Match List - I with List - II: Choose the correct answer from the options given below :List - I (Item) List - II (Concept) A. Furniture I. Process costing B. Cement II. Job costing C. Petroleum III. Output costing D. Interior Decoration IV. Operating costing
Cost Accounting Concepts Matching
This question requires matching specific industries or items with the appropriate costing method used in cost accounting. We need to identify which costing technique is best suited for each item listed in List - I based on the nature of their production or service delivery.
Matching List I II Concepts
The correct matching, aligning the items with their relevant costing concepts, is as follows:
- A. Furniture correctly matches with II. Job costing
- B. Cement correctly matches with I. Process costing
- C. Petroleum correctly matches with III. Output costing
- D. Interior Decoration correctly matches with IV. Operating costing
Matching Explanations
Furniture Job Costing Match (A-II)
Furniture, particularly custom-made or designer pieces, is often produced based on specific customer orders. Each order (job) is unique and differs in design, materials, and labor. Job costing is the method used to track the costs associated with each distinct job or project separately. Costs are accumulated per job, making it suitable for industries like furniture manufacturing where products are customized.
Cement Process Costing Match (B-I)
The production of Cement involves a continuous manufacturing process where large quantities of identical units are produced. Costs are typically accumulated for each stage or department of the production process over a specific period. These total costs are then averaged over the units produced. This method is known as Process costing, which is ideal for mass production of homogeneous products.
Petroleum Output Costing Match (C-III)
The Petroleum industry involves refining crude oil through continuous processes, yielding standardized products like gasoline, diesel, and kerosene. This is another example of mass production. Output costing is used here, focusing on determining the cost per unit of output. It's a form of process costing where costs are allocated based on the volume or units produced during the continuous production cycle.
Interior Decoration Operating Costing Match (D-IV)
Interior Decoration is fundamentally a service industry. Projects undertaken for clients are usually unique and require specific resources, design efforts, and labor hours. Operating costing, also referred to as Service costing, is employed in service sectors to calculate the cost of rendering a service. It tracks costs related to specific operations or contracts, making it suitable for interior decoration services.
Costing Matches Summary Table
The following table summarizes the correct matches between the items and costing concepts:
| List - I (Item) | List - II (Concept) | Justification |
|---|---|---|
| A. Furniture | II. Job costing | Suited for custom, unique production orders. |
| B. Cement | I. Process costing | Used for mass production of identical units through continuous processes. |
| C. Petroleum | III. Output costing | Applies to continuous refining processes, focusing on cost per unit of output. |
| D. Interior Decoration | IV. Operating costing | Appropriate for service industries, tracking costs per project or service unit. |
Important Questions from Cost accounting
Which of the following business would most likely use job order costing:
The following are the two statements regarding concept of profit. Indicate the correct code of the statements being correct or incorrect. Statement (I) : Accounting profit is a surplus of total revenue over and above all paid-out costs, including both manufacturing and overhead expenses.
Statement (II) : Economic or pure profit is a residual left after all contractual costs have been met, including the transfer costs of management, insurable risks, depreciation and payments to shareholders sufficient to maintain investment at its current level.
Highest in price first out method of valuation is used:
A Biscuit manufacturing concern employs:
Which of the following items is not included in cost accounting?
