Costing is defined by the Institute of Cost and Management Accountants (ICMA) as the method and process of determining costs.
This is a good explanation, however, it only considers the technical and procedural aspects. To expand on this, costing may also be described as a systematic method for establishing the unit cost of a product or service.
To put it another way, costing entails examining the costs associated with producing a product or providing a service. Managers of an organization may now see not just the total cost, but also the costs of its elements.
Objectives of Costing
The following three domains are roughly classified into costing objectives.
- Cost Estimation: The goal is to figure out how much each product, process, or operation costs, and to make sure that all expenditures are factored into the cost of the goods, procedures, and costing process.
- Cost Control: Measuring costs alone isn't enough. Naturally, this is insufficient because cost affects the selling price and, as a result, profitability. As a result, everyone tries to stick to the rule that "the lower the cost, the higher the profit."
- Management Guidelines: Costing is a loyal servant for managers inside a business. From a practical standpoint, it assists managers in making decisions.
As a result, costing as a method refers to the set of principles and procedures that are utilized to determine cost. It is the technique for determining expenses as a process.
The specifics of the business, the nature of the product, and the manner in which it is manufactured all play a role in determining the approach and procedure that should be used.
Following are some of the multiple choice questions on the Costing with answers that will help the students in developing their knowledge.
1. What will the factor be to convert recipe from 6 yield to 14?
2. If margin of safety -20%, profit volume ratio -60%, Fixed cost = Rs.75,000. Find Actual sales.
3. In process costing, each producing department is a __________
4. In cost accounting, stock is valued at
5. By product has equal economic importance.
6. The main function of cost accounting is _______ reporting
7. Scrap value of normal loss is _____ to process account.
8. The loss which arises due to abnormal circumstances is _____ loss.
9. The cost incurred prior to the point of separation of the joint or by-products are termed as _______.
10. Normal Output is calculated as __________.
11. Contribution margin is also known as
12. P/V Ratio is an indicator of
13. When fixed cost is Rs.20,000 and P/V Ratio is 40%, the breakeven point will be
14. Work certified is valued in term of ________ .
15. According to CIMA, England, “the technique and process of ascertaining cost” is called
16. Object of _____ is to protect the interest of contractor.
17. Sale of scrap is _____ to contract A/c.
18. In Contract Costing, work uncertified is valued at _____.
19. A manager can be blamed for _____ adverse variance.
20. An item of low value incidentally arising in a process is called _________.
21. Budgeting and control are key features of this form of accounting
22. Balance in the abnormal loss account is transferred to _____
23. In process accounts, _________ does not have a realisable value
24. In process accounts, _____ is treated as a part of the cost of production.
25. Work certified is recorded in the contract Account at cost.
26. -------- ------are sections of a business to which costs can be charged Therefore, a ---- ---- can be any function or section of the organisation. In a manufacturing business it can be an entire factory, a department of a factory, or a particular stage in the production process.
27. Hesketh is a stationary business. Classify the following elements:Insurance of office computers
28. Extra payment reuired to be paid for overtime work is called as overtime
29. _______ time refers to the time for which wages are paid without any production
30. ________ labour cost is the remuneration paid to the employees who are directly engaged in the manufacturing operations
31. Cost incurred by undertakings which do not manufacture any product but services is
32. Each contract is considered as a separate unit of cost.
33. A contract usually takes more than one year to complete.
34. Profit on each contract is computed every year on incomplete portion of the contract.
35. Most of the costs in a contract are direct cost.
36. __________ is debited to the contract A/c.
37. _____ money is paid a certain period after completion of the contract.
38. On _____ of the contract entire profit is transferred to P & L A/c.
39. _____ ensures the contractee that the contractor will continue the work.
40. Work–in–progress appears as _____ in balance sheet.
41. Profit on incomplete contract is calculated on the basis of _____ of completion.
42. Work done yet to be certified is called _____.
43. Work certified factilitates to monitor the _____.
44. In _____ there is no risk of loss.
45. Contract A/c is debited by _____ of plant.
46. Contract work is carried out at _____ site.
47. Marginal costing technique classifies cost into
48. Contribution is calculated by the formula
49. Which is not included in primecost?
50. Marginal costing helps the management to
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