Question 1

Process Costing is most suitable for industries where:

Continuous production of homogeneous products takes place (e.g., Oil Refining, Chemicals).Service is provided.Construction contracts are undertaken.Each job is distinct and customized (e.g., Interior Design).

View Explanation

In Process Costing, costs are accumulated for each process/stage because the product moves continuously from one process to another.

Question 2

Job Costing is most appropriate for:

A Printing Press executing specific customer orders.A Sugar Factory.A Coal Mine.A Paper Mill.

View Explanation

Job Costing is used when production is not continuous and each product/job is unique according to customer specifications (e.g., Printing, Repair shops).

Question 3

"Unit Costing" or "Single Output Costing" is suitable for:

Ship Building.Furniture making.Car Repair.Brick Making, Coal Mining, Cement Manufacturing.

View Explanation

Unit costing is used where a single standard product is produced continuously (identical units). Examples: Bricks, Coal, Cement.

Question 4

In Contract Costing, "Retention Money" is:

Tax deducted at source.A portion of the progress payment withheld by the contractee as security against defective work.Profit held back by the contractor.Advance payment made to the contractor.

View Explanation

Retention money ensures the contractor completes the work satisfactorily. It is released after the defect liability period.

Question 5

In Activity Based Costing (ABC), a "Cost Driver" is defined as:

A factor that causes a change in the cost of an activity.The person responsible for cost control.The total cost of a product.The profit margin.

View Explanation

ABC assigns overheads based on activities. A Cost Driver (e.g., number of machine setups, number of inspections) is the factor that influences the volume/cost of that activity, providing more accurate costing than traditional volume-based absorption.

Question 6

The primary difference between Job Costing and Process Costing is:

Job costing is for standardized products; Process costing is for customized products.Job costing accumulates costs by specific order; Process costing accumulates costs by production department/process over a period.Job costing is cheaper.Process costing is only for services.

View Explanation

Job Costing tracks each unique job separately (heterogeneous). Process Costing averages costs over a large number of identical units produced in a continuous flow (homogeneous).

Question 7

In Process Costing, "Equivalent Production" is calculated to:

Determine the selling price.Calculate abnormal loss only.Convert Work-in-Progress (WIP) into equivalent finished units to assign costs.Estimate future production.

View Explanation

Since opening and closing WIP are only partially complete, they cannot be simply added to completed units. They are converted into "Equivalent Units" based on the percentage of completion.

Question 8

"Operating Costing" is also known as:

Job CostingService CostingBatch CostingMultiple Costing

View Explanation

Operating Costing is the method used to ascertain the cost of providing a service (e.g., Transport, Hospital, Hotel, Power generation).

Question 9

An "Escalation Clause" in a contract is designed to cover the risk of:

Accidents at site.Changes in prices of material and labor during the contract period.Delay in completion.Bad workmanship.

View Explanation

This clause allows the contract price to be increased if input costs rise beyond a certain limit, protecting the contractor from inflation.

JAIIB Quiz

Quiz Finished!