Q.1 Operating costing is generally applied to which type of industries?
Manufacturing industries
Service industries
Trading industries
Mining industries
Explanation - Operating costing is used in service industries like transport, hospitals, and canteens where services are rendered instead of goods.
Correct answer is: Service industries
Q.2 Which of the following is an example of a service industry where operating costing is used?
Steel plant
Transport company
Textile mill
Sugar factory
Explanation - Transport companies calculate costs per kilometer, per passenger, or per tonne, making them typical users of operating costing.
Correct answer is: Transport company
Q.3 Service costing is also known as:
Output costing
Operating costing
Job costing
Batch costing
Explanation - Service costing is another term for operating costing since it is used to ascertain the cost of services.
Correct answer is: Operating costing
Q.4 In transport costing, cost per passenger kilometer is calculated as:
Total cost / Total kilometers
Total cost / (Passengers × Kilometers)
Total cost / Total passengers
Total cost / Time taken
Explanation - Passenger kilometer is a composite unit; cost is distributed by dividing the total cost by total passenger kilometers.
Correct answer is: Total cost / (Passengers × Kilometers)
Q.5 Which of the following is a composite cost unit?
Per bed
Per student
Per passenger kilometer
Per meal
Explanation - Composite cost units combine two measurements, such as passenger and distance, making 'per passenger kilometer' a composite unit.
Correct answer is: Per passenger kilometer
Q.6 Operating costing mainly focuses on:
Production of goods
Rendering of services
Trading of products
Stock valuation
Explanation - Unlike manufacturing costing, operating costing is concerned with determining the cost of providing services.
Correct answer is: Rendering of services
Q.7 Which industry would use 'per bed per day' as a cost unit?
Transport
Hospital
Hotel
Power generation
Explanation - Hospitals measure service cost in terms of cost per bed per day to evaluate patient service costs.
Correct answer is: Hospital
Q.8 In hotel costing, a suitable cost unit would be:
Per room per day
Per student
Per machine hour
Per unit produced
Explanation - Hotels use cost per room per day to determine costs of services rendered to customers.
Correct answer is: Per room per day
Q.9 Service costing involves classification of costs into:
Fixed and Variable costs
Direct and Indirect costs
Prime and Conversion costs
Operating and Administrative costs
Explanation - In service industries, costs are classified into fixed and variable categories to ascertain service costs properly.
Correct answer is: Fixed and Variable costs
Q.10 Which of the following is a direct cost in transport costing?
Driver's wages
Office salaries
Depreciation of office equipment
Administrative expenses
Explanation - Driver's wages are directly associated with the transport service, making them a direct cost.
Correct answer is: Driver's wages
Q.11 Fuel expenses in transport costing are classified as:
Fixed cost
Variable cost
Semi-variable cost
Indirect cost
Explanation - Fuel costs vary with usage of vehicles and distance traveled, making them variable costs.
Correct answer is: Variable cost
Q.12 Which cost is generally fixed in service costing?
Repairs
Fuel
Insurance
Lubricants
Explanation - Insurance is payable regardless of the level of service, hence it is considered a fixed cost.
Correct answer is: Insurance
Q.13 Cost per meal is an appropriate cost unit for:
Hospitals
Canteens
Hotels
Transport companies
Explanation - Canteens measure cost of services using cost per meal as their unit.
Correct answer is: Canteens
Q.14 Operating ratio is calculated as:
(Operating cost / Operating revenue) × 100
(Operating profit / Revenue) × 100
(Fixed cost / Total cost) × 100
(Variable cost / Total cost) × 100
Explanation - Operating ratio measures the proportion of operating cost to revenue to analyze efficiency.
Correct answer is: (Operating cost / Operating revenue) × 100
Q.15 In a transport company, which of the following would be a fixed cost?
Petrol
Driver’s wages
Road tax
Tyres
Explanation - Road tax is payable irrespective of kilometers traveled, making it a fixed cost.
Correct answer is: Road tax
Q.16 Which method of costing is applied to power houses?
Job costing
Operating costing
Batch costing
Contract costing
Explanation - Power houses fall under service industry, where operating costing is applied.
Correct answer is: Operating costing
Q.17 Which is an example of absolute (simple) cost unit?
Per passenger kilometer
Per bed per day
Per tonne
Per room per day
Explanation - Absolute cost units measure single measures like per tonne, unlike composite units.
Correct answer is: Per tonne
Q.18 Operating costing in cinema halls is measured by:
Per kilometer
Per seat per show
Per meal
Per room per day
Explanation - Cinema halls use cost per seat per show as their unit to allocate service costs.
Correct answer is: Per seat per show
Q.19 Which of the following is NOT a service industry?
Banking
Transport
Hospital
Cement
Explanation - Cement belongs to manufacturing, while operating costing applies mainly to services like hospitals and transport.
Correct answer is: Cement
Q.20 Operating costing is also called:
Unit costing
Contract costing
Service costing
Batch costing
Explanation - Operating costing is popularly called service costing as it is used for services.
Correct answer is: Service costing
Q.21 Lubricants used in vehicles are classified as:
Fixed cost
Variable cost
Indirect cost
Prime cost
Explanation - Lubricant consumption increases with running of vehicles, hence variable cost.
Correct answer is: Variable cost
Q.22 The cost sheet in operating costing is prepared to find out:
Total cost of goods sold
Total cost per unit of service
Gross profit
Closing stock
Explanation - In operating costing, the main objective is to compute cost per unit of service.
Correct answer is: Total cost per unit of service
Q.23 In operating costing, the formula for cost per composite unit is:
Total cost / Number of cost units
Total cost / Number of composite units
Fixed cost / Variable cost
Prime cost / Total cost
Explanation - Composite cost units combine two measures, so cost is calculated per composite unit.
Correct answer is: Total cost / Number of composite units
Q.24 Which of the following is NOT a fixed cost in operating costing?
Insurance
Licence fee
Fuel
Garage rent
Explanation - Fuel varies with service rendered, so it is a variable cost unlike fixed costs such as insurance.
Correct answer is: Fuel
Q.25 The primary objective of operating costing is:
Valuation of stock
Ascertainment of profit
Determination of cost per unit of service
Preparation of balance sheet
Explanation - Operating costing is mainly used to compute cost per service unit.
Correct answer is: Determination of cost per unit of service