Costing - Study Mode

[#356] Depreciation on fixed assets implies
Correct Answer

(C) no flow of funds

[#357] First in first out method of valuing material issues is suitable in times of . . . . . . . .
Correct Answer

(B) falling prices

[#358] Which one of following is an example of spoilage?
Correct Answer

(B) defective aluminium cans recycled by manufacturer

Explanation

Solution: Defective aluminium cans recycled by manufacturer is an example of spoilage. Spoilage is waste or scrap that occurs during the manufacturing process.

[#359] Units of normal spoilage are divided to total completed units, rather than total actual produced units to calculate
Correct Answer

(A) normal spoilage rates

Explanation

Solution: Units of normal spoilage are divided to total completed units, rather than total actual produced units to calculate normal spoilage rates. The normal spoilage will be calculated as the total number of spoiled units, divided by the total units produced, and multiplied by 100.

[#360] An amount of spoilage that is not natural in a specific production process is categorized as
Correct Answer

(C) abnormal spoilage

Explanation

Solution: An amount of spoilage that is not natural in a specific production process is categorized as abnormal spoilage. Abnormal spoilage does not directly correspond to the number of units produced, and is considered an unexcepted surplus.