Which of the following businesses would be most likely to use ‘passenger miles’ as an appropriate cost unit?
A. An airline.
B. A travel agency.
C. A road haulage company.
D. A car manufacturer.
Ans: A

16. Specific order costing is applicable were a product or service results from a sequence of continuous or repetitive operations or processes.
A. True
B. False
Ans: B

17. Batch costing is virtually identical to job costing, but the price of one unit is found by dividing the total costs of the batch by the number of units produced.
A. True
B. False
Ans: A

18. Profits can be recorded on a long-term contract prior to its completion.
A. True
B. False
Ans: A

19. An abnormal gain recorded under process costing is deducted from the total cost of production.
A. True
B. False
Ans: B

20. Under process costing, the firm is divided into departments which tend to be limited to one process or operation.
A. True
B. False
Ans: A

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