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Test: Methods of Costing- 1 - B Com MCQ


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10 Questions MCQ Test Cost Accounting - Test: Methods of Costing- 1

Test: Methods of Costing- 1 for B Com 2024 is part of Cost Accounting preparation. The Test: Methods of Costing- 1 questions and answers have been prepared according to the B Com exam syllabus.The Test: Methods of Costing- 1 MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Methods of Costing- 1 below.
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Test: Methods of Costing- 1 - Question 1
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Job costing is applicable to which of the following industries?

Detailed Solution for Test: Methods of Costing- 1 - Question 1
Job costing is applicable to industries such as manufacturing of machines, ship building, printing, and many others. In job costing, each job is considered a distinct cost unit, and a separate job cost sheet is prepared for each job. This allows for the identification and tracking of costs specific to each job.
Test: Methods of Costing- 1 - Question 2
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Which of the following is a feature of job costing?

Detailed Solution for Test: Methods of Costing- 1 - Question 2
Job costing has several features. Each job is treated as a cost unit, meaning that the costs are tracked and allocated to each job separately. A separate work in progress ledger is maintained for each job, allowing for the tracking of costs and progress. Additionally, profit or loss is determined for each job independently of others, providing a clear understanding of the financial outcome of each job.
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Test: Methods of Costing- 1 - Question 3
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What is the advantage of job costing?

Detailed Solution for Test: Methods of Costing- 1 - Question 3
Job costing offers several advantages. It helps in distinguishing profitable jobs from unprofitable jobs, allowing a company to identify areas of success and areas for improvement. It also helps in controlling future costs by analyzing the costs incurred for each job and making adjustments as necessary. Additionally, it aids in the preparation of cost estimates for submitting quotations and tenders, ensuring accurate pricing and competitiveness in the market.
Test: Methods of Costing- 1 - Question 4
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Batch costing is applicable to which industries?
Detailed Solution for Test: Methods of Costing- 1 - Question 4
Batch costing is applicable to industries such as manufacturing of machines, chemical industries, mining works, and others. It is a form of job costing where a large number of components or products are manufactured together in a batch. Separate job cost sheets are maintained for each batch, and costs are allocated to each batch accordingly.
Test: Methods of Costing- 1 - Question 5
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What is a contract account in contract costing?
Detailed Solution for Test: Methods of Costing- 1 - Question 5
A contract account is a nominal account in nature that is used in contract costing. It is prepared to find out the cost of the contract and to determine the profit or loss made on the contract. It includes the recording of direct costs, such as material, labor, and other direct expenses incurred during an accounting period. The difference between the two sides of the account represents the notional profit or notional loss.
Test: Methods of Costing- 1 - Question 6
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What is the procedure for job order costing system?
Detailed Solution for Test: Methods of Costing- 1 - Question 6
The procedure for job order costing system involves several steps. It starts with receiving an enquiry from the customer regarding price, quality, and other requirements. Based on this, an estimation of the price of the job is made, taking into consideration the costs incurred for similar jobs in the past. If the customer is satisfied with the quotation, an order is received. This order is then processed, and a production order is created by the planning department to initiate the job.
Test: Methods of Costing- 1 - Question 7
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Which type of contract allows for a fixed contract price agreed upon by both parties?
Detailed Solution for Test: Methods of Costing- 1 - Question 7
A fixed price contract is a type of contract where both parties agree to a fixed contract price. This means that the price for the contract is predetermined and does not change, regardless of any fluctuations in costs or other factors. It provides stability and clarity in terms of pricing and financial obligations.
Test: Methods of Costing- 1 - Question 8
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What is the method of costing used in industries engaged in continuous or mass production?
Detailed Solution for Test: Methods of Costing- 1 - Question 8
Process costing is the method of costing used in industries engaged in continuous or mass production. It involves determining the cost of a product at each process or stage of manufacturing. Separate accounts are maintained for each process, and costs are collected and allocated accordingly. This method is commonly used in manufacturing industries, chemical industries, mining works, and public utility undertakings.
Test: Methods of Costing- 1 - Question 9
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What is a characteristic of process costing?
Detailed Solution for Test: Methods of Costing- 1 - Question 9
Process costing has several characteristics. Production is continuous, meaning that it occurs without interruption. Products pass through two or more distinct processes of completion, where each process adds value to the product. Products are standardized and homogeneous, meaning they are similar and not distinguishable in the processing stage. These characteristics make process costing suitable for industries where standardized goods are produced.
Test: Methods of Costing- 1 - Question 10
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What is the advantage of process costing?
Detailed Solution for Test: Methods of Costing- 1 - Question 10
Process costing offers several advantages. It is easy to compute average cost because the products being produced are homogeneous. This simplifies the calculations involved in determining the cost per unit at each process. It also allows for the ascertainment of process costs at short intervals, providing up-to-date information on costs and performance. Additionally, process costing provides effective managerial control by evaluating the performance of each process, enabling managers to make informed decisions and improvements.
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