COSTING MCQ

1. Factory overhead can be charged on the basis of _______.

A. material cost
B. labour cost
C. prime cost
D. direct expenses

Answer & Solution

Answer: Option A
Solution:
Factory overhead can be charged on the basis of material cost. Factory overhead is the costs incurred during the
manufacturing process, not including the costs of direct labor and direct materials.

2. Office and administrative expenses can be charged on the basis of _______.

A. material cost
B. labour cost   
C. prime cost
D. factory cost

Answer & Solution

Answer: Option C
Solution:
Office and administrative expenses can be charged on the basis of prime cost. Administrative expenses are the
expenses that an organization incurs not directly tied to a specific function such as manufacturing, production or sales.

3. Job costing used in ________.

A. paper mills
B. chemical works
C. printing works
D. textile mill

Answer & Solution

Answer: Option C
Solution:
Job costing used in printing works. The purpose of any business is to make money, and job costing is the most
effective way to ensure that occurs. In a job costing system, costs may be accumulated either by job or by batch.

4. A document which provides for the detailed cost centre and cost unit is _______.
A. tender
B. cost sheet
C. invoice
D. profit statement

Answer & Solution

Answer: Option B
Solution:
A document which provides for the detailed cost centre and cost unit is cost sheet. Cost sheet is a statement in which
the details of expenses incurred on a particular product or job, during a specific period are presented.
5. Direct material is a _______.
A. fixed cost
B. variable cost
C. semi variable cost
D. semi fixed cost

Answer & Solution

Answer: Option B
Solution:
Direct material is a variable cost. Direct material cost is the cost of the raw materials and components used to create a
product.

6. The most important element of cost in manufacturing industries is _________.

A. material
B. labour
C. direct costs
D. indirect costs

Answer & Solution

Answer: Option A
Solution:
The most important element of cost in manufacturing industries is material. Material is the first and most important
element of cost. In most of the manufacturing organisations, materials form the single largest component of cost.

7. According to which method of pricing issues is close to current economic values?

A. Last In First Out
B. First In First Out
C. Highest In First Out
D. weighted average price

Answer & Solution

Answer: Option A
Solution:
According Last In First Out method of pricing issues is close to current economic values. LIFO Accounting means
inventory which was acquired last would be used up or sold first.

8. Continuous stock taking is a part of ________.

A. annual stock taking
B. perpetual inventory
C. ABC analysis
D. VED analysis

Answer & Solution

Answer: Option B
Solution:
Continuous stock taking is a part of perpetual inventory. Perpetual inventory is a method of accounting for inventory
that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and
enterprise asset management software.
9. Which of the following methods of stock control aims at concentrating efforts on selected items of

material?
A. Perpetual inventory system
B. Material turnover ratio
C. Level setting
D. ABC analysis

Answer & Solution

Answer: Option D
Solution:
ABC analysis methods of stock control aims at concentrating efforts on selected items of material. ABC method of
inventory control involves a system that controls inventory and is used for materials and throughout the distribution
management.

10. Material control involves ________.

A. consumption of material
B. issue of material
C. purchase of material
D. purchase, storage and issue of material

Answer & Solution

Answer: Option D
Solution:
Material control involves purchase, storage and issue of material. Materials control is the systematic control over the
materials at all its stages procurement, storage and usage so as to help in maintaining regular and uninterrupted flow
of the materials in the production pipeline.

11. Material requisition is meant for ________.

A. purchase of material
B. supply of material from stores
C. sale of material
D. storage of material

Answer & Solution

Answer: Option B
Solution:
Material requisition is meant for supply of material from stores. A materials requisition form is a source document that
the production department uses to request materials for manufacturing process. The production manager usually fills
out the materials requisition form and delivers it to the materials or storage department where all of the raw materials
are stored.

12. ABC analysis is ________.

A. At best Control
B. Always better Control
C. Average better Control
D. All best control

Answer & Solution

Answer: Option B
Solution:
ABC analysis is a way of categorizing the material on the basis of the quantity of consumption and their relative
values. Some material might be consumed in lower quantities but their period may be very high. Such materials are
kept in group "A". Similarly, some material may be consumed in large quantities but their values may be lower. Such
materials are kept in group 'C'. In between these two, some materials may be consumption in moderate quantity with
the moderated price. Such materials are kept in group 'B' under ABC analysis very close control is exercised over the
material in group 'A' whereas a very little control is exercise is exercised over the material in group 'C'.

13. ___________ is the value of economic resources used as a result of producing or doing the thing costed.
A. Cost
B. Inventory
C. Labour
D. overhead

Answer & Solution

Answer: Option A
Solution:
Cost is the value of economic resources used as a result of producing or doing the thing costed. Cost is ascertained
by cost centres or cost units or by both.

14. Perpetual inventory system involves __________

A. bin card and stores ledger
B. bill of material and material requisition
C. purchase requisition and purchase order
D. inward and outward invoices

Answer & Solution

Answer: Option A
Solution:
Perpetual inventory system involves bin card and stores ledger. Perpetual Inventory System keeps a record of every
now and then of materials. It comprises of Bin Card and Stores Ledger, to keep track of various items.

15. FIFO is ________.

A. Fast Investment in Future Order
B. First In First Out
C. Fast In Fast Out
D. Fast Issue Of Fast Order

Answer & Solution

Answer: Option B
Solution:
"FIFO" stands for first-in, first-out, meaning that the oldest inventory items are recorded as sold first but do not
necessarily mean that the exact oldest physical object has been tracked and sold. In other words, the cost associated
with the inventory that was purchased first is the cost expensed first.
16. LIFO method of pricing of materials is more suitable when _________.
A. material prices are rising
B. material prices are falling
C. material prices are constant
D. material prices are fluctuating

Answer & Solution

Answer: Option A
Solution:
LIFO method of pricing of materials is more suitable when material prices are rising. LIFO method of pricing issues is
suitable because materials are issued at the current market prices which are high. This method thus helps in showing
a lower profit because of increased charge to production during periods of rising prices and lower profit reduces
burden of income-tax.

17. Average method of pricing the material issues is useful when ___________.
A. material prices are rising
B. material prices are falling
C. material prices are constant
D. material prices are fluctuating

Answer & Solution

Answer: Option D
Solution:
Average method of pricing the material issues is useful when material prices are fluctuating. Under the 'Average Cost
Method', it is assumed that the cost of inventory is based on the average cost of the goods available for sale during
the period. The average cost is computed by dividing the total cost of goods available for sale by the total units
available for sale.

18. Scrap is ________.

A. residue of material
B. wastage of material
C. surplus material
D. abnormal loss of material
Answer: Option A
Solution:
Scrap is residue of material. It is incidental residue from the materials used in manufacturing operations which is
recoverable and measurable without processing.

19. Material is issued by store keeper against ________.

A. material requisition
B. material order
C. goods received note
D. purchase requisition

Answer & Solution

Answer: Option A
20. EOQ stands for ________.
A. Economic Order Quantity
B. Essential Order Quantity
C. Economic Output Quantity
D. Essential Output Quantity

Answer & Solution

Answer: Option A
Solution:
Economic order quantity (EOQ) is the ideal order quantity a company should purchase for its inventory given a set
cost of production, a certain demand rate, and other variables.

21. GRN number refers to________.

A. goods received note number
B. goods returned note number
C. goods shortage note number
D. goods requisition note number

Answer & Solution

Answer: Option A
Solution:
A goods receipt note (GRN) is created to record the delivery of items from your suppliers. A GRN is created against
an issued purchase order. When a GRN is created for an item, any pending item quantity for an approved indent
request will be automatically issued.

22. Bin card is maintained by ________.

A. costing department
B. stores department
C. finance department
D. accounting department

Answer & Solution

Answer: Option B
Solution:
Bin card is maintained by stores department. Store ledger is prepared by cost accounting department. Bin card is a
record of quantity only. Store ledger is a record of quantities and values.

23. Labour turnover is ______.

A. productivity of labour
B. efficiency of the labour
C. change in labour force
D. total cost of the labour

Answer & Solution

Answer: Option C
Solution:
Labour turnover is change in labour force. Labour turnover may be defined as the number of workers replaced during
a given period relative to the average labour force during the period. It is the number of workers who left the job during
a period relative to the average labour force during the period.
24. Idle time is ________.
A. time spent by workers in factory
B. time spent by workers in office
C. time spent by workers off their work
D. time spent by workers on their job

Answer & Solution

Answer: Option C
Solution:
Idle time is time spent by workers off their work. Idle time is unproductive time on the part of employees or machines
caused by management or as a result of factors beyond their control. Idle time is the time associated with waiting, or
when a piece of machinery is not being used but could be.

25. In__________ the workers are paid on the basis of hourly, daily, weekly rate
A. time rate system
B. piece rate system
C. premium bonus system
D. Emerson efficiency plan

Answer & Solution

Answer: Option A
Solution:
In time rate system the workers are paid on the basis of hourly daily, weekly rate. Under this method of wage
payment, the workers are paid the wages on the basis of time. In this system of wage payment, the workers are paid
the wages on the basis of time as, per hour, per day, per week, per fortnight or per month etc.

26. Difference between attendance time and job time is _______.

A. job time
B. over time
C. actual time
D. idle time

Answer & Solution

Answer: Option D
Solution:
Difference between attendance time and job time is idle time. Idle time is unproductive time on the part of employees
or machines caused by management or as a result of factors beyond their control. Idle time is the time associated with
waiting, or when a piece of machinery is not being used but could be.

27. Piece workers are paid on the basis of ________.

A. output sold
B. output produced
C. output in stock
D. input received

Answer & Solution

Answer: Option B
Solution:
Piece workers are paid on the basis of output produced. Piece rate system is the method of remunerating the workers
according to the number of unit produced or job completed. It is also known as payment by result or output.
28. Time wages are paid on the basis of ________.
A. actual time
B. standard time
C. time saved
D. overtime

Answer & Solution

Answer: Option A
Solution:
Time wages are paid on the basis of actual time. In this system of wage payment, the workers are paid the wages on
the basis of time as, per hour, per day, per week, per fortnight or per month etc. This system does not consider the
production of the employees during this time.

29. Differential piece wages means _______.

A. different wages for different level of performance
B. different wages for different time consumed
C. different wages for different level of output
D. different wages for different types of industries

Answer & Solution

Answer: Option A
Solution:
Differential piece wages means different wages for different level of performance. A differential piece-rate system is a
method of wage payment in which after tests have set a standard time for any task assigned the worker gets a high
piece rate for completing the job within the allotted time and lower piece rate for completing the job beyond the allotted
time.

30. Those cost which is incurred to prevent the labour turnover __________.
A. management cost
B. replacement cost
C. preventive cost
D. compensation cost

Answer & Solution

Answer: Option C
Solution:
Those cost which is incurred to prevent the labour turnover is known as preventive cost. These are costs which are
incurred to prevent excessive labour turnover. The aim of these costs is to keep the workers satisfied so that they may
not leave the factory.

31. Normal idle time __________.

A. can be avoided
B. can be minimized
C. cannot be avoided
D. can be controlled

Answer & Solution

Answer: Option C
Solution:
Normal idle time cannot be avoided. The main reasons for the occurrence of normal idle time are as follows:
i. Time taken by workers to travel the distance between the main gate of factory and the place of their work.
ii.Time lost between the finish of one job and starting of next job.
iii. Time spent to overcome fatigue.
iv. Time spent to meet their personal needs like taking lunch, tea etc.

32. Cost of idle time arising due to non-availability of raw material is _______.
A. charged to costing profit and loss account
B. charged to financial profit and loss account
C. charged to factory overhead
D. recovered by inflating the wage rate

Answer & Solution

Answer: Option A
Solution:
Cost of idle time arising due to non availability of raw material is charged to costing profit and loss account. The cost
of idle facilities for reasons such as trade depression, shortage of demand, etc. should be written off to Costing Profit
and Loss Account.

33. Wage sheet is prepared by ________.

A. time keeping department
B. personnel department
C. payroll department
D. cost accounting department

Answer & Solution

Answer: Option C
Solution:
Wage sheet is prepared by payroll department. The payroll or wage sheet is a consolidated list of workers, which
shows the gross deductions and net wages payable to them.

34. Time and motion study is conducted by ________.

A. time keeping department
B. personnel department
C. payroll department
D. engineering department

Answer & Solution

Answer: Option D
Solution:
Time and motion study is conducted by engineering department. It is a major part of scientific management
(Taylorism). After its first introduction, time study developed in the direction of establishing standard times, while
motion study evolved into a technique for improving work methods.

35. Under Gantts task and bonus plan no bonus is payable to a worker if his efficiency is less than ________.
A. 50%
B. 60%
C. 835%
D. 100%

Answer & Solution

Answer: Option D
Solution:
Under Gantts task and bonus plan no bonus is payable to a worker if his efficiency is less than 100%. If a worker
takes more time than the standard time to complete the task (i.e., his efficiency is below 100%), he is given wages for
the time taken by him and if a worker takes the standard time to perform the task (i.e., efficiency is 100%), he is given
wages for the standard time and a bonus of 20% on the wages earned.
36. When standard output is 10 units per hour and actual output is 12 units per hour, the efficiency is

________.
A. 75%
B. 80%
C. 90%
D. 120%

Answer & Solution

Answer: Option D
Solution:
When standard output is 10 units per hour and actual output is 12 units per hour, the efficiency is 120%.

37. Bonus under Halsey plan is paid ________.

A. at 50% of time saved
B. at 75% of time saved
C. at 80% of time saved
D. at 90% of time saved

Answer & Solution

Answer: Option A
Solution:
Bonus under Halsey plan is paid at 50% of time saved. The usual bonus share paid to the worker is 50% of the time
saved multiplied by the rate per hour (time-rate).

38. Halsey premium plan is ________.

A. individual incentive scheme
B. group incentive scheme
C. time and piece wage system
D. differential piece wage system

Answer & Solution

Answer: Option A
Solution:
Halsey premium plan is individual incentive scheme. Under Halsey plan minimum wages are guaranteed to every
worker. A standard time is fixed for the workers. If the workers finish the work before standard time they are given
bonus.

39. Labour cost is the second element of ________.

A. cost
B. profit
C. sales
D. task

Answer & Solution

Answer: Option A
Solution:
Labour cost is the second element of cost. Labour cost is a second major element of cost. Under the present political
conditions with a restive labour in organised industry, it is very difficult to reduce labour cost.
40. Number of methods available for calculation of Labour turnover is ________.
A. two
B. three
C. four
D. five

Answer & Solution

Answer: Option B
Solution:
Separation Method
Labour Turnover = No. of workers left or separated during a period / Average number of workers on role during that
period x 100
Replacement Method
Labour Turnover = No. of workers replaced during a period / Average number of workers on role during that period x
100
Flux Method
Labour Turnover = (No.of workers separated in a period + No. of workers replaced in the same period) / Average
number of workers on role during that period x 100

Note : Average No.of. Workers = (No. of workers at the beginning of the period + No. of workers at the end of the
period) / 2

41. Merricks multiple piece rate system has _______.

A. two rates
B. three rates
C. four rates
D. five rates

Answer & Solution

Answer: Option B
Solution:
Merricks multiple piece rate system has three rates. According to this plan, three piece rates for a job is fixed. None of
these three piece rates are fixed below the normal level. These three rates are applied in the manner given below:
Rates Bonus Incentive 1. Up to 83 '/3% Normal Rate 2. Above 83 1/3 % to 100% 110% of Normal Rate 3. Above
110% 120% of Normal Rate

42. Overhead is also known as ________.

A. on-going cost
B. basic cost
C. extra cost
D. chargeable expenses

Answer & Solution

Answer: Option A
Solution:
Overhead is also known as on-going cost. Overhead is those costs required to run a business, but which cannot be
directly attributed to any specific business activity, product, or service.
43. Reorder level = ________.
A. maximum level - minimum level
B. maximum consumption X maximum reorder period
C. minimum consumption x minimum reorder period
D. normal consumption X normal reorder period

Answer & Solution

Answer: Option B
Solution:
Reorder level = maximum consumption X maximum reorder period.

44. Overhead can be classified according to function-wise as ________.

A. fixed o/h, variable o/h and semi-variable o/h
B. controllable o/h and uncontrollable o/h
C. manufacturing o/h, administration o/h and selling & distribution o/h
D. past cost and future cost

Answer & Solution

Answer: Option C
Solution:
Overhead can be classified according to function-wise as manufacturing o/h, administration o/h and selling &
distribution o/h.

45. Allotment of overhead incurred for a particular cost centre to that specific cost centre is ________.
A. allocation
B. allotment
C. primary distribution
D. secondary distribution
Answer: Option A
Solution:
Allotment of overhead incurred for a particular cost centre to that specific cost centre is allocation. Allocation and
apportionment are accounting methods for attributing cost to certain cost objects for budgeting, planning, and financial
reporting.

46. The process of setting standards and comparing actual performance with standards with a view to control

the cost is ________.

A. cost reduction
B. cost control
C. cost allocation
D. cost ascertainment

Answer & Solution

Answer: Option B
Solution:
The process of setting standards and comparing actual performance with standards with a view to control the cost is
cost control. Cost control is the practice of identifying and reducing business expenses to increase profits, and it starts
with the budgeting process. A business owner compares actual results with the budgeted expectations and if actual
costs are higher than planned, management takes action.
47. Under ABC method of material control, the material are classified according to __________.
A. its value
B. its usage
C. its nature
D. its availability

Answer & Solution

Answer: Option A
Solution:
Under ABC method of material control, the material are classified according to its value. The ABC analysis suggests
that inventories of an organization are not of equal value. Thus, the inventory is grouped into three categories (A, B,
and C) in order of their estimated importance.

48. This is a point at which the store keeper should initiate purchase requisition for fresh supply It is

________.
A. maximum stock level
B. minimum stock level
C. reorder level
D. average stock level

Answer & Solution

Answer: Option C
Solution:
This is a point at which the store keeper should initiate purchase requisition for fresh supply It is reorder level. Re-
order level is a level of material at which the storekeeper should initiate the purchase requisition for fresh supplies.
When the stock-in-hand comes down to the re-ordering level, it is an indication that an action should be taken for
replenishment or purchase.

49. This is a level at which normal issue of material are stopped, but issued under special condition It is

________.
A. maximum stock level
B. minimum stock level
C. danger level
D. average stock level

Answer & Solution

Answer: Option C
Solution:
This is a level at which normal issue of material are stopped, but issued under special condition It is danger level.
Danger level is a level of fixed usually below the minimum level. When the stock reaches danger level, an urgent
action for purchase is initiated.
50. Annual usage is 6000 units @ Rs 20 per unit Cost of placing an order is Rs 60 and annual carrying cost of

one unit is 10% of inventory value EOQ = __________.

A. 600 units
B. 750 units
C. 1200 units
D. 1250 units

Answer & Solution

Answer: Option A

51. The method in which issue prices of material is computed by dividing total purchase cost of material in

stock with total quantity in stock ________.

A. Simple average method
B. weighted average method
C. periodical average method
D. periodic simple average method

Answer & Solution

Answer: Option B
Solution:
The method in which issue prices of material is computed by dividing total purchase cost of material in stock with total
quantity in stock weighted average method. Under this method weighted average price is calculated by dividing the
total cost of material purchased during the accounting period, in which the material to be priced is used by the total
quantity of material purchased during that period.

52. Under which method the rate of wages are linked with the cost of living index?
A. Flat time rate
B. High day rate
C. Measured day rate
D. Graduated time rate

Answer & Solution

Answer: Option D
Solution:
Under Graduated time rate method the rate of wages are linked with the cost of living index. Under this method the
rates of wages are linked up with the cost of living index. Thus, the rate per hour or day fixed initially goes on changing
with the changes in the cost of living index.

53. Under which plan efficiency is shared by employee and employer equally?
A. Time rate
B. Gantts task and bonus plan
C. Halsey plan
D. Rowan plan

Answer & Solution

Answer: Option C
Solution:
Under Halsey plan efficiency is shared by employee and employer equally.
54. Which of the following method of wage payment is most suitable where the speed of production is beyond

the control of worker?

A. Time rate system
B. Piece rate system
C. Halsey premium system
D. Rowan premium plan

Answer & Solution

Answer: Option A
Solution:
Time rate system method of wage payment is most suitable where the speed of production is beyond the control of
worker. The time rate system is that system of wage payment in which the workers are paid on the basis of time spent
by them in the factory.

55. Under which method of wage payment, wages are influenced by idle time?
A. Straight piece rate
B. Differential piece rate
C. Premium and bonus plan
D. Time wage rate

Answer & Solution

Answer: Option D
Solution:
Under Time wage rate method of wage payment, wages are influenced by idle time. Under time wage system, wages
are paid on the basis of time spent on the job irrespective of the amount of work done.

56. The allotment of whole item of cost to cost centre or cost units is called _________.
A. cost allocation
B. cost apportionment
C. cost absorption
D. cost disbursement

Answer & Solution

Answer: Option A
Solution:
The allotment of whole item of cost to cost centre or cost units is called cost allocation. The term allocation means the
allotment of the whole item without division to a particular department or cost centre.

57. Packing cost is ________.

A. production cost
B. selling cost
C. administration cost
D. distribution cost

Answer & Solution

Answer: Option D
Solution:
Packing cost is distribution cost. Packaging cost is a significant factor in pricing a product.
58. Directors remuneration and expenses form part of ________.
A. production overhead
B. administrative overhead
C. selling overhead
D. distribution overhead

Answer & Solution

Answer: Option B
Solution:
Director’s remuneration and expenses form part of administrative overhead. Administrative overhead includes the
expenses related to the administration and general operations of the business.

59. Absorption means ________.

A. charging overheads to cost centres
B. charging of overheads to cost units
C. charging of overheads to cost centres or cost units
D. allotment of overheads to different departments

Answer & Solution

Answer: Option B
Solution:
Absorption means charging of overheads to cost units. It means costs is absorbed by the production (or product
units ) during the period or charging each unit of a product with an equitable share of overhead expenses.

60. Which of the following is a service department?

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

Answer & Solution

Answer: Option C
Solution:
Receiving department is a service department. A service department is a cost center that provides services to the rest
of a company. The manager of a service department is responsible for keeping costs down, or meeting the costs
stated in a budget.

61. Bad debt is an example of ________.

A. production overhead
B. administrative overhead
C. selling overhead
D. distribution overhead

Answer & Solution

Answer: Option C
Solution:
Bad debt is an example of selling overhead. The expenses incurred by an organization in carrying out its selling
activities.
62. Variable cost per unit ________.
A. varies when output varies
B. remains constant
C. increase when output increases
D. decreases when output decreases

Answer & Solution

Answer: Option B
Solution:
Variable cost per unit remains constant. Variable costs are the costs that change in total each time an additional unit is
produced or sold. With a variable cost, the per unit cost stays the same, but the more units produced or sold, the
higher the total cost. Direct materials is a variable cost.

63. Increase in total variable cost is due to ________.

A. increase in fixed cost
B. increase in sales
C. increase in production
D. increase in efficiency

Answer & Solution

Answer: Option C
Solution:
Increase in total variable cost is due to increase in production. Variable costs increase or decrease depending on a
company's production volume; they rise as production increases and fall as production decreases.

64. An example of fixed cost ________.

A. property tax
B. rent for building
C. direct material cost
D. direct wages

Answer & Solution

Answer: Option B
Solution:
An example of fixed cost rent for building. A fixed cost is a cost that does not change with an increase or decrease in
the amount of goods or services produced or sold.

65. The process of allocating and apportioning the costs on suitable basis to all the departments is _______.
A. departmentalization
B. primary distribution
C. secondary distribution
D. classification

Answer & Solution

Answer: Option B
Solution:
The process of allocating and apportioning the costs on suitable basis to all the departments is primary distribution.
66. The process of redistribution of service department costs to production departments is ________.
A. departmentalization
B. primary distribution
C. secondary distribution
D. classification

Answer & Solution

Answer: Option C
Solution:
The process of redistribution of service department costs to production departments is secondary distribution.

67. Depreciation of plant can be apportioned on the basis of ________.

A. plant value
B. plant size
C. working days
D. output produced

Answer & Solution

Answer: Option A
Solution:
Depreciation of plant can be apportioned on the basis of plant value.

68. Indirect materials can be apportioned on the basis of ________.

A. direct material
B. prime cost
C. direct labour hour
D. machine hour

Answer & Solution

Answer: Option A
Solution:
Indirect materials can be apportioned on the basis of direct material. Indirect materials are materials used in the
production process, but which cannot be linked to a specific product or job.

69. A cost unit is ________.

A. the cost per machine hour
B. the cost per labour hour
C. a unit of production or service in relation to which costs are ascertained
D. a measure of work output in a standard hour

Answer & Solution

Answer: Option C
Solution:
A cost unit is a unit of production or service in relation to which costs are ascertained. A cost unit refers to the unit of
quantity of product, service or time (or combination of these) in relation to which costs may be ascertained or
expressed.
70. Factory overhead is also called as ________.
A. sundry overhead
B. extra overhead
C. works overhead
D. total overhead

Answer & Solution

Answer: Option C
Solution:
Factory overhead is also called as works overhead. Factory overhead, also called manufacturing overhead or work
overhead or American English factory burden, is the total cost involved in operating all production facilities of a
manufacturing business that cannot be traced directly to a product. It generally applies to indirect labor and indirect
cost.