Costing - Study Mode

[#371] A company calculates the prices of jobs by adding overheads to the prime cost and adding 30% to total costs as a profit margin. Job number Y256 was sold for Rs1690 and incurred overheads of Rs 694. What was the prime cost of the job?
Correct Answer

(A) Rs 489

[#372] State which of the following are the characteristics of service costing. 1. High levels of indirect costs as a proportion of total costs 2. Use of composite cost units 3. Use of equivalent units
Correct Answer

(B) (1) and (2) only

Explanation

Solution: The following that are the characteristics of service costing are High levels of indirect costs as a proportion of total costs and Use of composite cost units.

[#373] Which of the following organisations should not be advised to use service costing?
Correct Answer

(D) A light engineering company

Explanation

Solution: A light engineering company should not be advised to use service costing. Service costing is a type of operation costing which is used in organizations which provide services instead of producing goods.

[#374] "Calculate the most appropriate unit cost for a distribution division of a multinational company using the following information. Miles travelled 636,500 Tonnes carried 2,479 Number of drivers 20 Hours worked by drivers 35,520 Tonnes miles carried 375,200 Cost incurred 562,800"
Correct Answer

(B) Rs 1.50

[#375] "The following information is available for the W hotel for the latest thirty day period. Number of rooms available per night 40 Percentage occupancy achieved 65% Room servicing cost incurred Rs 3900 The room servicing cost per occupied room-night last period, to the nearest Rs, was:"
Correct Answer

(B) Rs 5.00

Explanation

Solution: Service occupied = 30 × 40 × 65/100 =780 The room servicing cost per occupied room-night last period, to the nearest Rs, was: = 3900/780 = Rs. 5.00