Chapter 8 - full costing

Question 1

What is a full cost?

Answer 1

This is the total amount of resources, usually measures in monetary terms, sacrificed to achieve a given objective

Question 2

What is a cost unit ?

Answer 2

This is a unit of whatever having its cost determined,

Question 3

What are the uses of full costing?

Answer 3

1. Assessing relative efficiency
2. exercising control
3. assessing performance
4. pricing and output decisions

Question 4

What is process costing?

Answer 4

This is adding up all of the elements of cost of production (materials,labour,rent,fuel, power etc.) and dividing it by the total number of units of output for the period

Question 5

What is a cost centre ?

Answer 5

This is a physical area or some activity ot function for which the cost is separately identified

Question 6

How to work out the full cost of single product busiensses ?

Answer 6

cost per unit = total cost of output divided by the number of units produced

Question 7

What is batch costing?

Answer 7

This is a variation of job costing where each job consists of a number of identical cost units

Question 8

What is job costing?

Answer 8

This is used when a business offers distinct / different products and services

Question 9

What is activity based costing (ABC) ?

Answer 9

This is an approach to dealing with overheads that treats all costs as being caused or driven by activities