Question 1

Use the information below to answer the following questions.
Jan runs a successful hairdressing salon in the CBD. The type of costs incurred in providing services to clients are:
i) Hairdressers' salaries
ii) Shampoo and Conditioner
(no individual records kept of usage)
iii) Colour and Perm Solutions
(individual records kept of usage per client)
iv) Electricity and Gas
v) Depreciation of equipment
-Refer to the information above.The direct costs incurred in providing a perm to a client would be:
A) all costs mentioned above.
B) hairdresser salary, shampoo, and conditioner.
C) hairdresser salary, colour and perm solution.
D) hairdresser salary.

Accepted Answer

The only costs directly related to providing a perm to a client are the hairdresser's salary and the cost of the colour and perm solutions. Shampoo and conditioner are indirect costs that are necessary for providing any hairdressing service. Electricity and gas are necessary for providing any service in the salon and are therefore also indirect costs. Depreciation of equipment is a fixed cost that is spread out over all the services provided, so it is not directly related to providing a perm to a client.

Question 2

The costing system used to assign costs to a distinct,identifiable job or service is called:
A) job costing system.
B) material control system.
C) process costing system.
D) average costing system.

Accepted Answer

A job costing system is used to assign costs to a particular job or service, making it the best choice among the given options. This costing system is useful for businesses that produce unique or custom products/services, and it helps to determine the cost of each job individually. Material control system and process costing system, on the other hand, are used to manage the flow of materials or to allocate costs to similar products produced in bulk, respectively. Average costing system is used to determine the average cost of a product, and is not necessarily used for assigning costs to specific jobs or services.

Question 3

Use the information below to answer the following questions.
Jan runs a successful hairdressing salon in the CBD. The type of costs incurred in providing services to clients are:
i) Hairdressers' salaries
ii) Shampoo and Conditioner
(no individual records kept of usage)
iii) Colour and Perm Solutions
(individual records kept of usage per client)
iv) Electricity and Gas
v) Depreciation of equipment
-Refer to the information above.The direct costs incurred in providing a haircut only to a client would be:
A) all costs mentioned above.
B) hairdresser salary, shampoo and conditioner.
C) hairdresser salary, shampoo and conditioner and electricity and gas.
D) hairdresser salary.

Accepted Answer

Direct costs are those that can be directly attributed to the production of a specific good or service. In the context of providing a haircut, the hairdresser's salary is the only cost that can be directly attributed to the service provided to a specific client. Shampoo and conditioner, while used, are not tracked per client and are therefore considered indirect costs, similar to electricity, gas, and depreciation of equipment.

Question 4

Full cost represents:
A) only semi-variable costs.
B) variable costs.
C) both fixed and variable costs.
D) fixed costs.

Accepted Answer

Full cost includes both fixed and variable costs, which are essential for calculating the total cost of producing goods or delivering services. Semi-variable costs are those costs that have components of both fixed and variable costs, but they are still included in the full cost calculation. Therefore, B and D are incorrect, and A is a subset of C.

Question 5

In full costing overhead,costs are:
A) economically identifiable with the cost object.
B) always fixed costs.
C) not economically identifiable with the cost object.
D) Both B and C.

Accepted Answer

In full costing, overhead costs are not economically identifiable with the cost object. This means that they cannot be directly traced to a specific product or service but are instead allocated based on a predetermined overhead rate. This is different from direct costs, such as raw materials and labor, which can be easily traced and assigned to a specific cost object.

Question 6

Use the information below to answer the following questions.
Jan runs a successful hairdressing salon in the CBD. The type of costs incurred in providing services to clients are:
i) Hairdressers' salaries
ii) Shampoo and Conditioner
(no individual records kept of usage)
iii) Colour and Perm Solutions
(individual records kept of usage per client)
iv) Electricity and Gas
v) Depreciation of equipment
-Refer to the information above.The indirect costs incurred in providing a haircut only to a client would be:
A) all costs mentioned above.
B) shampoo and conditioner, electricity and gas.
C) electricity and gas and depreciation of equipment.
D) shampoo and conditioner, electricity and gas, and depreciation of equipment.

Accepted Answer

The indirect costs incurred in providing a haircut only to a client would include the costs of shampoo and conditioner, which are used for each client, as well as the ongoing costs of electricity and gas, which are necessary to operate the salon. Additionally, the depreciation of equipment, such as hair dryers and styling chairs, represents an ongoing cost that is incurred regardless of the number of clients served. The costs of hairdressers' salaries and colour and perm solutions are both considered direct costs, as they are more closely tied to the specific services provided to each client.

Question 7

A cost unit can be:
A) a product.
B) a department.
C) a job.
D) all of the above.

Accepted Answer

A cost unit can refer to any object, such as a product, department, or job, which is used to calculate and allocate costs. Therefore, all of the above options are correct.

Question 8

Use the information below to answer the following questions.
Dan's Fencing constructs paling fences. During last month, the fencing division erected 4,000 metres of fencing. The costs incurred by the division were as follows:
 $$\begin{array} { l r } 
\text { Palings } & \$ 4,000 \
\text { Posts } & \$ 5,000 \
\text { Nails (no usage records) } & \$ 500 \
\text { Cement (no usage records) } & \$ 500 \
\text { Wear and tear on equip. } & \$ 1,000
\end{array}$$
-Refer to the table above.The full cost associated with constructing the 4,000 metres of fencing is:
A) $11,000.
B) $9,500.
C) $9,000.
D) $10,000.

Accepted Answer

The full cost includes all the listed expenses: Palings ($4,000) + Posts ($5,000) + Nails ($500) + Cement ($500) + Wear and tear on equipment ($1,000) = $11,000.

Question 9

Which of the following statements is correct?
A) Full costing takes into account all resources sacrificed to achieve a specific objective.
B) Full costing only takes into account manufacturing costs.
C) Only variable costs are required to determine the selling price for a product.
D) Full costing cannot be used in the service industries.

Accepted Answer

Full costing considers all costs incurred in producing a product or providing a service, including both direct and indirect costs. This includes not only manufacturing costs but also non-manufacturing costs such as administrative and selling expenses. Variable costs alone are not sufficient to determine the selling price as fixed costs need to be considered as well. Full costing can be used in the service industries as well, as it takes into account all costs associated with providing a service.

Question 10

Although ________ costs are important in management decision-making,they cannot be directly related to individual cost units.
A) overhead
B) direct
C) material
D) fixed

Accepted Answer

Overhead costs are indirect costs that cannot be directly traced to individual cost units, but they are still important in management decision-making. Direct costs, such as material costs, can be directly traced to individual cost units. Fixed costs, on the other hand, refer to costs that do not change with changes in production levels.

Question 11

Full product costs comprise:
A) non-production costs only.
B) production costs only.
C) both production and non-production costs.
D) all costs except warrantee costs.

Accepted Answer

Full product costs include both production and non-production costs, such as direct materials, direct labor, manufacturing overhead, marketing expenses, administrative costs, and other indirect costs. Warrantee costs would also be included in full product costs. Therefore, choice C is the best option.

Question 12

The classification of a cost as either direct or indirect depends primarily on:
A) the computer tracing system within the organisation.
B) the definition of the cost object.
C) the knowledge of the accountant.
D) the type of business.

Accepted Answer

The classification of a cost as either direct or indirect depends primarily on the definition of the cost object. A cost is direct if it can be traced directly to the cost object, while a cost is indirect if it cannot be traced directly to the cost object. The definition of the cost object is therefore crucial in determining whether a cost is direct or indirect. The other options are not primary factors in determining the classification of a cost.

Question 13

The approach to deriving full costs in an operation where only identical products are produced is:
A) (total cost times percentage allocated to each unit) divided by total units.
B) total cost divided by total units.
C) (total units times percentage allocated to each unit) times total cost.
D) total units times total cost.

Accepted Answer

The best approach to deriving full costs in an operation where only identical products are produced is to divide total cost by total units. This gives a unit cost that can be used to price the products and to determine profitability. A and C involve calculating a percentage allocated to each unit, which is unnecessary when all units are identical. D multiplies total cost by total units, which is not helpful in determining the cost per unit.

Question 14

A printing firm that produces newsletters,advertising brochures and other small documents for individual clients is operating what type of costing system?
A) Process costing.
B) Job costing.
C) Periodic costing.
D) None of the above.

Accepted Answer

A printing firm that produces newsletters, advertising brochures, and other small documents for individual clients uses a job costing system, as each order is unique and differs in terms of size, complexity, and specific requirements. This system allows the firm to accurately track the costs associated with each individual job and bill the client accordingly.

Question 15

An overhead recovery rate represents:
A) a rate at which jobs will be charged with overheads.
B) a rate at which jobs are charged labour costs.
C) a rate at which jobs are charged to clients.
D) a rate at which jobs use overhead.

Accepted Answer

An overhead recovery rate is the rate at which jobs will be charged with overheads. It is a calculation of the proportion of overhead costs that will be included in the cost of each job.

Question 16

The difference between selling price and profit is:
A) direct cost.
B) full cost.
C) variable cost.
D) fixed cost.

Accepted Answer

The difference between selling price and profit is the full cost, which includes both variable and fixed costs.

Question 17

Use the information below to answer the following questions.
Jan runs a successful hairdressing salon in the CBD. The type of costs incurred in providing services to clients are:
i) Hairdressers' salaries
ii) Shampoo and Conditioner
(no individual records kept of usage)
iii) Colour and Perm Solutions
(individual records kept of usage per client)
iv) Electricity and Gas
v) Depreciation of equipment
-Refer to the information above.The indirect costs incurred in providing a perm to a client would be:
A) all costs mentioned above.
B) shampoo and conditioner, electricity and gas, depreciation on equipment.
C) shampoo and conditioner, electricity and gas, colour and perm solution.
D) shampoo and conditioner, electricity and gas.

Accepted Answer

The answer of Use the information below to answer the...

Question 18

Use the information below to answer the following questions.
Dan's Fencing constructs paling fences. During last month, the fencing division erected 4,000 metres of fencing. The costs incurred by the division were as follows:
 $$\begin{array} { l r } 
\text { Palings } & \$ 4,000 \
\text { Posts } & \$ 5,000 \
\text { Nails (no usage records) } & \$ 500 \
\text { Cement (no usage records) } & \$ 500 \
\text { Wear and tear on equip. } & \$ 1,000
\end{array}$$
-Refer to the table above.The total direct costs incurred in erecting the 4,000 metres of fencing is:
A) $11,000.
B) $9,000.
C) $9,500.
D) $10,000.

Accepted Answer

Direct costs are those that can be directly attributed to the production of a specific good or service. In this case, the costs for palings and posts can be directly linked to the construction of the fencing, totaling $9,000 ($4,000 for palings + $5,000 for posts). Costs for nails and cement are not recorded by usage and wear and tear on equipment is considered an indirect cost, thus not included in the direct costs.

Question 19

Use the information below to answer the following questions.
Dan's Fencing constructs paling fences. During last month, the fencing division erected 4,000 metres of fencing. The costs incurred by the division were as follows:
 $$\begin{array} { l r } 
\text { Palings } & \$ 4,000 \
\text { Posts } & \$ 5,000 \
\text { Nails (no usage records) } & \$ 500 \
\text { Cement (no usage records) } & \$ 500 \
\text { Wear and tear on equip. } & \$ 1,000
\end{array}$$
-Refer to the table above.The cost per metre of fencing is:
A) $2.25.
B) $2.75.
C) $2.50.
D) $2.38.

Accepted Answer

The total cost is the sum of all individual costs: $4,000 (Palings) + $5,000 (Posts) + $500 (Nails) + $500 (Cement) + $1,000 (Wear and tear on equipment) = $11,000. To find the cost per metre, divide the total cost by the total metres of fencing: $11,000 / 4,000 metres = $2.75 per metre.

Question 20

Anything for which a separate measurement of cost is desired is called a:
A) cost unit.
B) job.
C) article.
D) fixed cost object.

Accepted Answer

A cost unit is defined as anything for which a separate measurement of cost is desired. Therefore, option A is the correct answer. Option B (job) is incorrect because not all cost units are necessarily jobs. Option C (article) is incorrect because not all cost units are tangible or physical products. Option D (fixed cost object) is incorrect because cost units can include both fixed and variable costs.

Quiz 10: Full Costing

The costing system used to assign costs to a distinct,identifiable job or service is called:

Full cost represents:

In full costing overhead,costs are:

A cost unit can be:

Which of the following statements is correct?

Although ________ costs are important in management decision-making,they cannot be directly related to individual cost units.

Full product costs comprise:

The classification of a cost as either direct or indirect depends primarily on:

The approach to deriving full costs in an operation where only identical products are produced is:

A printing firm that produces newsletters,advertising brochures and other small documents for individual clients is operating what type of costing system?

An overhead recovery rate represents:

The difference between selling price and profit is:

Anything for which a separate measurement of cost is desired is called a: