Costing - Study Mode
[#151] Overhead is also known as ________.
Correct Answer
(A) ongoing cost
Explanation
Solution: Overhead is also known as ongoing cost. Overhead is those costs required to run a business, but which cannot be directly attributed to any specific business activity, product, or service.
[#152] Reorder level = ________.
Correct Answer
(B) maximum consumption X maximum reorder period
Explanation
Solution: Reorder level = maximum consumption X maximum reorder period.
[#153] Overhead can be classified according to function-wise as ________.
Correct Answer
(C) manufacturing o/h, administration o/h and selling & distribution o/h
Explanation
Solution: Overhead can be classified according to function-wise as manufacturing o/h, administration o/h and selling & distribution o/h.
[#154] Allotment of overhead incurred for a particular cost centre to that specific cost centre is ________.
Correct Answer
(A) allocation
Explanation
Solution: Allotment of overhead incurred for a particular cost centre to that specific cost centre is allocation. Allocation and apportionment are accounting methods for attributing cost to certain cost objects for budgeting, planning, and financial reporting.
[#155] The process of setting standards and comparing actual performance with standards with a view to control the cost is ________.
Correct Answer
(B) cost control
Explanation
Solution: The process of setting standards and comparing actual performance with standards with a view to control the cost is cost control. Cost control is the practice of identifying and reducing business expenses to increase profits, and it starts with the budgeting process. A business owner compares actual results with the budgeted expectations and if actual costs are higher than planned, management takes action.