1. Indirect costs can be allocated to a cost centre if they:A. Can be identified wholly with the cost centreB. Can be identified partially with the cost centreC. Can be apportioned to the cost centreD. Can be traced directly to the cost unit2. Absorption costing is a reliable and accurate method for predicting the total costper unit.A. TrueB. False3. The reason for charging indirect costs to cost centres is to:A. Calculate the cost of direct materialsB. Calculate the cost of direct labourC. Allow overheads to be charged to cost unitsD. Allow overheads to be charged to expenses4. In what circumstances might a company be prepared to price a special contractat less than its relevant cost?A. When there are signs of improved market conditions.B. In the expectation that additional profitable orders will be placed by the same customer.C. When sales of other products will not increase.D. When the company is operating at almost full capacity.

• Indirect Cost are such cost which cannot be directly traced to individual products. Example:…

1. Indirect costs can be allocated to a cost centre if they: A. Can be identified wholly with the cost centre B. Can be identified partially with the cost centre C. Can be apportioned to the cost centre D. Can be traced directly to the cost unit 2. Absorption costing is a reliable and accurate method for predicting the total cost per unit. A. True B. False 3. The reason for charging indirect costs to cost centres is to:

1. Indirect costs can be allocated to a cost centre if they: A. Can be identified wholly with the cost centre B. Can be identified partially with the cost centre C. Can be apportioned to the cost centre D. Can be traced directly to the cost unit 2. Absorption costing is a reliable and accurate method for predicting the total cost per unit. A. True B. False 3. The reason for charging indirect costs to cost centres is to:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

Question

1. Indirect costs can be allocated to a cost centre if they:
A. Can be identified wholly with the cost centre
B. Can be identified partially with the cost centre
C. Can be apportioned to the cost centre
D. Can be traced directly to the cost unit
2. Absorption costing is a reliable and accurate method for predicting the total cost
per unit.
A. True
B. False
3. The reason for charging indirect costs to cost centres is to:
A. Calculate the cost of direct materials
B. Calculate the cost of direct labour
C. Allow overheads to be charged to cost units
D. Allow overheads to be charged to expenses
4. In what circumstances might a company be prepared to price a special contract
at less than its relevant cost?
A. When there are signs of improved market conditions.
B. In the expectation that additional profitable orders will be placed by the same customer.
C. When sales of other products will not increase.
D. When the company is operating at almost full capacity.

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