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Management Accounting - A15

1. Choose all that apply.
Subsidiary books include:-
a)____ Cash Book
b)____ Purchase Register
c)____ Sales Register
d)____ Pass Book
Ans. A,b,c
2. Choose the correct answer.
Product costs under direct costing include:-
a) Prime cost only
b) Prime cost and variable factory overheads
c) Prime cost and fixed factory overheads
d) Prime cost, variable and fixed factory overheads
Ans. B
3. An item of cost that is direct for one business organization may be indirect for another
business organization.
a) true
b) false
Ans. A
4. Choose the correct answer.
Annual maintenance of Rs.28,000/- was paid on 15th June, 2003 for a period of one
year therefrom. Find the amount of prepaid maintenance expenditure for the year
ended 31st March.
a) Rs.28,000/-
b) Rs.22,167/-
c) Rs.7,000/-
d) Rs.5,833/-
Ans. D
5. If the total manufacturing overhead of a tiles producing factory amounted to Rs.15
lakhs and the overhead rate was Rs.5/- per sq.ft, then the production for the period can
be stated as _____________ sq.ft. tiles.
Ans. 300000
6. A fixed budget is useful only when the actual level of activity corresponds to the
budgeted level of activity.
a) true
b) false
Ans. A
7. Match the following:
1. Spirit of mutual trust (2) 1. Scope of uniform costing
2. Avoids cut throat competition (3) 2. Requisite for uniform costing
3. Treatment given to research (5) 3. Advantage of uniform costing
and development costs
4. Advantageously applicable in (1) 4. Process of uniform costing
similar industries
5. Fields covered by uniform costing
6. Disadvantage of uniform costing
8. Bank reconciliation statement is a systematic presentation of errors made by the
a) true
b) false
Ans. B
9. If the ordering cost _____________s, then the economic order quantity will Increase.
Become NIL;Decrease;Remain constant;Increase
Ans. Increase
10. Choose the correct answer.
Alpha Bros. manufactures and sells four products-A, B, C and D. The sales mix in
value comprises 33-1/3%, 41-2/3%, 16-2/3% and 8-1/3%, respectively, out of the
total sales of Rs.60,000/-. Operating costs are 60%, 68%, 80% and 40%, respectively
of the selling price. Fixed costs are Rs.14,700/- per month. You are required to find
out the break even point for the products on an overall basis for Alpha Bros.
a) Rs.42,000/-
b) Rs.24,000/-
c) Rs.60,000/-
d) Rs.56,000/-
11. Choose all that apply.
Pre-requisites of Uniform Costing are :-
a)____ Spirit of mutual trust
b)____ Free Exchange of ideas
c)____ Tendency of withholding information
d)____ No rivalry
Ans. A,b,d
12. Choose the correct answer.
The capacity utilized to installed capacity ratio is 80% for the company. The capacity
utilization ratio in respect of a machine for a particular month is 90%. The available
working hours in a month are 200 hours. The break of idle time is as follows :
Waiting for job - 5 hours, breakdown - 4 hours and waiting for tools - 3 hours.
Calculate the idle time cost when the hourly fixed cost of running the machine is
a) Rs.72/-
b) Rs.56/-
c) Rs.88/-
d) Rs.96/-
12Ans. D
13. The _______________ adjustment is necessary to reflect the cost for the use of fixed
asset during the year.
Ans. Depreciation
14. Choose all that apply.
The features of multiplicity of key factors are as follows :-
a)____ Only one key factor
b)____ More than one key factors
c)____ Refers to a complex situation
d)____ Can be resolved by using linear programming technique
Ans. B,c,d
15. 1) Financial statements are basically in two forms i.e. profitability statement and
balance sheet.
a) true
b) false
Ans. A
16. Education facility to workers and their children, pension, superannuation fund are
examples of __________________ incentives.
Ans. Non-monetary
17. In calculation of total sales margin variance, the _____________ cost of sales is
deducted from the actual sales revenue.
Ans. Standard
18. Choose the correct answer.
Which of the following aspects is ignored by financial accounting?
a) Sales tax
b) Income tax
c) Incentives and salary of employees
d) Efficiency and loyalty of employees
Ans. D
19. GAIL having monopoly in the CNG (Compressed Natural Gas) market can
implement the Uniform costing system.
a) true
b) false
Ans. B
20. Choose all that apply.
Identify the budgets for which the production manager should be held responsible :-
a)____ Materials budget
b)____ Production budget
c)____ Production overheads budget
d)____ Plant utilization budget
Ans. B,c,d
21. Choose the correct answer.
The following data is available for a company for the month of April, 2004 : Territory
I : selling expenses Rs.7,600/-; distribution cost Rs.4,000/-; number of units sold –
16,000; sales Rs.76,000/-. Territory II : selling expenses Rs.4,200/-; distribution cost
Rs.1,800/-; number of units sold -6,000; sales Rs.28,000/-. Territory III : selling
expenses Rs.6,240/-; distribution cost Rs.2,000/-; number of units sold -10,000; sales
Rs.52,000/-. The company adopts sales basis and quantity basis for application of
selling and distribution costs respectively. Compute the amount of selling and
distribution costs chargeable to a consignment of 4,000 units of a product sold in each
territory at Rs.2.50 per unit.
a) Territory I -Rs.2,000/-; Territory II -Rs.2,000/- and Territory III -Rs.2,000/-
b) Territory I -Rs.2,700/-; Territory II -Rs.2,700/- and Territory III -Rs.2,700/-
c) Territory I -Rs.2,700/-; Territory II -Rs.2,700/- and Territory III -Rs.2,000/-
d) Territory I -Rs.2,000/-; Territory II -Rs.2,700/- and Territory III -Rs.2,000/-
Ans. D
22. Direct labour hour rate method of absorption of overheads is suitable where most of
the production is done by using machines.
a) true
b) false
Ans. B
23. Choose the correct answer.
Which document facilitates estimating material cost of a particular job, before
completion of that job?
a) Bill of exchange
b) Bill of material
c) Material requisition note
d) Purchase order
Ans. B
24. Choose all that apply.
The management of Horngreen Ltd. is deciding whether to continue working at loss
or to temporarily shut down the factory. State the qualitative aspects that must be
considered before arriving at a decision :-
a)____ Loss of trained personnel
b)____ Loss of regular customers
c)____ Expenditure required to restart the factory
d)____ Expenditure relating to expanding the business
Ans. A,b,c
25. In differential cost analysis, decisions are taken by comparing the incremental
revenue with differential costs.
a) true
b) false
Ans. A
26. Choose the correct answer.
If the annual labour turnover rate as per the flux method is 19.25%, what is equivalent
monthly rate?
a) 0.1925
b) 0.0963
c) 0.0321
d) 0.0161
Ans. D
27. Choose the correct answer.
A firm of boiler-house engineers provides engineering services to large number of
factories having boiler houses. The firm charges on the basis of number of hours its
engineers have worked for the client. Each engineer works for eight hours on each
working day. Each engineer enjoys Saturday and Sunday as holiday. In addition he is
granted a total of 21 more paid holidays in a year. An engineer's annual remuneration
comprises (for the year 2003) : basic pay Rs.2,00,000/-, house rent allowance 30%,
dearness allowance 20% and other allowances 15%. Employer also contributes 10%
of basic pay towards provident fund, which is taken as part of the salary. Calculate the
rate of charge(on total cost basis) for an hour's work done by the engineer for the
a) Rs.182.29
b) Rs.182.00
c) Rs.183.29
d) Rs.183.00
28. Financial Accounting discloses the financial performance & financial statements of
the business as a whole.
a) true
b) false
28Ans. A
29. According to Reducing Balance Method, the depreciation is provided at a
predetermined percentage on the balance of cost of asset after deduction of the
depreciation previously charged.
a) true
b) false
Ans. A
30. Absorption costing is more suitable for decision making than marginal costing.
a) true
b) false
Ans. B
31. Choose all that apply.
International Motors manufactures crankshafts for jeeps and trucks. They have
furnished the following particulars for the quarter ended 31st March : Materials
Rs.298,000/-; direct wages Rs.42,000/-; store expenses Rs.20,000/-; machinery
maintenance Rs.4,600/-; depreciation Rs.22,300/-; staff welfare Rs.12,000/-; general
expenses Rs.30,000/-; administration and selling expenses Rs.27,000/-. Additional
information provided by them : Production 300 numbers of jeep and 400 trucks;
material cost ratio per vehicle between jeep and truck is 1 : 2. Direct labour ratio per
vehicle for jeep and truck is 2 : 3. Machine hour ratio per vehicle for jeep and truck is
1 : 2. Select the statements which are true and correct.
a)____ Cost per crankshaft for jeep is Rs.445.45
b)____ Cost per crankshaft for truck is Rs.805.66
c)____ Cost per crankshaft for truck is Rs.1,139.75
d)____ General expenses should be apportioned on direct labour ratio
Ans. A,b,d
32. Choose all that apply.
The data for two materials P and Q is given below : Material P : opening stock
Rs.80,000/-; closing stock Rs.40,000/- and purchases Rs.500,000/-. Material Q :
opening stock Rs.170,000/-; closing stock Rs.60,000/- and purchases Rs.750,000/-.
Identify which of the given statements relevant to the data given are correct?
a)____ Inventory turnover period for material P is 40.5 days
b)____ Material P is faster moving material
c)____ Material Q is faster moving material
d)____ Consumption of material Q is Rs.860,000/-
33. Management Accounting is the process of analysis and interpretation of financial data
collected with help of financial accounting and cost accounting
a) true
b) false
Ans. A
34. Match the following:
1. Cost Centre (3) 1. Indirect cost
2. Cost Control (4) 2. Historical Cost
3. Differential Cost (6) 3. Facilitate the fixation of responsibility
4. Sunk Cost (2) 4. Process of controlling costs of operations
5. Penalty paid
6. Increase or Decrease in cost
35. _________________ is any documentary evidence to justify that a particular
transaction has taken place.
Counter file;Payment Advice;Voucher;Invoice
Ans. Voucher
36. Factory light, telephone expenses are examples of ______________ expenses.
Ans. Indirect
37. Choose all that apply.
Inventory holding cost comprises of :-
a)____ Cost of insurance
b)____ Rent of store house
c)____ Cost of material
d)____ Salary of store keeper
Ans. A,b,d
38. In the scheme of cost- _____________-profit analysis, an attempt is made to measure
the variations of cost with Volume.
Selling price;Selling costs;Volume;Contribution
Ans. Volume
39. In case of seasonal industry, the budget period may be taken as _______________.
10 years;5 years;One season;One month
Ans. One season
40. The balance sheet has three columns, viz. assets, liabilities and ledger folio.
a) true
b) false
Ans. B
41. Choose the correct answer.
If debtors in the trial balance are of Rs.23,000/-. Provision for doubtful debts is to be
made @ 5% and discount on sundry debtors is to be provided @ 2%. Calculate the
total amount which should be debited to profit and loss account.
a) Rs.1,193/-
b) Rs.1,193.70
c) Rs.1,196/-
d) Rs.1,196.70
41Ans. B
42. If overhead absorbed i.e. overheads charged to units during the period is more than
the overhead incurred, it is said that the overheads are ___________________.
Over-absorbed;Equal to the actual;True and fair;Under-absorbed
Ans. Over-absorbed
43. Choose all that apply.
These are the replacement costs of labour turnover :-
a)____ Cost of personnel administration
b)____ Inefficiency of new workers
c)____ Cost of selection and placement
d)____ Increased spoilage and defectives
Ans. B,c,d
44. Choose the correct answer.
Which of the following is a valid classification of the salary paid to the foreman in
charge of the packing department?
a) Indirect departmental cost
b) Direct departmental cost
c) Direct product cost
d) Service department cost
Ans. C
45. Choose all that apply.
Select the examples of functional budgets:-
a)____ Sales budget
b)____ Production budget
c)____ Research and development budget
d)____ Capital expenditure budget
Ans. A,b,c
46. Choose all that apply.
Material Yield variance -Rs.1,000/- (Adverse); material mix variance -Rs.250/-
(Favourable) and material price variance - Rs.350/- (Favourable). Find material cost
variance and material usage variance.
a)____ Material cost variance -Rs.400/- (Adverse)
b)____ Material usage variance -Rs.750/-
c)____ Material usage variance is favourable
d)____ Material usage variance is adverse
Ans. A,b,d
47. Choose the correct answer.
Following data has been extracted from the records of a manufacturing company
whose level of operations varies during different months. Minimum activity : 30,000
machine hours and manufacturing overheads Rs.400,000/-. Maximum activity :
80,000 machine hours and manufacturing overheads Rs.600,000/-. Determine the
fixed and variable components of manufacturing overheads.
a) Fixed overheads Rs.480,000/- and variable overheads Rs.4/- per machine hour
b) Fixed overheads Rs.480,000/- and variable overheads Rs.8/- per machine hour
c) Fixed overheads Rs.280,000/- and variable overheads Rs.8/- per machine hour
d) Fixed overheads Rs.280,000/- and variable overheads Rs.4/- per machine hour
Ans. D
48. Fundamentally, changes in price and changes in sales volume give rise to sales
a) true
b) false
Ans. A
49. Contribution represents pool of resources available for meeting all costs other than
Historical costs;Variable costs;Sunk costs;Fixed costs
Ans. Variable costs
50. Choose all that apply.
Techniques of management accounting include:-
a)____ Marginal costing
b)____ Cost control
c)____ Budgetary control
d)____ Standard costing
Ans. A,c,d

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