Multiple Choice Questions on Absorption of Overheads-Under and Over Absorption of Overheads.

1. MULTIPLE CHOICE QUESTIONS
ACCOUNTING OF OVERHEADS-PART-II
PRESENTED BY
DR.SHRADHA PRASAD

2. Overhead Absorption is also called as overhead __________
A . Application B . Recovery
C . Levy of Overhead D . All of the above
Answer : D - All of the above
6/9/2021 2
COST & WORKS ACCOUNTING -
II BY DR. SHRADHA PRASAD

3. Apportionment is the _________step in the distribution process.
A . First B . Second
C . Last D . Third
Answer : B -Second
6/9/2021 3
COST & WORKS ACCOUNTING -
II BY DR. SHRADHA PRASAD

4. Absorption is the __________ step in the distribution process.
A . Last B . First
C . Second D . Third
Answer : A- Last
6/9/2021 4
COST & WORKS ACCOUNTING -
II BY DR. SHRADHA PRASAD

5. Direct Labour Hour Rate Method is adopted in ____industries.
A . Labour-intensive B . Capital-intensive
C . Both A & B D . None of the above
Answer : A- Labour-intensive
6/9/2021 5
COST & WORKS ACCOUNTING -
II BY DR. SHRADHA PRASAD

6. Standing Charges are ____________ expenses.
A . Fixed B . Variable
C . Semi-variable
Answer : A- Fixed
6/9/2021 6
COST & WORKS ACCOUNTING -
II BY DR. SHRADHA PRASAD

7. Machine Expenses are ____which vary with the use of machine.
A . Fixed B . Variable
C . Semi-variable
Answer : B-Variable
6/9/2021 7
COST & WORKS ACCOUNTING -
II BY DR. SHRADHA PRASAD

8. _____is the single overhead rate applicable to the whole factory.
A . Multiple Rate B . Actual Rate
C . Blanket Rate
Answer : C- Blanket Rate
6/9/2021 8
COST & WORKS ACCOUNTING -
II BY DR. SHRADHA PRASAD

9. Overhead __________ is the allotment of overhead to cost units.
A . Allocation B . Apportionment
C . Absorption
Answer : C- Absorption
6/9/2021 9
COST & WORKS ACCOUNTING -
II BY DR. SHRADHA PRASAD

10. Seasonal Fluctuation may cause under or over-absorption.
A . True B . False
Answer : A- True
6/9/2021 10
COST & WORKS ACCOUNTING -
II BY DR. SHRADHA PRASAD

11. Over-absorption has the effect of over stating the cost of jobs.
A . True B . False
Answer : A- True
6/9/2021 11
COST & WORKS ACCOUNTING -
II BY DR. SHRADHA PRASAD

12. Supplementary Rate is used when the amount of under/over-
absorption is quite ____________
A . Small B . Large
Answer : B- Large
6/9/2021 12
COST & WORKS ACCOUNTING -
II BY DR. SHRADHA PRASAD

13. Machine Hour Rate is suitable where production is not
uniform.
A . True B . False
Answer : A- True
6/9/2021 13
COST & WORKS ACCOUNTING -
II BY DR. SHRADHA PRASAD

14. Machine Hour Rate as a method facilitates cost control.
A . True B . False
Answer : A- True
6/9/2021 14
COST & WORKS ACCOUNTING -
II BY DR. SHRADHA PRASAD

15. Overhead Rate mainly depends on __________ policy.
A . Administrative B . Managerial
Answer : B-Managerial
6/9/2021 15
COST & WORKS ACCOUNTING -
II BY DR. SHRADHA PRASAD

16. Direct Labour Hour Rate Method does not consider time factor.
A . True B . False
Answer : B- False
6/9/2021 16
COST & WORKS ACCOUNTING -
II BY DR. SHRADHA PRASAD

17. Machine Hour Rate Method is the most scientific method of
recovery of overheads.
A . True B . False
Answer : A- True
6/9/2021 17
COST & WORKS ACCOUNTING -
II BY DR. SHRADHA PRASAD

18. Pre-determined rate facilitates computation of cost in advance.
A . True B . False
Answer : A- True
6/9/2021 18
COST & WORKS ACCOUNTING -
II BY DR. SHRADHA PRASAD

19. Multiple Rate is also known as Departmental Overhead Rate.
A . True B . False
Answer : A- True
6/9/2021 19
COST & WORKS ACCOUNTING -
II BY DR. SHRADHA PRASAD

20. Supplementary overhead rates are used only at the end of the
budgeted period.
A . True B . False
Answer : A- True
6/9/2021 20
COST & WORKS ACCOUNTING -
II BY DR. SHRADHA PRASAD

21. Dual-hour rate method is more beneficial where both machine
and labour are equally important.
A . True B . False
Answer : A- True
6/9/2021 21
COST & WORKS ACCOUNTING -
II BY DR. SHRADHA PRASAD

22. THANK YOU
6/9/2021 22
COST & WORKS ACCOUNTING -
II BY DR. SHRADHA PRASAD