Cost and Works Accounting 2

Q 1. Identify the characteristics of services: I. Intangibility: They do not have a physical substance unlike goods. They cannot be held or seen. II. Inseparability: Consumption and creation of a service cannot be separated. Services are consumed as they are created. III. Variability: Services face the problem of maintaining consistency in the standard of output. IV. Perishability: Services cannot be stored. V. Lack of ownership: Services do not result in the transfer of property in anything.

(A) All of the above
(B) (I) (II) and (V) only
(C) (I) and (V) only
(D) None
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Q 2. The job costing method can therefore be applied in costing batches. The only difference is that a number of items are being costed together as a single unit, instead of a single item or service.

(A) The above statement is correct
(B) The above statement is incorrect
(C) none
(D) none
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Q 3. The cost per unit manufactured in a batch is the total batch cost divided by the number of units in the batch.

(A) Correct
(B) Incorrect
(C) none
(D) none
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Q 4. Batch costing is similar to job costing in that each batch of similar articles is separately identifiable.

(A) False
(B) True
(C) none
(D) none
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Q 5. What would be the effect of inaccurate estimation of overhead absorption rates on a Job?

(A) If the jobs are over-priced, customers will go elsewhere
(B) If the jobs are under-priced, sales revenue will fail to cover costs and/or provide an adequate return
(C) Both A&B
(D) None
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Q 6. It is possible to use a job costing system to control the costs of an internal service department, such as the maintenance department and the printing department.

(A) The above statement is correct
(B) The above statement is incorrect
(C) none
(D) none
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Q 7. A computerised job accounting system contain which of the following features:

(A) Every job will be given a job code number, which will determine how the data relating to the job is stored.
(B) A separate set of codes will be given for the type of costs that any job is likely to incur. Thus ‘direct wages’, say, will have the same code whichever job they are allocated to.
(C) In a sophisticated system, costs can be analysed both by job (for example all costs related to Job 456), but also by type (for example direct wages incurred on all jobs). It is therefore easy to perform control analysis and to make comparisons between jobs.
(D) All of the above
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Q 8. Cost plus pricing means that a desired profit margin is added to total costs to arrive at the selling price.

(A) False
(B) True
(C) none
(D) none
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Q 9. The usual method of fixing prices in a jobbing concern is cost plus pricing.

(A) True
(B) False
(C) none
(D) none
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Q 10. The items recorded on job cost sheet would include:

(A) Job number, description of job, specifications, etc.
(B) Customer details, estimated costs, selling price, estimated profit
(C) Delivery date promised, actual delivery date, delivery note number
(D) All of the above
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