Unit 3 accounting for management
Pg trb commerce cost accounting
Q.1. Which of
these is not an objective of Cost Accounting?
(a) Ascertainment
of Cost
(b) Determination
of Selling Price
(c) Cost Control
and Cost reduction
(d) Assisting
Shareholders in decision making
Q.2. A profit
centre is a centre
(a) Where the
manager has the responsibility of generating and maximising profits
(b) Which is
concerned with earning an adequate Return on Investment
(c) Both of the
above
(d) Which manages
cost
Q.3.
Responsibility Centre can be categorised into:
(a) Cost Centres
only
(b) Profit
Centres only
(c) Investment
Centres only
(d) Cost Centres,
Profit Centres and Investment Centres
Q.4. Cost Unit is
defined as:
(a) Unit of
quantity of product, service or time in relation to which costs may be
ascertained or
expressed
(b) A location,
person or an item of equipment or a group of these for which costs are
ascertained
and used for cost
control.
(c) Centres
having the responsibility of generating and maximising profits
(d) Centres
concerned with earning an adequate return on investment
Q.5. Fixed cost
is a cost:
(a) Which changes
in total in proportion to changes in output
(b) which is
partly fixed and partly variable in relation to output
(c) Which do not
change in total during a given period despise changes in output
(d) which remains
same for each unit of output
Q.6.
Uncontrollable costs are the costs which be influenced by the action of a
specified member of an
undertaking.
(a) can not
(b) can
(c) may or may
not
(d) must
Q.7. Element/s of
Cost of a product are:
(a) Material only
(b) Labour only
(c) Expenses only
(d) Material,
Labour and expenses
Q.8. Abnormal
cost is the cost:
(a) Cost normally
incurred at a given level of output
(b) Cost not
normally incurred at a given level of output
(c) Cost which is
charged to customer
(d) Cost which is
included in the cost of the product
Q.9. Conversion
cost includes cost of converting……….into……..
(a) Raw material,
WIP
(b) Raw material,
Finished goods
(c) WIP, Finished
goods
(d) Finished
goods, Saleable goods
Q.10. Sunk costs
are:
(a) relevant for
decision making
(b) Not relevant
for decision making
(c) cost to be
incurred in future
(d) future costs
Q.11. Describe
the method of costing to be applied in case of Nursing Home:
(a) Operating
Costing
(b) Process
Costing
(c) Contract
Costing
(d) Job Costing
Q.12. Describe
the cost unit applicable to the Bicycle industry:
(a) per part of
bicycle
(b) per bicycle
(c) per tonne
(d) per day
Q.13. Calculate
the prime cost from the following information:
Direct material
purchased: Rs. 1,00,000
Direct material
consumed: Rs. 90,000
Direct labour:
Rs. 60,000
Direct expenses:
Rs. 20,000
Manufacturing
overheads: Rs. 30,000
(a) Rs. 1,80,000
(b) Rs. 2,00,000
(c) Rs. 1,70,000
(d) Rs. 2,10,000
Q. 14. Total cost
of a product: Rs. 10,000
Profit: 25% on
Selling Price
Profit is:
(a) Rs. 2,500
(b) Rs. 3,000
(c) Rs. 3,333
(d) Rs. 2,000
Q.15. Calculate
cost of sales from the following:
Net Works cost:
Rs. 2,00,000
Office &
Administration Overheads: Rs. 1,00,000
Opening stock of
WIP: Rs. 10,000
Closing Stock of
WIP: Rs. 20,000
Closing stock of
finished goods: Rs. 30,000
There was no
opening stock of finished goods.
Selling
overheads: Rs. 10,000
(a) Rs. 2,70,000
(b) Rs. 2,80,000
(c) Rs. 3,00,000
(d) Rs. 3,20,000
Q.16. Calculate
value of closing stock from the following:
Opening stock of
finished goods (500 units) : Rs. 2,000
Cost of
production (10000 units) : Rs. 50,000
Closing stock
(1000 units):?
(a) Rs. 4,000
(b) Rs. 4,500
(c) Rs. 5,000
(d) Rs. 6,000
Q. 17. Which of
these is not a Material control technique:
(a) ABC Analysis
(b) Fixation of
raw material levels
(c) Maintaining
stores ledger
(d) Control over
slow moving and non moving items
Q.18. Out of the
following, what is not the work of purchase department:
(a) Receiving
purchase requisition
(b) Exploring the
sources of material supply
(c) Preparation
and execution of purchase orders
(d) Accounting
for material received
Q.19. Bin Card is
a
(a) Quantitative
as well as value wise records of material received, issued and balance;
(b) Quantitative
record of material received, issued and balance
(c) Value wise
records of material received, issued and balance
(d) a record of
labour attendance
Q.20. Stores
Ledger is a:
(a) Quantitative
as well as value wise records of material received, issued and balance;
(b) Quantitative
record of material received, issued and balance
(c) Value wise
records of material received, issued and balance
(d) a record of
labour attendance
Q.21. Re-order
level is calculated as:
(a) Maximum
consumption x Maximum re-order period
(b) Minimum
consumption x Minimum re-order period
(c) 1/2 of
(Minimum + Maximum consumption)
(d) Maximum level
- Minimum level
Q.22. Economic
order quantity is that quantity at which cost of holding and carrying inventory
is:
(a) Maximum and
equal
(b) Minimum and
equal
(c) It can be
maximum or minimum depending upon case to case.
(d) Minimum and
unequal
Q.23. ABC
analysis is an inventory control technique in which:
(a) Inventory
levels are maintained
(b) Inventory is
classified into A, B and C category with A being the highest quantity, lowest
value.
(c) Inventory is
classified into A, B and C Category with A being the lowest quantity, highest
value
(d) Either b or
c.
Q.24. Which one
out of the following is not an inventory valuation method?
(a) FIFO
(b) LIFO
(c) Weighted
Average
(d) EOQ
Q.25. In case of
rising prices (inflation), FIFO method will:
(a) provide
lowest value of closing stock and profit
(b) provide
highest value of closing stock and profit
(c) provide
highest value of closing stock but lowest value of profit
(d) provide
highest value of profit but lowest value of closing stock
Q.26. In case of
rising prices (inflation), LIFO will:
(a) provide
lowest value of closing stock and profit
(b) provide
highest value of closing stock and profit
(c) provide
highest value of closing stock but lowest value of profit
(d) provide
highest value of profit but lowest value of closing stock
Q.27. Calculate
Re-order level from the following:
Consumption per
week: 100-200 units
Delivery period:
14-28 days
(a) 5600 units
(b) 800 units
(c) 1400 units
(d) 200 units
Q.28. Calculate
EOQ (approx.) from the following details:
Annual
Consumption: 24000 units
Ordering cost:
Rs. 10 per order
Purchase price:
Rs. 100 per unit
Carrying cost: 5%
(a) 310
(b) 400
(c) 290
(d) 300
Q.29. Calculate
the value of closing stock from the following according to FIFO method:
1st January,
2014: Opening balance: 50 units @ Rs. 4
Receipts:
5th January,
2014: 100 units @ Rs. 5
12th January,
2014: 200 units @ Rs. 4.50
Issues:
2nd January,
2014: 30 units
18th January,
2014: 150 units
(a) Rs. 765
(b) Rs. 805
(c) Rs. 786
(d) Rs. 700
Q.30. Calculate
the value of closing stock from the following according to LIFO method:
1st January,
2014: Opening balance: 50 units @ Rs. 4
Receipts:
5th January,
2014: 100 units @ Rs. 5
12th January,
2014: 200 units @ Rs. 4.50
Issues:
2nd January,
2014: 30 units
18th January,
2014: 150 units
(a) Rs. 765
(b) Rs. 805
(c) Rs. 786
(d) Rs. 700
Q.31. Calculate
the value of closing stock from the following according to Weighted Average
method:
1st January,
2014: Opening balance: 50 units @ Rs. 4
Receipts:
5th January,
2014: 100 units @ Rs. 5
12th January,
2014: 200 units @ Rs. 4.50
Issues:
2nd January,
2014: 30 units
18th January,
2014: 150 units
(a) Rs. 765
(b) Rs. 805
(c) Rs. 786
(d) Rs. 700
Q.32. Cost of
abnormal wastage is:
(a) Charged to
the product cost
(b) Charged to
the profit & loss account
(c) charged
partly to the product and partly profit & loss account
(d) not charged
at all.
Q.33. Calculate
re-order level from the following:
Safety stock:
1000 units
Consumption per
week: 500 units
It takes 12 weeks
to reach material from the date of ordering.
(a) 1000 units
(b) 6000 units
(c) 3000 units
(d) 7000 units
Q.34. From the
following information, calculate the extra cost of material by following EOQ:
Annual
consumption: = 45000 units
Ordering cost per
order: = Rs. 10
Carrying cost per
unit per annum: = Rs. 10
Purchase price
per unit = Rs. 50
Re-order quantity
at present = 45000 units
There is discount
of 10% per unit in case of purchase of 45000 units in bulk.
(a) No saving
(b) Rs. 2,00,000
(c) Rs. 2,22,010
(d) Rs. 2,990
Q.35. Which of
the following is an abnormal cause of Idle time:
(a) Time taken by
workers to travel the distance between the main gate of factory and place of
their
work
(b) Time lost
between the finish of one job and starting of next job
(c) Time spent to
meet their personal needs like taking lunch, tea etc.
(d) Machine break
downs
Q.36. If overtime
is resorted to at the desire of the customer, then the overtime premium:
(a) should be
charged to costing profit and loss account;
(b) should not be
charged at all
(c) should be
charged to the job directly
(d) should be
charged to the highest profit making department
Q.37. Labour
turnover means:
(a) Turnover
generated by labour
(b) Rate of
change in composition of labour force during a specified period
(c) Either of the
above
(d) Both of the
above
Q.38. Which of
the following is not an avoidable cause of labour turnover:
(a)
Dissatisfaction with Job
(b) Lack of
training facilities
(c) Low wages and
allowances
(d) Disability,
making a worker unfit for work
Q.39. Costs
associated with the labour turnover can be categorised into:
(a) Preventive
Costs only
(b) Replacement
costs only
(c) Both of the
above
(d) Machine costs
Q.40. Calculate
workers left and discharged from the following:
Labour turnover
rates are 20%, 10% and 6% respectively under Flux method, Replacement method
and
Separation
method. No. of workers replaced during the quarter is 80.
(a) 112
(b) 80
(c) 48
(d) 64
Q.41. Calculate
workers recruited and joined from the following:
Labour turnover
rates are 20%, 10% and 6% respectively under Flux method, Replacement method
and
Separation
method. No. of workers replaced during the quarter is 80.
(a) 112
(b) 80
(c) 48
(d) 64
Q.42. Calculate
the labour turnover rate according to replacement method from the following:
No. of workers on
the payroll:
- At the
beginning of the month: 500
- At the end of
the month: 600
During the month,
5 workers left, 20 workers were discharged and 75 workers were recruited. Of
these, 10 workers
were recruited in the vacancies of those leaving and while the rest were
engaged for an
expansion scheme.
(a) 4.55%
(b) 1.82%
(c) 6%
(d) 3%
Q.43. Calculate
the labour turnover rate according to Separation method from the following:
No. of workers on
the payroll:
- At the
beginning of the month: 500
- At the end of
the month: 600
During the month,
5 workers left, 20 workers were discharged and 75 workers were recruited. Of
these,
10 workers were
recruited in the vacancies of those leaving and while the rest were engaged for
an
expansion scheme.
(a) 4.55%
(b) 1.82%
(c) 6%
(d) 3%
Q.44. A worker is
allowed 60 hours to complete the job on a guaranteed wage of Rs. 10 per hour.
Under
the Rowan Plan,
he gets an hourly wage of Rs. 12 per hour. For the same saving in time, how
much he
will get under
the Halsey Plan?
(a) Rs. 720
(b) Rs. 540
(c) Rs. 600
(d) Rs. 900
Q.45. Overhead
refers to:
(a) Direct or
Prime Cost
(b) All Indirect
costs
(c) only Factory
indirect costs
(d) Only indirect
expenses
Q.46. Allotment
of whole item of cost to a cost centre or cost unit is known as:
(a) Cost
Apportionment
(b) Cost
Allocation
(c) Cost
Absorption
(d) Machine hour
rate
Q. 47. Which of
the following is not a method of cost absorption?
(a) Percentage of
direct material cost
(b) Machine hour
rate
(c) Labour hour
rate
(d) Repeated
distribution method
Q.48. Service
departments costs should be allocated to:
(a) Only Service
departments
(b) Only
Production departments
(c) Both
Production and service departments
(d) None of the
production and service departments
Q.49. Most
suitable basis for apportioning insurance of machine would be:
(a) Floor Area
(b) Value of
Machines
(c) No. of
Workers
(d) No. of
Machines
Q. 50. Blanket
overhead rate is:
(a) One single
overhead absorption rate for the whole factory
(b) Rate which is
blank or nil rate
(c) rate in which
multiple overhead rates are calculated for each production department, service
department etc.
(d) Always a
machine hour rate
(d) 18,700
Q.51. Which of
the following is not a reason for an idle time variance?
(a) Wage rate
increase
(b) Machine
breakdown
(c) Illness or
injury to worker
(d) Non-
availability of material
Q.52. A Local
Authority is preparing cash Budget for its refuse disposal department. Which of
the
following items
would not be included in the cash budget?
(a) Capital cost
of a new collection vehicle
(b) Depreciation
of the machinery
(c) Operatives
wages
(d) Fuel for the
collection Vehicles
Q.53. In process
costing, a joint product is
(a) a product
which is later divided into many parts
(b) a product
which is produced simultaneously with other products and is of similar value to
at least one of the other products.
(c) A product
which is produced simultaneously with other products but which is of a greater
value
than any of the
other products.
(d) a product
produced jointly with another organization
Q.54. In process
costing, if an abnormal loss arises, the process account is generally
(a) Debited with
the scrap value of the abnormal loss units
(b) Debited with
the full production cost of the abnormal loss units
(c) Credited with
the scrap value of the abnormal loss units
(d) Credited with
the full production cost of the abnormal loss units
Q.55. Which of
the following statements is/are correct?
1. A materials
requisition note is used to record the issue of direct material to a specific
job.
2. A typical job
cost will contain actual costs for material, labour and production overheads,
andnon –production overheads are often added as a percentage of total
production cost
3. The job
costing method can be applied in costing batches
(a) (1) only
(b) (1) and (2)
only
(c) (1) and (3)
only
(d) (2) and (3)
only
Pg trb commerce cost accounting
Q.56 A job is budgeted to require 3,300 productive
hours after incurring 25% idle time. If the total labourcost budgeted for the
job is Rs36,300. What is the labour cost per hour( to the nearest cent)?
(a) Rs 8.25
(b) Rs 8.80
(c) Rs 11.00
(d) Rs 14.67
Q.57. A company
calculates the prices of jobs by adding overheads to the prime cost and adding
30% tototal costs as a profit margin. Job number Y256 was sold for Rs1690 and
incurred overheads of Rs 694.What was the prime cost of the job?
(a) Rs 489
(b) Rs 606
(c) Rs 996
(d) Rs 1300
Q.58. State which
of the following are the characteristics of service costing.
1. High levels of
indirect costs as a proportion of total costs
2. Use of
composite cost units
3. Use of
equivalent units
(a) (1) only
(b) (1) and (2)
only
(c) (2) only
(d) (2) and (3)
only
Q.59. Which of
the following organisations should not be advised to use service
costing?
(a) Distribution
service
(b) Hospital
(c) Maintenance
division of a manufacturing company
(d) A light
engineering company
Q.60. A company
makes a single product and incurs fixed costs of Rs. 30,000 per annum. Variable
costper unit is Rs. 5 and each unit sells for Rs. 15. Annual sales demand is
7,000 units. The breakeven pointis:
(a) 2,000 units
(b) 3,000 units
(c) 4,000 units
(d) 6,000 units
Q.61. A company
manufactures a single product for which cost and selling price data are as
follows:
Selling price per
unit - Rs. 12
Variable cost per
unit - Rs. 8
Fixed cost for a
period - Rs. 98,000
Budgeted sales
for a period - 30,000 units
The margin of
safety, expressed as a percentage of budgeted sales,is:
(a) 20%
b) 25%
(c) 73%
(d) 125%
Q.62. Capital
gearing ratio is ___________.
(a) Market test
ratio
(b) Long-term
solvency ratio
(c) Liquid ratio
(d) urnover ratio
Q.63. After
inviting tenders for supply of raw materials, two quotations are received as
follows—
Supplier P Rs.
2.20 per unit, Supplier Q Rs. 2.10 per unit plus Rs. 2,000 fixed charges
irrespective of theunits ordered. The order quantity for which the purchase
price per unit will be the same—
(a) 22,000 units
(b) 20,000 units
(c) 21,000 units
(d) None of the
above
. Pg trb commerce cost accounting
Q.64. In ‘make or
buy’ decision, it is profitable to buy from outside only when the supplier’s
price is below
the firm’s own
______________.
(a) Fixed Cost
(b) Variable Cost
(c) Total Cost
(d) Prime Cost
Q.65. A budget
which is prepared in a manner so as to give the budgeted cost for any level of
activity is
known as:
(a) Master budget
(b) Zero base
budget
((c) Functional
budget
(d) Flexible
budget
Q.66. _________
is also known as working capital ratio.
(a) Current ratio
(b) Quick ratio
((c) Liquid ratio
(d) Debt-equity
ratio
Q.67. ___________
is a summary of all functional budgets in a capsule form.
(a) Functional
Budget
(b) Master Budget
(c) Long Period
Budget
(d) Flexible
Budget
Q.68.
_____________ is a detailed budget of cash receipts and cash expenditure
incorporating both
revenue and
capital items.
(a) Cash Budget
(b) Capital
Expenditure Budget
(c) Sales Budget
(d) Overhead
Budget
Q.69. Statutory
cost audit are applicable only to:
(a) Firm
(b) Company
(c) Individual
(d) Society
Q.70. In
element-wise classification of overheads, which one of the following is not
included —
(a) Fixed
overheads
(b) Indirect
labour
(c) Indirect
materials
(d) Indirect
expenditure.
2. a
3. d
4. a
5. c
6. a
7. d
8. b
9. b
10. b
11. a
12. b
13. c
14. c
15. b
16. c
17. c
18. d
19. b
20. a
21. a
22. b
23. c
24. d
25. b
26. a
27. b
28. a
29. a
30. b
31. c
32. b
33. d
34. d
35. d
36. c
37. b
38. d
39. c
40. c
41. a
42. b
43. a
44. b
45. b
46. b
47. d
48. c
49. b
50. a
51. c
52. d
53. a
54. a
55. d
56. d
57. d
58. b
59. a
60. a
61. b
62. b
63. b
64. b
65. c
66. a
67. d
68. c
69. a
70. b
71. b
72. d
73. b
74. b
75. b
76. a
77. d
78. d
79. c
80. c
81. b
82. b
83. c
84. c
85. c
86. b
87. d
88. a
89. b
90. a
91. b
92. a
93. b
94. b
95. c
96. a
97. b
98. a
99. a
100. c
ANSWERS
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