190+ Cost and Works Accounting 2 chapter-wise solved MCQs with PDF download
To compare the cost per unit of operating one vehicle, with another vehicle, and to ascertain the efficiency of each vehicle. To compare the cost per unit of one means of transport with that of another, and to find out the profitable means of transport. V. Proper apportionment of costs to different departments which use the service is possible. It helps in controlling, operating and maintenance costs.
Which of the following costs of management is likely to have least control?
Movies with production cost of more than Rs 100 crore excusing remuneration of heroes, heroines and directors will be considered super high budget films. The cinema operator may run these refreshment or eating stalls/ kiosks/ counters or restaurants themselves or they may give it on contract to a third party. The customer may like to avail the services supplied by these refreshment/snack counters or choose not to avail these services.
An example of a production overhead would be:
The distinction is necessary to ascertain the cost of service and the unit cost of service. The costs involved in canteen services include the cost of material, labour, services, consumable stores and miscellaneous overheads. Further, we will be discussing on transport costing as an illustration of service costing. Therefore, we are going to view the computation of transport costing in this section. The cost unit, which uses only one single parameter for measurement of the service cost, is termed as a simple cost unit. Different methodologies could be applied to perform a cost estimate.
- Some outputs or services are easier to measure physically than others.
- Operating Costing is also applied in those undertakings engaged in steam production.
- The costs involved in canteen services include the cost of material, labour, services, consumable stores and miscellaneous overheads.
- Time not spent on productive work is known as……………… 4.
- For example, in a manufacturing setting, identifying the most relevant cost drivers for allocating overhead costs among different products can be complex.
Hospital Costing – Departments, Illustration and Cost Sheet
WACC requires access to detailed company information, and certain elements of the formula, such as cost of equity, are not consistent values and may be reported differently. Company XYZ, on the other hand, registered returns of 11% and a composite cost of capital of 17%. Based on these numbers, it would appear that XYZ is losing 6 cents for every dollar spent. Company ABC yields returns in cinema halls composite cost unit is of 22% and has a composite cost of capital of 12%. In other words, it generates 10% returns on every dollar the company invests—or creates 10 cents of value for each dollar spent. Composite cost of capital tells us how much a company forks out, after tax, to get its hands on the money it needs to get by and expand.
Iv) To make a comparative analysis of operating cost incurred for different periods. Iii) To keep the operating cost at the optimum level. (vii) This system requires a more detailed but simpler statistical data for proper costing. Documents like the daily log sheet, operating cost sheet, boiler house cost sheet, canteen cost sheet etc. are used for the collection of cost data. It is not concerned with accounting for inventories, other than those for miscellaneous supplies. There is nothing like finished services inventory similar to finished goods inventory.
Please give Ace some feedback
From various perspectives, challenges arise when calculating cost units. One challenge is the allocation of indirect costs, such as overhead expenses, to specific cost units. This requires careful analysis and estimation to ensure fairness and accuracy in cost allocation.
Composite Cost of Capital: Meaning, Example, Uses
This article will discuss how composites can help you create reliable and accurate cost estimates in these situations. Which one of the following can be described as the composite cost unit in cinema halls and why? Frequently, a composite cost unit may be deemed more appropriate. Let us consider baggage on an airline, the weight of the baggage and the km travelled by the plane will affect how much fuel cost is needed. Therefore, the composite cost unit here will be $ per kilo per km travelled. Another challenge is determining the appropriate cost drivers for allocating indirect costs.
Power House Costing – Cost Sheet Specimens and Illustration
As a result, while composite cost of capital can often help lend valuable insight into a company, it must also be treated with caution. In most cases, investors are advised to use this metric alongside others to determine whether or not to invest in a stock. Investors, meanwhile, may use a company’s composite cost of capital as one of several factors in deciding whether to buy the company’s stock. A company with a relatively low composite cost of capital may be better positioned to grow and expand, potentially rewarding shareholders.
A cost unit is a unit of output or service for which costs are measured and allocated. Cost units can vary depending on the nature and purpose of the business, such as products, services, customers, projects, activities, etc. Accurate cost unit determination is essential for effective planning, control, and decision making in any organization.
- Movies with production cost of more than Rs 100 crore excusing remuneration of heroes, heroines and directors will be considered super high budget films.
- (v) Unlike in other methods of costing, selection of cost unit is difficult in operating costing.
- The budget control organization is usually headed by a top executive who is known as……………… 10.
- For example, a cost analysis for internal decision making may use different cost units than a cost analysis for external reporting or benchmarking.
Cost drivers are factors that influence the incurrence of costs, and selecting the right ones can be a daunting task. For example, in a manufacturing setting, identifying the most relevant cost drivers for allocating overhead costs among different products can be complex. This document contains 49 multiple choice questions regarding cost accounting concepts. It covers topics like cost estimation, types of costs (direct, indirect, prime, factory, etc.), costing methods, inventory management, and overhead allocation. The questions test understanding of key cost accounting terms and how they are applied in different costing systems and cost analysis methods.
Also, the variable charges like medicines, bed charges, doctors fees, etc. are involved in the total cost. The boiler house provides supporting services to power and electricity generation units, in the form of steam which is used in the air conditioning, power generation and air compression. It includes multiple-choice questions aimed at assessing understanding of these concepts, including the classification of costs and the correct accounting entries for materials and labor. The chapter also discusses overhead absorption methods and the treatment of over and under absorbed overheads. In service costing, labour may be the only direct cost involved in providing a service. The total cost of providing a service will include labour, materials, direct expenses and overheads.
But, in certain cases, a composite unit of cost is used, e.g., per passenger-kilometre in case of bus companies, which means the cost of carrying one passenger for a distance of one kilometre. A proper unit of cost must be selected in order to ascertain the cost per unit of service provided. The selection of a proper unit is a difficult task and it depends upon the nature of work and the purpose for which cost has to be computed. Besides, one can find a number of organizations which are remunerating their employees on the basis of both the time and output. For instance, a good number of State Road Transport Corporations in India are rewarding their crew members on the basis of monthly salary plus commission at a specific percentage of the traffic revenue earned. In this type of situations, labour remuneration falls into the category of semi-variable or semi-fixed costs.
Add a comment