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. Volume of Production only

B. Direct Labor Hours

C. Cost Drivers

D. Machine Hours

Answer: Option C

Solution (By JKExamLibrary)

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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Practice More Accountancy and Book Keeping Questions

Question #1 Report Error

The 'Trial Balance' includes:

A. Only personal account balances

B. Balances of all ledger accounts

C. Only nominal accounts

D. Only real and nominal accounts

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Correct Answer: Option B

Explanation:
It lists all ledger balances irrespective of account type.

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

Question #2 Report Error

The 'Payment of Bonus Act, 1965' is applicable to:

A. All employees

B. Only private sector

C. Only government employees

D. Employees drawing wages up to ₹21,000 per month

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Correct Answer: Option D

Explanation:
The Act applies to employees with wages ≤ ₹21,000 per month (threshold may vary with amendments).

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

Question #3 Report Error

Which document is prepared to inform the supplier that his account has been debited due to purchase returns?

A. Debit Note

B. Credit Note

C. Invoice

D. Cash Memo

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Correct Answer: Option A

Explanation:
A debit note is sent to the supplier indicating that their account has been debited (reduced) in our books due to returned goods.

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

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