Cost Classification – NBC Institute

ATAX – Nov 2018 – L3 – Q7 – Petroleum Profits Tax (PPT)

Report on classification of mineral rights acquisition, development, and production costs in Nigeria's upstream oil and gas sector.

Question

The Petroleum Industry Governance (PIG) Bill, recently passed into law by both chambers of the Nigerian National Assembly, has rekindled interest among local and foreign investors in Nigeria’s oil and gas industry. A Chinese billionaire-investor, Mr. Wu Chen, while browsing the internet, came across the PIG Bill and the Petroleum Profits Tax Act (PPTA) Cap P.13 LFN 2004 (as amended). He downloaded and studied them but could not understand a particular section of the Act relating to the classification of costs in the upstream sector.

Mr. Chen then contacted his associate in Nigeria, Mr. Li Yen, to help find a reputable tax consultancy that could provide professional advice on the matter. The report is to be submitted to Mr. Chen’s subsidiary company in Nigeria, Wu Integrated Limited, Victoria Island, Lagos.

Required:

As the newly appointed tax consultant to Mr. Chen, write a report on the classification of costs in the upstream sector of the oil and gas industry in Nigeria. Specifically, your report should explain the following:

(a) Mineral rights acquisition costs (5 Marks)
(b) Development costs (5 Marks)
(c) Production costs (5 Marks)

Answer

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Tags: Cost Classification, Development Costs, Mineral Rights Acquisition, Petroleum Profits Tax, Production Costs, Upstream Oil and Gas
Level: Level 3

Topic: Petroleum Profits Tax (PPT)

MI – May 2022 – L1 – SA – Q8 – Cost Classifications

Identifying a classification not related to fixed costs.

Question

Which of the following is NOT a category in which fixed cost can be sub-divided?

A. Time period classification
B. Volume classification
C. Unit classification
D. Unavoidable classification
E. Policy classification

Answer

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Tags: Cost Classification, Fixed Costs
Level: Level 1

Topic: Cost Classifications
Series: MAY 2022

MI – Nov 2023 – L1 – SA – Q10 – Costing Techniques

Identifying the correct method to separate fixed costs from semi-variable costs.

Question

ONE of the methods of separating fixed costs from semi-variable costs is:
A. Low high method
B. Variable method
C. High low method
D. Constant method
E. Semi variable method

Answer

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Tags: Cost Classification, Fixed Costs, Semi-Variable Costs
Level: Level 1

Topic: Costing Techniques
Series: NOV 2023

MI – May 2023 – L1 – SA – Q1 – Introduction to Cost Accounting

This question asks for the identification of a cost that cannot be easily or conveniently traced to a cost object.

Question

A cost that is not easily or conveniently traceable to a cost object is known as:
A. Collective cost
B. Untraceable cost
C. Objective cost
D. Indirect cost
E. Direct cost

Answer

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Tags: Cost Classification, Cost Object, Indirect Costs
Level: Level 1

Topic: Introduction to Cost Accounting
Series: MAY 2023

MI – Mar-Jul 2020 – L1 – SA – Q10 – Cost Classification

Identify the cost that is charged against revenue irrespective of production volume.

Question

Costs that are charged against revenue irrespective of the volume of production achieved are known as:

A. Semi-variable costs
B. Period costs
C. Direct costs
D. Marginal costs
E. Conversion costs

Answer

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Tags: Cost Classification, Cost Management, Period Costs
Level: Level 1

Topic: Cost Classifications
Series: MAR/JULY 2020

IMAC – AUG 2022 – L1 – Q5 – Costs and Cost Behaviour

Establishment of total cost function using high-low method, profit calculation for a specific production level, and identification of advantages and disadvantages of high-low method.

Question

a) Takyi Carpentry makes twin-desk for local schools in the Daboase District. To facilitate control, the owner of the shop has asked you to assist him in analysing cost into fixed and variable elements.

Below is his six-year financial information:

Year	No. of Twin-Desk	Revenue (GH¢)	Profit (GH¢)
2016	1,800	19,600	6,000
2017	1,700	22,000	6,200
2018	1,750	20,300	5,800
2019	2,100	26,200	8,000
2020	1,950	22,400	7,500
2021	2,050	21,800	6,800

Required: i) Establish total cost function using high-low method. (5 marks)

ii) Calculate profit for making 3,500 units of the twin-desk if the selling price is fixed at GH¢20. (3 marks)

iii) Identify TWO (2) advantages and TWO (2) disadvantages of using high-low method. (4 marks)

iv) Identify THREE (3) importance for classifying cost as fixed and variable. (3 marks)

b) For managers within a company, exercising control through standards and standard costing is a creative program aimed at determining whether the organisations’ resources are being used optimally. Standard costs are typically determined during the budgetary control process because it uses predetermined standard costs for direct material, direct labour and factory overheads.

Required: Explain THREE (3) benefits to a company that uses standard costing. (5 marks)

Answer

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Tags: Cost Classification, Cost Function, Fixed Cost, High-Low Method, Profit Calculation, Variable Cost
Level: Level 1

Topic: Cost and Cost Behaviour
Series: AUG 2022

IMAC – NOV 2020 – L1 – Q3 – Cost and Cost Behaviour

Explain various cost terms in management accounting; identify characteristics of services.

Question

a) Cost is a generic term used by accountants to mean the expenses that are incurred in the production of goods and the delivery of services. The nature of cost is, however, well understood by a preceding adjective.

Required:
Explain the difference between the following cost terms as used in Management Accounting:
i) Direct and Indirect cost. (3 marks)
ii) Fixed and Variable cost. (3 marks)
iii) Controllable and Uncontrollable cost. (3 marks)
iv) Full and Marginal cost. (3 marks)
v) Production and Non-Production cost. (3 marks)

b) Costs can be established for services and operations in the same way as for physical goods even though services are different from physical goods.

Required:
Identify and explain TWO (2) characteristics of services. (5 marks)

Answer

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Tags: Cost Classification, Management Accounting, Service Characteristics
Level: Level 1

Topic: Cost and Cost Behaviour
Series: NOV 2020

ATAX – Nov 2018 – L3 – Q7 – Petroleum Profits Tax (PPT)

Report on classification of mineral rights acquisition, development, and production costs in Nigeria's upstream oil and gas sector.

Question

Required:

(a) Mineral rights acquisition costs (5 Marks)
(b) Development costs (5 Marks)
(c) Production costs (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost Classification, Development Costs, Mineral Rights Acquisition, Petroleum Profits Tax, Production Costs, Upstream Oil and Gas
Level: Level 3

Topic: Petroleum Profits Tax (PPT)

MI – May 2022 – L1 – SA – Q8 – Cost Classifications

Identifying a classification not related to fixed costs.

Question

Which of the following is NOT a category in which fixed cost can be sub-divided?

A. Time period classification
B. Volume classification
C. Unit classification
D. Unavoidable classification
E. Policy classification

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost Classification, Fixed Costs
Level: Level 1

Topic: Cost Classifications
Series: MAY 2022

MI – Nov 2023 – L1 – SA – Q10 – Costing Techniques

Identifying the correct method to separate fixed costs from semi-variable costs.

Question

ONE of the methods of separating fixed costs from semi-variable costs is:
A. Low high method
B. Variable method
C. High low method
D. Constant method
E. Semi variable method

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost Classification, Fixed Costs, Semi-Variable Costs
Level: Level 1

Topic: Costing Techniques
Series: NOV 2023

MI – May 2023 – L1 – SA – Q1 – Introduction to Cost Accounting

This question asks for the identification of a cost that cannot be easily or conveniently traced to a cost object.

Question

A cost that is not easily or conveniently traceable to a cost object is known as:
A. Collective cost
B. Untraceable cost
C. Objective cost
D. Indirect cost
E. Direct cost

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost Classification, Cost Object, Indirect Costs
Level: Level 1

Topic: Introduction to Cost Accounting
Series: MAY 2023

MI – Mar-Jul 2020 – L1 – SA – Q10 – Cost Classification

Identify the cost that is charged against revenue irrespective of production volume.

Question

Costs that are charged against revenue irrespective of the volume of production achieved are known as:

A. Semi-variable costs
B. Period costs
C. Direct costs
D. Marginal costs
E. Conversion costs

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost Classification, Cost Management, Period Costs
Level: Level 1

Topic: Cost Classifications
Series: MAR/JULY 2020

IMAC – AUG 2022 – L1 – Q5 – Costs and Cost Behaviour

Establishment of total cost function using high-low method, profit calculation for a specific production level, and identification of advantages and disadvantages of high-low method.

Question

Below is his six-year financial information:

Year	No. of Twin-Desk	Revenue (GH¢)	Profit (GH¢)
2016	1,800	19,600	6,000
2017	1,700	22,000	6,200
2018	1,750	20,300	5,800
2019	2,100	26,200	8,000
2020	1,950	22,400	7,500
2021	2,050	21,800	6,800

Required: i) Establish total cost function using high-low method. (5 marks)

ii) Calculate profit for making 3,500 units of the twin-desk if the selling price is fixed at GH¢20. (3 marks)

iii) Identify TWO (2) advantages and TWO (2) disadvantages of using high-low method. (4 marks)

iv) Identify THREE (3) importance for classifying cost as fixed and variable. (3 marks)

Required: Explain THREE (3) benefits to a company that uses standard costing. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost Classification, Cost Function, Fixed Cost, High-Low Method, Profit Calculation, Variable Cost
Level: Level 1

Topic: Cost and Cost Behaviour
Series: AUG 2022

IMAC – NOV 2020 – L1 – Q3 – Cost and Cost Behaviour

Explain various cost terms in management accounting; identify characteristics of services.

Question

b) Costs can be established for services and operations in the same way as for physical goods even though services are different from physical goods.

Required:
Identify and explain TWO (2) characteristics of services. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost Classification, Management Accounting, Service Characteristics
Level: Level 1

Topic: Cost and Cost Behaviour
Series: NOV 2020

Question Tag: Cost Classification

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ATAX – Nov 2018 – L3 – Q7 – Petroleum Profits Tax (PPT)

Report on classification of mineral rights acquisition, development, and production costs in Nigeria's upstream oil and gas sector.

MI – May 2022 – L1 – SA – Q8 – Cost Classifications

Identifying a classification not related to fixed costs.

MI – Nov 2023 – L1 – SA – Q10 – Costing Techniques

Identifying the correct method to separate fixed costs from semi-variable costs.

MI – May 2023 – L1 – SA – Q1 – Introduction to Cost Accounting

This question asks for the identification of a cost that cannot be easily or conveniently traced to a cost object.

MI – Mar-Jul 2020 – L1 – SA – Q10 – Cost Classification

Identify the cost that is charged against revenue irrespective of production volume.

IMAC – AUG 2022 – L1 – Q5 – Costs and Cost Behaviour

Establishment of total cost function using high-low method, profit calculation for a specific production level, and identification of advantages and disadvantages of high-low method.

IMAC – NOV 2020 – L1 – Q3 – Cost and Cost Behaviour

Explain various cost terms in management accounting; identify characteristics of services.

ATAX – Nov 2018 – L3 – Q7 – Petroleum Profits Tax (PPT)

Report on classification of mineral rights acquisition, development, and production costs in Nigeria's upstream oil and gas sector.

MI – May 2022 – L1 – SA – Q8 – Cost Classifications

Identifying a classification not related to fixed costs.

MI – Nov 2023 – L1 – SA – Q10 – Costing Techniques

Identifying the correct method to separate fixed costs from semi-variable costs.

MI – May 2023 – L1 – SA – Q1 – Introduction to Cost Accounting

This question asks for the identification of a cost that cannot be easily or conveniently traced to a cost object.

MI – Mar-Jul 2020 – L1 – SA – Q10 – Cost Classification

Identify the cost that is charged against revenue irrespective of production volume.

IMAC – AUG 2022 – L1 – Q5 – Costs and Cost Behaviour

Establishment of total cost function using high-low method, profit calculation for a specific production level, and identification of advantages and disadvantages of high-low method.

IMAC – NOV 2020 – L1 – Q3 – Cost and Cost Behaviour

Explain various cost terms in management accounting; identify characteristics of services.

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ATAX – Nov 2018 – L3 – Q7 – Petroleum Profits Tax (PPT)

Report on classification of mineral rights acquisition, development, and production costs in Nigeria's upstream oil and gas sector.

You're reporting an error for "ATAX – Nov 2018 – L3 – Q7 – Petroleum Profits Tax (PPT)"

MI – May 2022 – L1 – SA – Q8 – Cost Classifications

Identifying a classification not related to fixed costs.

You're reporting an error for "MI – May 2022 – L1 – SA – Q8 – Cost Classifications"

MI – Nov 2023 – L1 – SA – Q10 – Costing Techniques

Identifying the correct method to separate fixed costs from semi-variable costs.

You're reporting an error for "MI – Nov 2023 – L1 – SA – Q10 – Costing Techniques"

MI – May 2023 – L1 – SA – Q1 – Introduction to Cost Accounting

This question asks for the identification of a cost that cannot be easily or conveniently traced to a cost object.

You're reporting an error for "MI – May 2023 – L1 – SA – Q1 – Introduction to Cost Accounting"

MI – Mar-Jul 2020 – L1 – SA – Q10 – Cost Classification

Identify the cost that is charged against revenue irrespective of production volume.

You're reporting an error for "MI – Mar-Jul 2020 – L1 – SA – Q10 – Cost Classification"

IMAC – AUG 2022 – L1 – Q5 – Costs and Cost Behaviour

Establishment of total cost function using high-low method, profit calculation for a specific production level, and identification of advantages and disadvantages of high-low method.

You're reporting an error for "IMAC – AUG 2022 – L1 – Q5 – Costs and Cost Behaviour"

IMAC – NOV 2020 – L1 – Q3 – Cost and Cost Behaviour

Explain various cost terms in management accounting; identify characteristics of services.

You're reporting an error for "IMAC – NOV 2020 – L1 – Q3 – Cost and Cost Behaviour"

ATAX – Nov 2018 – L3 – Q7 – Petroleum Profits Tax (PPT)

Report on classification of mineral rights acquisition, development, and production costs in Nigeria's upstream oil and gas sector.

You're reporting an error for "ATAX – Nov 2018 – L3 – Q7 – Petroleum Profits Tax (PPT)"

MI – May 2022 – L1 – SA – Q8 – Cost Classifications

Identifying a classification not related to fixed costs.

You're reporting an error for "MI – May 2022 – L1 – SA – Q8 – Cost Classifications"

MI – Nov 2023 – L1 – SA – Q10 – Costing Techniques

Identifying the correct method to separate fixed costs from semi-variable costs.

You're reporting an error for "MI – Nov 2023 – L1 – SA – Q10 – Costing Techniques"

MI – May 2023 – L1 – SA – Q1 – Introduction to Cost Accounting

This question asks for the identification of a cost that cannot be easily or conveniently traced to a cost object.

You're reporting an error for "MI – May 2023 – L1 – SA – Q1 – Introduction to Cost Accounting"

MI – Mar-Jul 2020 – L1 – SA – Q10 – Cost Classification

Identify the cost that is charged against revenue irrespective of production volume.

You're reporting an error for "MI – Mar-Jul 2020 – L1 – SA – Q10 – Cost Classification"

IMAC – AUG 2022 – L1 – Q5 – Costs and Cost Behaviour

Establishment of total cost function using high-low method, profit calculation for a specific production level, and identification of advantages and disadvantages of high-low method.

You're reporting an error for "IMAC – AUG 2022 – L1 – Q5 – Costs and Cost Behaviour"

IMAC – NOV 2020 – L1 – Q3 – Cost and Cost Behaviour

Explain various cost terms in management accounting; identify characteristics of services.

You're reporting an error for "IMAC – NOV 2020 – L1 – Q3 – Cost and Cost Behaviour"

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