UnitName ChapterName SectionName Questions A

Computation Computation Computation The process of charging cost to a cost unit is

of Overhead of Overhead of Overhead Absorption
_____.
Rates Rates Rates
Computation Computation Computation Labour hour rate is followed in _____ intensive
of Overhead of Overhead of Overhead Labour
industry.
Rates Rates Rates
Computation Computation Computation Machine hour rate is followed in _____
of Overhead of Overhead of Overhead Machine
intensive industry.
Rates Rates Rates
Computation Computation Computation Recovery of overheads in costing less than Under
of Overhead of Overhead of Overhead actual is _____ of overheads. Absorption
Rates Rates Rates
Computation Computation Computation Recovery of overheads in costing more than Over
of Overhead of Overhead of Overhead actual is _____ of overheads. Absorption
Rates Rates Rates
Computation Computation Computation Factory overheads are recovered as a % of
of Overhead of Overhead of Overhead Direct Wages
_____ wages.
Rates Rates Rates
Computation Computation Computation Office overheads are recovered as a % of _____
of Overhead of Overhead of Overhead Factory Cost
_____ cost.
Rates Rates Rates

Computation Computation Computation Labour hour rate = _____. Overheads,

of Overhead of Overhead of Overhead Labour Hours
Rates Rates Rates

Computation Computation Computation Overheads,

Machine hour rate = _____.
of Overhead of Overhead of Overhead Machine hours
Rates Rates Rates
Computation Computation Computation
of Overhead of Overhead of Overhead Depreciation of machine is _____ expense.
Rates Rates Rates Power
Computation Computation Computation
of Overhead of Overhead of Overhead Repairs and maintenance is _____ expense.
Rates Rates Rates Direct
Computation Computation Computation Production overhead rate is suitable when
of Overhead of Overhead of Overhead Uniform
output is _____.
Rates Rates Rates
Computation Computation Computation % of direct material cost is suitable when
of Overhead of Overhead of Overhead Fluctuate
material prices do not _____ much.
Rates Rates Rates
Computation Computation Computation % of Direct wages is suitable when direct _____
of Overhead of Overhead of Overhead Labour
is major factor of production.
Rates Rates Rates
Computation Computation Computation Direct labour hour rate is suitable when labour is
of Overhead of Overhead of Overhead Dominant
_____ factor of produciton.
Rates Rates Rates
Computation Computation Computation Machine hour rate is suitable when machine is a
of Overhead of Overhead of Overhead _____ factor of production.
Rates Rates Rates Fluctuate
Computation Computation Computation
of Overhead of Overhead of Overhead Rent is a _____ charge. Standing
Rates Rates Rates
Computation Computation Computation
of Overhead of Overhead of Overhead Insurance is a _____ charge. Dominant
Rates Rates Rates
Computation Computation Computation
of Overhead of Overhead of Overhead Power is a _____ expense.
Rates Rates Rates Machine
Computation Computation Computation
of Overhead of Overhead of Overhead Lubricating oil is a _____ expense.
Rates Rates Rates Machine
Computation Computation Computation Machine hour rate takes into account _____
of Overhead of Overhead of Overhead Time Fact
_____.
Rates Rates Rates
Computation Computation Computation Underabsorption refers to charging less
of Overhead of Overhead of Overhead overheads in costing than financial accounting.
Rates Rates Rates True
Computation Computation Computation Overabsorption refers to charging more
of Overhead of Overhead of Overhead overheads in costing than in financial
Rates Rates Rates accounting. True
Computation Computation Computation
of Overhead of Overhead of Overhead Factory overheads are recorded as a % of cost.
Rates Rates Rates True
Computation Computation Computation Factory overheads are recoved as a % of Direct
of Overhead of Overhead of Overhead wages.
Rates Rates Rates True
Computation Computation Computation Office overheads are recovered as a % of Direct
of Overhead of Overhead of Overhead materials.
Rates Rates Rates True
Computation Computation Computation
Machine hour rate is overheads ¸ Machine
of Overhead of Overhead of Overhead
hours.
Rates Rates Rates True
Computation Computation Computation
of Overhead of Overhead of Overhead Machine expenses are repairs of building.
Rates Rates Rates True
Computation Computation Computation Overabsorption of overheads brings down
of Overhead of Overhead of Overhead costing profit.
Rates Rates Rates True
Computation Computation Computation Overabsorption of overheads increases costing
of Overhead of Overhead of Overhead profit.
Rates Rates Rates True
Computation Computation Computation In labour intensive industries machine hour rate
of Overhead of Overhead of Overhead is not suitable.
Rates Rates Rates True
Computation Computation Computation Overabsorption or underabsorption may be due
of Overhead of Overhead of Overhead to defective method of absorption.
Rates Rates Rates True
Computation Computation Computation
of Overhead of Overhead of Overhead Rent is a standing charge.
Rates Rates Rates True
Computation Computation Computation
of Overhead of Overhead of Overhead Heating & lighting is a machine expense.
Rates Rates Rates True
Computation Computation Computation
of Overhead of Overhead of Overhead Power is a machine expense.
Rates Rates Rates True
Computation Computation Computation Obsolescene occurs due to technological
of Overhead of Overhead of Overhead advancement.
Rates Rates Rates True
Computation Computation Computation The process by which cost items are charged
of Overhead of Overhead of Overhead direct to a cost unit is called
Rates Rates Rates absorption
A common absorption rate used through out the
Computation Computation Computation following for all jobs and units of output
of Overhead of Overhead of Overhead irrespective of the department in which they machine hour
Rates Rates Rates were produced is called rate
When allocating service department costs to
Computation Computation Computation production departments, the method that does
of Overhead of Overhead of Overhead not consider different cost behaviour pattern is
Rates Rates Rates the step method
Computation Computation Computation most of the
of Overhead of Overhead of Overhead Machine hour rate is followed when work is done
Rates Rates Rates by machine
Computation Computation Computation Labour hour rate is followed when most of the
of Overhead of Overhead of Overhead work is done by
Rates Rates Rates labour
Computation Computation Computation When overheads recovered in costing are less
of Overhead of Overhead of Overhead than actual overheads incurred it is called : underabsorptio
Rates Rates Rates n
Computation Computation Computation When overheads recovered in costing are more
of Overhead of Overhead of Overhead than actual overheads incurred it is called : underabsorptio
Rates Rates Rates n
Computation Computation Computation
of Overhead of Overhead of Overhead Factory overheads are recovered as a : % of Direct
Rates Rates Rates wages
Computation Computation Computation
of Overhead of Overhead of Overhead Office overheads are recovered as a % of : Direct
Rates Rates Rates materials
Computation Computation Computation Insurance is apportioned on machines on the Insured value
of Overhead of Overhead of Overhead basis of : of each
Rates Rates Rates machine
Computation Computation Computation
of Overhead of Overhead of Overhead Machine expenses are : Depreciation
Rates Rates Rates on machine
Computation Computation Computation
of Overhead of Overhead of Overhead Machine expenses are : Depreciation of
Rates Rates Rates Building
XYZ Ltd. budgeted overheads in the last year
was ` 2,40,000. It’s the same period were `
Computation Computation Computation 3,60,000 and ` 3,90,000 respectively. What is Under
of Overhead of Overhead of Overhead the amount of over at under absorption of absorption `
Rates Rates Rates overheads? 30,000
Overheads are ` 36,000 and direct labour hours
Computation Computation Computation 36,000, material used ` 54,000, Direct wages `
of Overhead of Overhead of Overhead 45,000 hours of machine operation 30,000. The
Rates Rates Rates overheads based on material is 66.67%
Computation Computation Computation Refer to Question No. 16. the overheads based
of Overhead of Overhead of Overhead on direct labour is
Rates Rates Rates 80%
Computation Computation Computation Refer to Question No. 16. the overheads based
of Overhead of Overhead of Overhead on labour hour is
Rates Rates Rates `2
Computation Computation Computation Refer to Question No. 16. the overheads based
of Overhead of Overhead of Overhead on machine hour is
Rates Rates Rates ` 1.20
 B C D Answer Solution

Absorption
Allocation Apportionment Allotment A
Different
Machine groups of None of the Labour
machine above A
Different
Labour groups of None of the Machine
machine above A
Over Under
Absorption None of the Absorption
Application above A
Under Over
Absorption None of the Absorption
Application above A

None of the Direct Wages

Indirect Wages above A

None of the Factory Cost

Variable cost Production cost above A

Overheads,
Overheads, Direct Labour, None of the Labour Hours
Machine Hours Machine Hours above A

Direct Overheads,
Materials, Direct Labour, None of the Machine hours
Machine Hours Machine Hours above A

Machine None of the Machine

Salary above C

Indirect Machine Machine

Selling C

Fluctuate None of the Uniform

Constant above A

Uniform None of the Fluctuate

Constant above A

None of the Labour

Machine Wages above A

None of the Dominant

Major Fluctuate above A

Dominant None of the Dominant

Major above B

Dominant None of the Standing

Fluctuate above A
 Standing None of the Standing
Fluctuate above A

None of the Machine

Labour Office above A

Machine
Direct Indirect Labour A

None of the Time Fact

Cost Fact Place Fact above A

False A True

False A True

False B False

False A True

False B False

False A True

False B False

False A True

False B False

False A True

False A True

False A True

False B False

False A True
False B False

allocation
apportionment allocation allotment C

machine hour
department overall blanket rate
absorption rate absorption rate absorption rate A

simple rate
reciprocal simple rate dual rate method
method method method C
most of the most of the
work is done overall blanket work is done
by labour absorption rate absorption rate A by machine
different
groups of None of the labour
machines machines above A
underabsorptio
none of the n
over absorption recovery above A

over absorption
over absorption application all of the above B
% of Direct
% of cost of None of the wages
production % of sales above A

None of the Factory cost

Direct wages Factory cost above C
Invoice price Insured value
of each Cost of of each
machine Area machine A machine

Depreciation
Rent of Salary of All of the on machine
premises supervisors above A

Repairs & both (ii) & (iii)

maintenance Power both (ii) & (iii) D

Under
Over Under Over absorption `
absorption ` absorption ` absorption ` 30,000
1,20,000 25,000 1,00,000 A

66.67%
60% 70% 80% A

80%
70% 69% 75% A

`2
`1 `5 `4 A
 ` 1.20
`2 `3 ` 4.50 A
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