Cost Accounting Quiz

What is the definition of overhead cost?

• Cost that can be directly allocated to a particular product

• Cost that cannot be allocated or indirectly traceable to a particular product

• Cost that is incurred only in the production department

• Cost that is incurred in the selling department

Which of the following is an example of indirect material?

• Fabric used in making furniture

• Paint used in making furniture

• Metal used in making furniture

• Wood used in making furniture

What is the purpose of a service cost center?

• To directly produce goods

• To distribute goods to customers

• To provide services/support to production cost centers

• To sell goods to customers

What is the basis commonly used for the reapportionment of maintenance expenses?

• Meter Usage / Kwh

• No. of Employees

• No. of Material Requisition Notes

• Area or space occupied

What is the purpose of calculating the Overhead Absorption Rate (OAR)?

• To determine the total direct costs

• To estimate the total production costs

• To know how much overhead has been absorbed during the year

• To calculate the total indirect costs

What is the difference between Over Absorption and Under Absorption of Overhead?

• Over Absorption occurs when Actual Overhead > Overhead Absorbed, while Under Absorption occurs when Overhead Absorbed > Actual Overhead

• Over Absorption occurs when Actual Overhead < Overhead Absorbed, while Under Absorption occurs when Overhead Absorbed < Actual Overhead

• Over Absorption occurs when Actual Overhead = Overhead Absorbed, while Under Absorption occurs when Overhead Absorbed = Actual Overhead

• Over Absorption occurs when Overhead Absorbed > Actual Overhead, while Under Absorption occurs when Actual Overhead > Overhead Absorbed

What is the purpose of an Overhead Analysis Sheet?

• To calculate the total production costs

• To record only the direct costs

• To show the direct costs incurred by each cost center

• To show the overhead charged to each cost center

Which method is used when there is more than one service cost center for reapportionment?

• Cost Apportionment

• Cost Allocation

• Direct Method

• Repeated Method

What is the basis commonly used for the absorption of overhead based on Direct Labour Hours?

• Total Budgeted Overhead / Total Machine Hour

• Total Budgeted Overhead / Total unit of output

• Total Budgeted Overhead / Total DM Cost

• Total Budgeted Overhead / Total DL Hour

What is the purpose of Departmental Overhead Rate?

• To have a single rate for all departments

• To have different rates for each department based on their core activities

• To calculate the total direct costs

• To estimate the total production costs