Under Activity Based Costing (ABC), costs are allocated based on: MCQ with Answer and Explanation

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Under Activity Based Costing (ABC), costs are allocated based on:

A. Cost Drivers

B. Volume of Production only

C. Direct Labor Hours

D. Machine Hours

Answer: Option A

Solution (By JKSSB Mock Tests)

ABC traces overheads to specific activities and allocates them to products based on the consumption of 'cost drivers'.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

The 'External Commercial Borrowings' (ECB) policy is governed by:

A. DGFT

B. RBI

C. Ministry of Finance

D. SEBI

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Correct Answer: Option B

Explanation:
ECB policy and regulations are formulated by RBI in consultation with Government.

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Question #2

The 'Roll-forward Procedures' in audit are performed to:

A. Postpone audit

B. Replace interim testing

C. Start audit early

D. Update audit findings from an interim date to the period end

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Correct Answer: Option D

Explanation:
Roll-forward extends the conclusions from interim date to year-end.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #3

A and B share profits 3:2. They admit C for 1/5th share. C brings ₹50,000 as capital and ₹20,000 as goodwill. Goodwill is withdrawn by old partners. The amount credited to A's capital for goodwill will be:

A. ₹20,000

B. ₹8,000

C. ₹12,000

D. ₹10,000

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Correct Answer: Option C

Explanation:
Goodwill brought by C is distributed in sacrificing ratio, which is old ratio 3:2. A's share = 20,000 * 3/5 = ₹12,000.

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