Costing - Study Mode

[#986] Procedure of assigning direct cost to any cost abject is classified as
Correct Answer

(C) cost allocation

Explanation

Solution: Procedure of assigning direct cost to any cost abject is classified as cost allocation. Cost allocation is the process of identifying, aggregating, and assigning costs to cost objects. A cost object is any activity or item for which you want to separately measure costs.

[#987] If an actual indirect cost incurred is $25000 and indirect cost allocated is $23000, then over allocated indirect cost would be
Correct Answer

(B) -$2000

[#988] In an accounting system, document which supports journal entries is classified as
Correct Answer

(C) source document

Explanation

Solution: In an accounting system, document which supports journal entries is classified as source document. A source document is an original record which contains the detail that supports or substantiates a transaction that will be (or has been) entered in an accounting system.

[#989] If budgeted indirect cost base is $115 and budgeted cost allocation base is $830 per hour, then annual indirect cost (budgeted) will be
Correct Answer

(D) $95,450

Explanation

Solution: Annual indirect cost (budgeted) = Budgeted indirect cost × Budgeted cost allocation = $115 × $830 = $95,450

[#990] If budgeted annual manufacturing indirect cost is $2250000 and cost allocation base is 2800 labour hour, then budgeted manufacturing overhead rate will be
Correct Answer

(A) $803.571 per labour hour

Explanation

Solution: Manufacturing overhead = Manufacturing indirect cost ÷ Cost allocation base = $2250000 ÷ 2800 = $803.571 per labour hour