Costing - Study Mode

[#1201] Following information is available of PQR for year ended March, 20XX: 4,000 units in process, 3,800 units output, 10% of input is normal wastage, Rs 2.50 per unit is scrap value and Rs 46,000 incurred towards total process cost then amount on account of abnormal gain to be transferred to Costing P&L will be:-
Correct Answer

(A) Rs 2,500

Explanation

Solution: VALUE OF ABNORMAL GAIN = (Total cost - scrap value)/No of unit produced × Abnormal Issue =(46000-(400×2.50))/(4000-400) × 200 =2500

[#1202] In element-wise classification of overheads, which one of the following is not included —
Correct Answer

(A) Fixed overheads

Explanation

Solution: In element-wise classification of overheads, Fixed overheads is not included. The fixed overheads do not vary in total in a certain level of production.

[#1203] When the sales increase from Rs 40,000 to Rs 60,000 and profit increases by Rs 5,000, the P/V ratio is —
Correct Answer

(C) 0.25

Explanation

Solution: Increase in sales = Rs. 60000 - Rs. 40000 = Rs. 20000 PV Ratio = Increase in Profit / Increase in sales = 5000 / 20000 = 0.25

[#1204] Labour related to manufacturing of product can be classified under
Correct Answer

(A) direct manufacturing labour costs

Explanation

Solution: Labour related to manufacturing of product can be classified under direct manufacturing labour costs. The cost of labor is the amount of employee wages and benefits, plus payroll taxes paid by an employer. The cost of labor can be broken into direct and indirect costs.

[#1205] Direct material costs are added into direct manufacturing costs to calculate
Correct Answer

(B) prime costs

Explanation

Solution: Direct material costs are added into direct manufacturing costs to calculate prime costs. Direct materials cost the cost of direct materials which can be easily identified with the unit of production.