Costing - Study Mode
[#761] Fixed cost per unit increases when _______.
Correct Answer
(D) production volume decreases
Explanation
Solution: Fixed cost per unit increases when production volume decreases. Total fixed costs remain the same, within the relevant range. However, the fixed cost per unit decreases as production increases, because the same fixed costs are spread over more units.
[#762] The process of grouping of costs according to some common characteristics ________.
Correct Answer
(D) classification
Explanation
Solution: The process of grouping of costs according to some common characteristics classification. Cost may be classified according to their nature, i.e., material, labour and expenses and a number of other characteristics.
[#763] Which of the following is an example of semi-variable cost?
Correct Answer
(C) Telephone expenses
Explanation
Solution: Telephone expenses is an example of semi-variable cost. A semi-variable cost, also known as a semi-fixed cost or a mixed cost, is a cost composed of a mixture of both fixed and variable components.
[#764] Fire insurance of stock can be apportioned on the basis of ________.
Correct Answer
(A) value of stock
Explanation
Solution: Fire insurance of stock can be apportioned on the basis of value of stock. A value stock is a stock that trades at a lower price relative to its fundamentals, such as dividends, earnings, or sales, making it appealing to value investors.
[#765] Appropriate basis for apportionment of material handling charges is ________.
Correct Answer
(C) material consumed
Explanation
Solution: Appropriate basis for apportionment of material handling charges is material consumed. Material handling costs are a crucial component of a manufacturing company's profit calculations.