Costing - Study Mode

[#636] Works overhead is Rs 40,000, total machine hours is 8500 hours and time allowed for machine setting is 500 houRs What is the machine rate?
Correct Answer

(D) Rs. 5 per hour

Explanation

Solution: Machine hour rate = Works overhead / Machine hour = 40000 / (8500 - 500) = Rs. 5 per hour.

[#637] Expenditure over and above prime cost is known as ________.
Correct Answer

(A) overhead

Explanation

Solution: Expenditure over and above prime cost is known as overhead. Overhead is those costs required to run a business, but which cannot be directly attributed to any specific business activity, product, or service.

[#638] In a machine dominated industry which method of overhead absorption is suitable?
Correct Answer

(D) Machine hour method

Explanation

Solution: In a machine dominated industry Machine hour method of overhead absorption is suitable. Under this method, hourly rate of depreciation is calculated. The cost of the asset (less residual value if any) is divided by the estimated working hours. The actual depreciate for any given period depends upon the working hours during that year.

[#639] Most appropriate basis for the apportionment of power is ________.
Correct Answer

(D) horse power of machines

Explanation

Solution: Most appropriate basis for the apportionment of power is horse power of machines.

[#640] The costing method which can be used in industry where the product pass through different processes is known as ________.
Correct Answer

(D) process costing

Explanation

Solution: The costing method which can be used in industry where the product pass through different processes is known as process costing. Process costing is used when there is mass production of similar products, where the costs associated with individual units of output cannot be differentiated from each other.