G 11 Cost

Which of the following is not a reason for keeping cost information?

• It is a legal requirement

• It helps decision making

• It is important for setting targets

• It helps in setting budgets

Which of the following is not a variable cost?

• Raw materials for making soft drinks

• Wages of head teacher

• Commission paid on sales

• Electricity to power a piece of production machinery

A direct cost is one that:

• is variable

• is fixed

• cannot be identified with a unit of production

• can be identified with a unit of production

The following information relates to a pen manufacturer:

Material costs $0.60 per pen

Direct labor costs $0.10 per pen

Fixed costs $800 per day

Current production 1500 pens per day

Selling price $1.50

What is the break - even level of output

• 500

• None of these

• 1500

• 1000

The following information relates to a pen manufacturer:

Material costs $0.60 per pen

Direct labor costs $0.10 per pen

Fixed costs $800 per day

Current production 1500 pens per day

Selling price $1.50

What is the margin of safety?

• 100

• 500

• 1000

• 1500

The following information relates to a pen manufacturer:

Material costs $0.60 per pen

Direct labor costs $0.10 per pen

Fixed costs $800 per day

Current production 1500 pens per day

Selling price $1.50

What is the profit at the current level of production?

• $1000

• $2000

• $3000

• None of these

A feature contribution costing is that?

• decisions are made on the basis of profits

• decisions should also take account of quantitative factors

• decisions are made on the basis of contribution

• decisions take account of the allocation of overheads

Which of the following statements about making decisions using costing method is true?

• There is only one right method of costing

• Decisions should also involve qualitative data

• The contribution should only involve consideration of quantitative data

• Decisions should only involve consideration of quantitative data

The amount by which the sales level exceeds the break level output

• Break even point

• Margin of safety

• Contribution per unit

• Break-even analysis

The extra cost of producing one more unit of output

• Fixed cost

• Direct Cost

• Marginal Cost

• variable cost