Costing - Study Mode

[#886] Cost of process Rs1,60,000 and profit to be charged on the transfer price is 20% What is the inter process profit?
Correct Answer

(B) Rs 40,000

Explanation

Solution: Inter process profit = (160000 / (100% - 20%) - 160000) = 200000 - 160000 = Rs. 40000.

[#887] Job costing method is the most suitable method for ________.
Correct Answer

(D) repair shops

Explanation

Solution: Job costing method is the most suitable method for repair shops. A job costing system is used by companies that produce unique products or jobs.

[#888] Which method of costing can be used in furniture manufacture industry?
Correct Answer

(A) Job costing

Explanation

Solution: Job costing method of costing can be used in furniture manufacture industry. A job card is made for each work or job. This method of costing is used in the factories which produce the machine tool and other engineering products, furniture projects, hardware and interior decoration. This method of costing is also called a piece of work costing or terminal costing.

[#889] Contract costing is most appropriate method of costing for ________.
Correct Answer

(A) construction industry

Explanation

Solution: Contract costing is most appropriate method of costing for construction industry. Contract costing is the tracking of costs associated with a specific contract with a customer.

[#890] Cost of contract and profit or loss thereon are determined by preparing ________.
Correct Answer

(D) separate ledger a/c

Explanation

Solution: Cost of contract and profit or loss thereon are determined by preparing separate ledger a/c. A separate contract account is prepared for each contract.