SEBI Grade A 2022 – Costing Practice Question | Set- 1

Correct Answer: B. Interest paid

Explanation: Cost sheet is a document which provides for the assembly of the detailed cost of a cost unit. It is a periodical statement of cost designed to show in detail the various components of the cost of goods produced like prime cost, factory cost, cost of production, total cost and cost per unit. Interest paid is of financial nature and thus not included while preparing a cost sheet.

Correct Answer – D. Brick making industry

Explanation: Unit costing is used in industries manufacturing a single product or two or more grades of the same product on large scale. The products need to be homogeneous in this case. Unit or output costing is suitable for breweries, collieries, cement works, steel, brick making , flour mills etc.

Correct Answer – A. A product is produced to meet the specific requirements of the or

Explanation: Job costing may be defined as a system in which the elements of cost are accumulated separately for each job order undertaken by the organisation. A job is carried out or product is produced to meet the specific requirements of the order.

Correct Answer – B. Contract costing

Explanation:  In contract costing each contract is treated as a cost unit and costs are ascertained separately for each contract. It is suitable for businesses concerned with building or engineering projects or structural or construction contracts.

Correct Answer – C. Co-products

Explanation: Co-products are particular types of products but produced in different varieties. For example, in the automobile industry co-products are, cars, jeeps, trucks, buses, etc.

Correct Answer – C. Operating costing

Explanation:Operating costing method is applicable where services are rendered rather than good produced. The total expenses of operating are divided by the units and cost per unit of service is arrived at. This method is employed in railways, road transport, water supply undertakings, telephone services, etc.

Correct Answer – A. Operating costing

Explanation: Classification and accumulation of costs by fixed and variable costs is of special importance in operating costing. Operating costing applies where standardized services are provided by an undertaking.

Correct Answer – B. Economic batch quantity

Explanation: Batch costing is useful to determine economic batch quantity. In each batch, there are a number of units. The ascertainment of economic batch quantity is very useful. Economic batch quantity may be calculated by using the formula meant for calculating Economic Order Quantity (EOQ) in case of material control.

Correct Answer – D. Work certified

Explanation:  The basis for the payment of cash by contractee under contract is work certified. During the period of contract, Contractee has to pay sums of amount to contractor especially where a contractor is engaged in a big and long term contract. This amount is paid on the basis of certification of work done by surveyors or architects on behalf of the Contractee, who certified the value of the work done by the contractor.

Correct Answer – A. Separate ledger a/c

Explanation: Process cost is ascertained and recorded in separate ledger a/c. Process costing is an accounting methodology that traces and accumulates direct costs, and allocates indirect costs of a manufacturing process. Costs are assigned to products, usually in a large batch, which might include an entire month’s production.