hitechpathshala

Q. 1

The type of process loss that should not be allowed to affect the cost of good units is:

Abnormal loss

Normal loss

Seasonal loss

Standard loss

Q. 2

200 units were introduced in a process in which 20 units is the normal loss. If the actual output is 150 units, then there is:

No abnormal loss

No abnormal gain

Abnormal loss of 30 units

Abnormal gain of 30 units

Q. 3

100 units are processed at a total cost of ₹ 160, normal loss is 10%, & scrap units are sold @ ₹ 0.25 each. If the output is 80 units, then the value of abnormal loss is:

₹ 2.50

₹16

₹17.50

₹17.75

Q. 4

When average method is used in process costing, the opening inventory costs are:

Subtracted from the new costs

Added to the new costs

Kept separate from the costs of the new period

Averaged with other costs to arrive at total cost

Q. 5

Spoilage that occurs under inefficient operating conditions and is ordinarily controllable is called:

Normal spoilage

Abnormal spoilage

Normal defectives

None of the above

Q. 6

The cost of normal process loss is -

Absorbed by good units produced and amount realised by the sale of loss units should be debited to the process account.

Debited to costing profit and loss account.

Absorbed by good units produced.

Debited to costing profit and loss account and amount realised by the sale of loss units should be credited to the process account.

Q. 7

The value of abnormal loss is equal to:

Total cost of materials

Total process cost less realizable value of normal loss

Total process cost less cost of scrap

Total process cost less realizable value of normal loss less value of transferred out goods.

Q. 8

Inter-process profit is calculated, because:

a process is a cost centres

each process has to report profit

the efficiency of the process is measured

the wages of employees are linked to the process profitability.

Q. 9

Under Weighted Average (Average) Method:

The cost to complete the opening WIP is ignored.

The cost to complete the opening WIP and other completed units are calculated separately.

The cost of opening work-in-process and cost of the current period are aggregated and the aggregate cost is divided by output in terms of completed units.

Closing stock of work in process is valued at current cost.

Q. 10

Lean Labs develops 55mm film using a four-step process that moves progressively through four departments. The company specializes in overnight service and has the largest drug store chain as its primary customer. Currently, direct labor, direct materials, and overhead are accumulated by departments. The cost accumulation system that best describes the system Lean Labs is using is:

Operation costing.

Activity-based costing.

Job-order costing.

Process costing.

Q. 11

When compared with normal spoilage, abnormal spoilage:

Arises more frequently from factors that are inherent in the manufacturing process.

Is given the same accounting treatment as normal spoilage.

Is generally thought to be more controllable by purchase department than production department.

Is not typically influenced by the

Q. 12

Assume 550 units were worked on during a period in which a total of 500 good units were completed. Normal spoilage consisted of 30 units; abnormal spoilage, 20 units. Total production costs were ₹ 2,200. The company accounts for abnormal spoilage separately on the income statement as loss due to abnormal spoilage. Normal spoilage is not accounted for separately. What is the cost of the good units produced?

₹ 2,080

₹ 2,115

₹ 2,200

₹ 2,332

Process & Operation Costing

Marks: 12