Production overheads are absorbed into production units by the use of an overhead absorption rate. Which one of the following best describes how the absorption rate is calculated?

(A) Total number of units produced divided by the total cost centre overheads.
(B) Total number of units produced multiplied by the unit overhead cost.
(C) otal cost centre overheads divided by the cost centre activity level.
(D) Total indirect costs for the business divided by the total number of units produced.

The first in, first out method of pricing raw material issues, exhibits which one of the following features?

(A) The issue price is recalculated each time new deliveries are made into stock.
(B) The issue price is always at the latest price.
(C) The goods are always issued strictly in the physical order in which they are received.
(D) The issue price is always at the earliest price.

Which of the following is likely to be classified as a direct material cost of a motor car wheel?

(A) The metal used to manufacture it.
(B) The metal used to manufacture one of the tools used in the car wheel factory.
(C) The cost of operating the raw material stores in the factory.
(D) The cost of the quality operation on the finished car wheels.

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