Cost accounting important questions. Top 20 Questions and Answers 2022-10-29
Cost accounting important questions Rating:
Cost accounting is a vital part of any business, as it helps organizations to understand the costs associated with producing goods or services, and to make informed decisions about pricing and resource allocation. In this essay, we will explore some important questions that organizations should consider when it comes to cost accounting.
First, it is important for organizations to understand the difference between fixed and variable costs. Fixed costs are expenses that do not vary with changes in the volume of production, such as rent or salaries. Variable costs, on the other hand, do vary with changes in production volume, such as materials or labor. Understanding the distinction between these two types of costs is crucial for making informed decisions about pricing and resource allocation.
Another important question in cost accounting is how to allocate indirect costs. Indirect costs are expenses that cannot be directly traced to a specific product or service, such as utilities or office supplies. There are several methods for allocating indirect costs, including the direct method, the step-down method, and the reciprocal method. Each of these methods has its own advantages and disadvantages, and it is important for organizations to carefully consider which method is most appropriate for their needs.
Another key question in cost accounting is how to determine the cost of a product or service. There are several different approaches to this, including the full cost approach, the variable cost approach, and the contribution margin approach. Each of these approaches has its own strengths and weaknesses, and it is important for organizations to carefully consider which approach is most appropriate for their needs.
Finally, it is important for organizations to consider how to use cost accounting information to make informed decisions about pricing and resource allocation. This may involve analyzing the cost-volume-profit relationship, or using cost-benefit analysis to compare the costs and benefits of different options.
In conclusion, cost accounting is an essential part of any business, and there are many important questions that organizations should consider when it comes to managing costs. Understanding the difference between fixed and variable costs, determining the most appropriate method for allocating indirect costs, and choosing the right approach to determining the cost of a product or service are all crucial for making informed decisions about pricing and resource allocation.
Cost Accounting: Important Question
Thus, this technique is free from complications and confusion. The work is carried out within a factory or workshop and moves through processes and operations as a continuously identifiable unit. About Us Project Practical is a management and career blog that was created by business professionals. Cost control and cost reduction. The system shows profits which are not realised because of stock not sold out Q 61. First, it is used to determine the cost of a product through different costing methods. Discuss briefly the principles to be followed while taking credit for profit on incomplete contract? We hire professional interviewers people with multiple years of experience interviewing candidates to help us create our interview questions and write answer examples.
Perpetual inventory is essentially necessary for material control. It normally occurs when production involves less repeated work, and manufacturing is done in batches, with a definite number of articles. Rowan Bonus Scheme pays more bonus if the time saved is below the 50 per cent of time allowed and if the time saved is more than 50 percent of time allowed then Halsey bonus scheme pays more bonus. What Is the Accounting Procedure for Batch Costing? How is cost accounting different from financial. This also meets the requirements of management information system. Rent, insurance, depreciation of factory building and equipment are examples of fixed costs where the final product produced is the cost object. This article looks at some of the interview questions to expect in a cost accounting interview room, which will help you prepare well and convince the interviewers that you are the perfect fit.
The term itself is not a significant one unless it is used with an adjective or phrase, when only it communicates the meaning for which it is intended. Describe briefly, how joint costs upto the point of separation may be apportioned amongst the joint products under the following methods: i Average unit cost method ii Contribution margin method iii Market value at the point of separation iv Market value after further processing v Net realizable value method. State the applicability of Process Costing? Cost Control is a preventive function. Profit Planning : Marginal Costing helps the management in the area of profit planning. Protects fluctuation in output: Inventory control tries to reduce the gap between planned production and actual production. It also helps businesses minimize wastages and thus widen the profit margin.
The unit of cost in these industries is not the job, product or process but the services rendered. I realized through this challenge that it's essential to keep a positive and active network. State its advantages and disadvantages. Thus, cost units may be units of production, e. When the time saved is equal to 50 per cent of time allowed then both plans pays same bonus to a worker.
Under this method a standard time is fixed for the performance of each job; worker is paid for actual time taken at an hourly rate plus 50% of time saved as bonus. Apportionment of Joint Cost amongst Joint Products using: Market value at the point of separation This method is used for apportionment of joint costs to joint products upto the split off point. Meaning of Operating Costing: Operating Costing is a method of ascertaining costs of providing or operating a service. The design policy may be selected towards objectives such as: a Low cost and functional efficiency b Widest possible application c Quality and life and d Appearance. Easy Understanding of Income Statement: Management can easily understand the income statement prepared by allocating fixed expenses and variable expenses separately. Semi-variable costs — These are partly fixed and partly variable in relation to output e. Download notes pdf for free.
Cost Accounting Solved Question Paper May' 2018, Dibrugarh University links.lfg.com 4th Sem CBCS Pattern
Decisions like produce or buy, continue or drop a product, operate or shut down, etc. What is the definition of the term Operating Costing? The presence of following factors is necessary to ensure job costing an effective and workable system: 1. However, the main one is that regular costing can be done on several jobs simultaneously, which may not be the case for contracts. Cost classification based on normality segregates the cost into abnormal and normal costs. Answer: For construction related works such as bridges, dams, houses, civil engineering contracts, etc. It also helps the employer in maximising the profit of the concern.
Cost accounting important questions, paper pattern and books review for bcom 3rd year and 5th semester 2021 CBCS osmania university
Enumerate the causes of labour turnover. Answer: Batch costing is a costing system in which the item in question is manufactured step by step over various workstations and various batches of articles are produced. In other words, the high use value items are controlled more closely than the items of low use value. Type of costs i Imputed Cost ii Opportunity Cost iii Shut Down Cost iv Product Cost Q. The following are the features of marginal costing: i Costs are separated into fixed and variable elements. Perpetual Inventory system represents a system of records maintained by the stores department. These are historical, absorption, marginal, and standard costing.
Mention various types of ledger maintained under non-integrated accounting system? Discuss the accounting of Selling and Distribution overheads. When coming up with a cost center, the business may consider how work is divided in the organization, the availability of information, communication aids, and the relevant management policies. For example, in the case of a decision relating to the replacement of a machine, the written down value of the existing machine is a sunk cost, and therefore, not considered. You must create your own answers, and be prepared for any interview question in any interview. When spoiled work is the result of rigid specification, the cost of spoiled work is absorbed by good production while the cost of disposal is charged to production overhead. The following are the figures relating to both the processes: Ans: Job Costing : Job costing is designed to accumulate cost data for a manufacturing firm which produces goods to specific order.