Management Accounting

Cost classification is

• identifying, measuring and recording cost information 

• assigning costs to cost objects.

• arrangement of costs items into logical groups. 

• Any item or activity that separate measurement of costs can be traced 

Which of these are the broad classification of cost?

• planning and control

• cost accumulation

• decision making

• stock valuation & profit determination

Which of these cost is not considered as prime cost for manufacturing

• Direct material

• Direct labor

• Direct expense

• Administration expense

Manufacturing costs are usually combined o form prime cost and conversion cost. Which of these combination is for conversion cost.

• Direct material + Direct labor

• Direct material + Manufacturing overhead

• Direct labor + Manufacturing overhead

• Direct labor + Administrative Expense

Which of these statement on semi variable cost is false

• Semi-variable costs have properties of both variable and fixed elements attached to the total cost

•  High/low method is a ‘method of estimating cost behaviour by comparing the total cost associated with two different level of outputs.​

• For semi-variable costs, the distinction between the fixed and variable costs element is not important for decision-making purposes.

• Cost estimation methods such as high-low method, scatter diagram and regression analysis are used to separate the fixed and variable elements in semi-variable costs.​

Absorption of overheads may be done on the following basis: ​

• Data from previous or historical

• Anticipated volume or unit produced

• Classification of major activities and pooling their costs.

• Normal volume of output or capacity

"The allotment of overheads to cost units" is a definition for

• ABC method

• Absorption method

• High and low method

• Period cost manufacturing method

Using Absorption method, the overhead cost can be allotted to cost units. Below are the common cost unit used for absorption except

• breakeven

• unit produced

• time basis

• blanket overhead

Below statements are correct for ABC except

• ABC stands for Activity Based Consumption

• costs to be traced back to the activities that drive the costs.

• ABC is based on the concept that products consume activities

• Recognizing a few classification of major activities and pooling their costs

Cost driver can be established using the below except

• A cost driver rate is the rate of overheads expressed in terms of units of activities that will be charged to the products and services.​

• A cost driver is any activity that causes a cost to be incurred

• This method is used only if the company produces a single product.

• Cost driver or activity driver is the unit of an activity that causes the change of an activity cost.​