Costing - Study Mode

[#546] Direct material Rs 25,000 and wages Rs 15,000 and direct expenses Rs 5,000 What would be the factory cost if factory overhead rate is 20%.
Correct Answer

(C) Rs. 54,000

Explanation

Solution: Calculation of factory cost = (Direct material + Wages + Direct expenses) + Factory overhead rate = (25000 + 15000 + 5000) + 20% = 45000 + (20/100 × 45000) = 45000 + 9000 = Rs. 54000.

[#547] Overvaluation of opening stock in financial accounting results ________.
Correct Answer

(B) decreases financial accounts profit

Explanation

Solution: Overvaluation of opening stock in financial accounting results decreases financial accounts profit. Overvalued opening inventory means understated profit and and undervalued opening inventory means high profit.

[#548] Under absorption of overhead expenses in cost accounting results in _________.
Correct Answer

(C) increase in costing profit

Explanation

Solution: Under absorption of overhead expenses in cost accounting refers to the allocation of overhead costs to the cost of production. When overhead expenses are absorbed into the cost of production, it results in a higher portion of overhead being included in the cost of goods sold. This leads to a higher total cost of production, which in turn decreases the per unit cost of production. When the cost of production decreases, the profit margin per unit increases, resulting in an increase in costing profit. Therefore, the correct option is increase in costing profit .

[#549] ________ refers to the verification of cost accounts and check on the adherence to the cost accounting plan.
Correct Answer

(A) Cost Audit

Explanation

Solution: Cost Audit refers to the verification of cost accounts and check on the adherence to the cost accounting plan. Cost Audit represents the verification of cost accounts and check on the adherence to cost accounting plan.

[#550] Direct material is a ________.
Correct Answer

(A) manufacturing cost

Explanation

Solution: Direct material is a manufacturing cost. Direct material cost is the cost of the raw materials and components used to create a product.