1701. Absorption means :

A. Charging of overheads to cost units *
B. Fees charged to cost centers or cost units for overhead
C. Charging of overheads to cost centre
D. None of them

1702. The costs of administration are recouped as a percentage of:

A. Direct materials
B. Prime cost
C. Direct wages
D. Works cost *

1703. Which of the following is a service department ?

A. Refining department
B. Receiving department *
C. Machining department
D. Finishing department

1704. Which of the following is not selling overhead ?

A. Transportation insurance to cover sold goods *
B. Royalty on sales
C. Legal costs for debt realisation
D. Distribution of samples

1705. In the case of a company that only produced one type of uniform product, which strategy would you recommend for covering factory overhead costs?

A. Percentage of direct wages basis
B. A rate per unit of output *
C. Direct labour hour rate
D. Any of the above

1706. When the amount of under-or over absorption is significant , it should be disposed of by :

A. Moving into the profit and loss costing account
B. The use of supplementary rates *
C. Extending as a conceded charge to the following bookkeeping year
D. none of them

1707. Idle capacity of a plant refers to the difference between :

A. Maximum capacity and practical capacity
B. Practical capacity and normal capacity
C. Capacity based on actual sales expectations and capacity *
D. Maximum capacity and actual capacity

1708. Maximum possible productive capacity of a plant, when no operating time is lost, is its:

A. Practical capacity
B. Theoretical capacity
C. Normal capacity *
D. Capacity based on sales

1709. The capacity which is based on the long term average of the sales expectancy level is known as :

A. Practical capacity
B. Normal capacity *
C. Actual capacity
D. None of these

1710. When the amount of overhead absorbed is less than the amount of overhead incurred, it is called :

A. Under-absorption of overhead *
B. Over-absorption of overhead
C. Proper absorption of overhead
D. None of them