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B Com Exam  >  B Com Tests  >  Cost Accounting  >  Test: Methods of Costing- 2 - B Com MCQ

Test: Methods of Costing- 2 - B Com MCQ


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10 Questions MCQ Test Cost Accounting - Test: Methods of Costing- 2

Test: Methods of Costing- 2 for B Com 2024 is part of Cost Accounting preparation. The Test: Methods of Costing- 2 questions and answers have been prepared according to the B Com exam syllabus.The Test: Methods of Costing- 2 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- 2 below.
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Test: Methods of Costing- 2 - Question 1
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Which method can be used to value by-products?

Detailed Solution for Test: Methods of Costing- 2 - Question 1
By-products can be valued using either Option A or Option B. In Option A, the proceeds from the sale of the by-product are treated as pure profit. In Option B, the proceeds from the sale, after deducting any handling and selling expenses, are applied to reduce the cost of the main products. The choice of method will depend on the specific circumstances and the accounting policies of the company.
Test: Methods of Costing- 2 - Question 2
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When valuing by-products, if further processing is required to improve their marketability, what should be deducted from the net revenue?

Detailed Solution for Test: Methods of Costing- 2 - Question 2
If a by-product needs further processing to improve its marketability, the cost of this additional processing should be deducted from the net revenue when valuing the by-product. This ensures that the final value of the by-product reflects the cost of making it marketable.
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Test: Methods of Costing- 2 - Question 3
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When apportioning joint costs based on physical measurement of joint products, what should be done if the unit of measurement is different for each product?

Detailed Solution for Test: Methods of Costing- 2 - Question 3
If the unit of measurement is different for each product in joint costing, a method should be found to express them in a common unit. This can be done by separating and apportioning costs using weighting factors. This ensures that the costs are allocated appropriately between the different products.
Test: Methods of Costing- 2 - Question 4
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What is the purpose of apportioning joint costs between products in joint valuation?
Detailed Solution for Test: Methods of Costing- 2 - Question 4
The purpose of apportioning joint costs between products in joint valuation is to allocate common costs fairly between the products. This ensures that each product bears its appropriate share of the costs and allows for a more accurate determination of the overall profitability of each product.
Test: Methods of Costing- 2 - Question 5
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What is the main basis for apportioning joint costs between products?
Detailed Solution for Test: Methods of Costing- 2 - Question 5
The main bases for apportioning joint costs between products are physical measurement of joint products, market value, and technical estimates of relative use of common resources. The choice of basis will depend on the specific circumstances and the objectives of the joint valuation.
Test: Methods of Costing- 2 - Question 6
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Why can apportioned common costs be misleading when used as a basis for decision-making?
Detailed Solution for Test: Methods of Costing- 2 - Question 6
Apportioned common costs can be misleading when used as a basis for decision-making because they do not reflect the actual profitability of each product, they do not consider the market values of each product, and they are based on arbitrary calculations. Therefore, it is important to consider other factors and relevant cost revenue differences when making decisions.
Test: Methods of Costing- 2 - Question 7
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In the context of joint products, which of the following decisions may affect total joint costs?
Detailed Solution for Test: Methods of Costing- 2 - Question 7
All of the above decisions may affect total joint costs in the context of joint products. For example, withdrawing a product may allow for a reduction in the capacity of the joint process, which can affect the total joint costs. Similarly, adding a product or changing the marketing strategy can also impact the total joint costs. It is important to consider these factors when analyzing profitability and marketing opportunities.
Test: Methods of Costing- 2 - Question 8
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What is the purpose of valuing work-in-progress in process industries?
Detailed Solution for Test: Methods of Costing- 2 - Question 8
The purpose of valuing work-in-progress in process industries is to determine the total cost of production, the percentage of completion of each unit, and to calculate the equivalent production units. Work-in-progress represents the incomplete units at the end of an accounting period, and valuing it allows for a more accurate assessment of the overall production and costs.
Test: Methods of Costing- 2 - Question 9
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What are equivalent production units in the context of work-in-progress valuation?
Detailed Solution for Test: Methods of Costing- 2 - Question 9
Equivalent production units in the context of work-in-progress valuation refer to the notional quantity of completed units that are substituted for the incomplete units. This is done when the aggregate work content of the incomplete units is deemed to be equivalent to that of the substituted quantity. Equivalent units are calculated separately for each element of cost, such as material, labor, and overheads, as the percentage of completion may vary for different cost components.
Test: Methods of Costing- 2 - Question 10
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What is the main difference between operating costing and operation costing?
Detailed Solution for Test: Methods of Costing- 2 - Question 10
The main difference between operating costing and operation costing is that operating costing is used for services, such as transport, supply service, welfare service, etc., while operation costing is used for the production of commodities. Operating costing focuses on determining the cost per unit of service rendered, taking into account both fixed and variable costs. On the other hand, operation costing is used to determine the total cost and unit cost of each operation, specifically focusing on variable costs.
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