ECONOMICS

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COST ACCOUNTING

METHODS OF COSTING

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
What are the missing words in this definition of ‘The Pound Approach’ costing method? “Method based on what company t ____ k the company can afford I ____ d of the company’s sales”
A
think, instead
B
tweak, incorporated
C
track, insured
Explanation: 

Detailed explanation-1: -Process costing is a type of operation costing which is used to ascertain the cost of a product at each process or stage of manufacture. CIMA defines process costing as “The costing method applicable where goods or services result from a sequence of continuous or repetitive operations or processes.

Detailed explanation-2: -Cost of goods sold (COGS) definition Cost of goods sold (COGS) is the direct cost of making a company’s products. It is an important line on your income statement that can tell you a lot about your financial performance, efficiency and profitability.

Detailed explanation-3: -Costs are broadly classified into four types: fixed cost, variable cost, direct cost, and indirect cost.

Detailed explanation-4: -During periods of inflation, the use of FIFO will result in the lowest estimate of cost of goods sold among the three approaches, and the highest net income.

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