The costing system

Question 1

Classification by nature

Answer 1

Direct

Indirect

Question 2

Indirect costs are also called….

Answer 2

Overheads

Question 3

Classification by function

Answer 3

Production
Administration
Selling and distribution
Finance

Question 4

Classification by element

Answer 4

Materials
Labour
Expense

Question 5

Financial accounting is

Answer 5

The area of accounting that includes bookkeeping.
It concentrates on providing historic information.
It can be used internally and externally.

Question 6

Management accounting is

Answer 6

The area of accounting that includes costing.
It concentrates on providing internal information about the future.
It has no externally set rules to follow.

Question 7

Prime costs are

Answer 7

The total of direct costs

The total direct cost for a unit of output

Question 8

Direct costs

Answer 8

Costs that are directly identified with the units of outputs

Question 9

Cost of production is

Answer 9

The total of direct costs and indirect production costs