Job, Batch and Service Costing MCQs

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Job costing is used when a business entity carries out tasks or jobs to meet specific customer orders. Batch costing is similar to job costing in that
Job, Batch and Service Costing MCQs | MCQs.CLUB

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Job, Batch and Service Costing MCQs

Job costing is used when a business entity carries out tasks or jobs to meet specific customer orders. Batch costing is similar to job costing in that each batch of similar articles is separately identifiable. Here on MCQs.club we have designed easily understandable Multiple-Choice Questions (MCQs) on Job, Batch and Service costing that covers the meaning/definition/methods/accounting/system with examples. These MCQs are useful for Professional exams and competitive exams.

  1. The production operations of most businesses can be categorized as either being:
    1. Specific orders
    2. Continuous operations
    3. Both A or B
    4. None
  2. Specific order costing methods are appropriate for organizations which produce cost units which are separately identifiable from one another.
    1. The above statement is correct
    2. The above statement is incorrect
  3. Identify the types of specific order costing.
    1. Job costing
    2. Batch costing
    3. Process costing
    4. Both A&B only
  4. Job costing is used when a business entity carries out tasks or jobs to meet specific customer orders.
    1. The above statement is false
    2. The above statement is true
  5. A job is a cost unit which consists of a single order or contract.
    1. True
    2. False
  6. Job costing is used when a business entity carries out tasks or jobs to meet specific customer orders.
    1. True
    2. False
  7. In Job costing a cost is calculated for each individual job, and this cost can be used to establish the profit or loss from doing the job.
    1. The above statement is incorrect
    2. The above statement is correct
  8. Which of the following statement is correct with regard to job costing?
    1. Job costing differs from most other types of costing system because each cost unit is a job, and no two jobs are exactly the same. Each job is costed separately.
    2. The expected cost of a job has to be estimated so that a price for the job can be quoted to a customer.
    3. A costing system should also calculate the actual cost of each job that has been carried out to work out the relative profitability of relevant jobs.
    4. All of the above are correct
  9. A job costing system is usually based on absorption costing principles, and in addition a cost is included for non-production overheads.
    1. False
    2. True
  10. Non-production overheads might be added to the cost of the job:
    1. As a percentage of the prime cost of the job
    2. As a percentage of the production cost of the job
    3. Either A or B
    4. None
  11. In job costing each job is given a unique:
    1. Identity number, or job number
    2. Account name
    3. Costing system
    4. None
  12. In a costing system, a job account is similar to a work in progress account, except that it is for one job only. In a company that specialises in jobbing work, the work in progress account is the total of all the individual job accounts.
    1. The above statement is correct
    2. The above statement is incorrect
  13. Job costing is a costing method applied where work is undertaken to customers’ special requirements and each order is of comparatively short duration.
    1. True
    2. False
  14. Costs for each job are collected on a:
    1. Job cost sheet
    2. Job card
    3. Either A or B
    4. None
  15. A separate record must therefore be maintained to show the details of individual jobs. Such records are often known as job cost sheets or job cost cards.
    1. Correct
    2. Incorrect
  16. The items recorded on job cost sheet would include:
    1. Job number, description of job, specifications, etc.
    2. Customer details, estimated costs, selling price, estimated profit
    3. Delivery date promised, actual delivery date, delivery note number
    4. All of the above
  17. The usual method of fixing prices in a jobbing concern is cost plus pricing.
    1. True
    2. False
  18. Cost plus pricing means that a desired profit margin is added to total costs to arrive at the selling price.
    1. False
    2. True
  19. A computerised job accounting system contain which of the following features:
    1. Every job will be given a job code number, which will determine how the data relating to the job is stored.
    2. A separate set of codes will be given for the type of costs that any job is likely to incur. Thus ‘direct wages’, say, will have the same code whichever job they are allocated to.
    3. In a sophisticated system, costs can be analysed both by job (for example all costs related to Job 456), but also by type (for example direct wages incurred on all jobs). It is therefore easy to perform control analysis and to make comparisons between jobs.
    4. A job costing system might have facilities built into it which incorporate other factors relating to the performance of the job. In complex jobs, sophisticated planning techniques might be employed to ensure that the job is performed in the minimum time possible: time management features may be incorporated into job costing software.
    5. All of the above
  20. It is possible to use a job costing system to control the costs of an internal service department, such as the maintenance department and the printing department.
    1. The above statement is correct
    2. The above statement is incorrect
  21. What would be the effect of inaccurate estimation of overhead absorption rates on a Job?
    1. If the jobs are over-priced, customers will go elsewhere
    2. If the jobs are underpriced, sales revenue will fail to cover costs and/or provide an adequate return
    3. Both A&B
    4. None
  22. Batch costing is similar to job costing in that each batch of similar articles is separately identifiable.
    1. False
    2. True
  23. The cost per unit manufactured in a batch is the total batch cost divided by the number of units in the batch.
    1. Correct
    2. Incorrect
  24. The job costing method can therefore be applied in costing batches. The only difference is that a number of items are being costed together as a single unit, instead of a single item or service.
    1. The above statement is correct
    2. The above statement is incorrect
  25. Identify the characteristics of services:
    1. Intangibility: They do not have a physical substance unlike goods. They cannot be held or seen.
    2. Inseparability: Consumption and creation of a service cannot be separated. Services are consumed as they are created.
    3. Variability: Services face the problem of maintaining consistency in the standard of output.
    4. Perishability: Services cannot be stored.
    5. Lack of ownership: Services do not result in the transfer of property in anything.
      1. All of the above
      2. (I) (II) and (V) only
      3. (I) and (V) only
      4. None
  26. What characteristics of Service costing differs it from costing in manufacturing industries?
    1. There is no production system; therefore, there are no production overheads. General overhead costs can be a very high proportion of total costs.
    2. Direct materials costs are often a fairly small proportion of total costs.
    3. In some service industries, direct labour costs are high
    4. All of the above
  27. One of the main problems with service costing is that it can be difficult to identify a suitable cost unit for the service. It is often appropriate to use a composite cost unit in service costing. This is a cost that is made up from two variables, such as a cost per man per day (a cost per ‘man/day’).
    1. The above statement is correct
    2. The above statement is incorrect
  28. In which of the following circumstances Service costing can be used?
    1. A company operating in a service industry will cost its services for which sales revenue will be earned; examples are electricians, car hire services, road, rail or air transport services and hotels.
    2. A company may wish to establish the cost of services carried out by some of its departments; for example, the costs of the vans or lorries used in distribution, the costs of the computer department, and the staff canteen
    3. Both A&B
    4. None

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