Costing - Study Mode
[#771] An ability of an accounting system, to point out use of resources in every step of production process is called
Correct Answer
(B) audit trails
Explanation
Solution: An ability of an accounting system, to point out use of resources in every step of production process is called audit trails. An audit trail is a step-by-step record by which accounting or trade data can be traced to its source.
[#772] Systematic flow of services, goods or information from buying material for product delivery to customers is known as
Correct Answer
(A) supply chain
Explanation
Solution: Systematic flow of services, goods or information from buying material for product delivery to customers is known as supply chain. A supply chain is a network between a company and its suppliers to produce and distribute a specific product to the final buyer. This network includes different activities, people, entities, information, and resources.
[#773] Costs associated with storage of finished goods such as spoilage, obsolescence and insurance of goods are classified as
Correct Answer
(A) carrying costs
Explanation
Solution: Costs associated with storage of finished goods such as spoilage, obsolescence and insurance of goods are classified as carrying costs. Carrying costs are the costs of holding inventory and include maintenance, specifically in regard to perishable items, and storage costs.
[#774] Costs of goods acquired from suppliers is classified as
Correct Answer
(D) purchasing costs
Explanation
Solution: Costs of goods acquired from suppliers is classified as purchasing costs. It is important when you decide to buy a home that you have a full understanding of the costs associated with your purchase.
[#775] If demand in units is 18000, relevant ordering cost for each year is $150 and an order quantity is 1500, then annual relevant ordering cost would be
Correct Answer
(D) $180
Explanation
Solution: Annual relevant ordering cost = (18000 ÷ (1500/150 × 100)) = $180