Management Accounting - A09

MANAGEMENT ACCOUNTING ASSIGNMENT QUESTIONS

1. Choose the correct answer.
Which system can assist in fixing a common selling price for the industry as a whole
on the basis of cost of production of all units belonging to that industry?
Ans. Uniform costing

2. Token or disc method is a related to the system of ________.
Ans. Time-keeping

3. An amount of Rs.200/- is received from P and is credited to Q. The rectification entry
would affect ________
Ans. P's A/c and Q's A/c

4. Purchase day book for the month of April was under cast by Rs.1000/- ________
account should be credited.
Ans. Suspense

5. Choose the correct answer.
The profit volume ratio of X Ltd. is 50% and the margin of safety to sales ratio is 40%.
You are required to calculate the net profit if sale volume is Rs.100,000/-
Ans. Rs.20,000/-

6. A firm earns profit when contribution is equal to fixed costs under variable costing.
a) true
b) false
Ans. B

7. Choose the correct answer.
The gross profit transferred from the trading account is Rs.98,999/-. The expenses
debited to the profit and loss account are salary Rs.12,000/-; advertisement expenses
Rs.18,000/-; printing and stationery Rs.5,500/- and managing director's incentive
Rs.28,000/-. It was noted that no entry was made for salary of one month which was
due but not yet paid. Find the net profit of the company.
Ans. Rs.34,408.09

8. Choose the correct answer.
Judge the following narrative according to the criteria given : There are many
organizations whose sales fluctuate with fluctuations in the weather, viz. ice-cream,
sweaters, etc.
Ans. The statement and the reason are both incorrect


9. Choose the correct answer.
The Asian Industries specializes in the manufacture of small capacity motors. The cost
structure of a motor is as under : Material Rs.50/-; labour Rs.80/-; variable overheads
75% of labour cost. The fixed overheads of the company amount to Rs.240,000/- per
annum. The sale price of the motor is Rs.230/- each. Determine the number of motors
that have to be manufactured and sold in a year in order to break-even.
Ans. 6,000 motors

10. If the time booked as per the job cards is less than the attendance time it indicates
________ during which the worker has not done any work though he was present in
the factory.
Ans. Idle time

11. Bank reconciliation statement can be prepared on weekly basis.
a) true
b) false
Ans. A

12. Balance sheet indicates the financial status of the business at given period.
a) true
b) false
Ans. A

13. Choose the correct answer.
The following information relating to material X and its standard use for production
has been extracted from the standard cost card: Price of material X = Rs.5/- per litre;
consumption of X = 10 litres per unit of product. Data relating to actual material
purchases and production during the period: Purchases of X = 4,000 litres; price paid
for X =Rs.6/- per unit; actual production = 500units. Calculate material usage
variance.
Ans. Rs.5,000/- (Favourable)

14. The bin card and stores ledger, being independent records, comparison of these two
records should be avoided.
a) true
b) false
Ans. B

15. Choose all that apply.
Select the accounts to be disclosed on the assets side of the Balance sheet :-
Ans. Furniture , Loan to Bank of U.S.A. , Land & building

16. Choose the correct answer.
Purchases returns of Rs.18,000/- were wrongly transferred to the sales returns
account. Calculate its impact on net profit.
Ans. The net profit will not be affected
17. Choose all that apply.
Identify the steps involved in selecting the optimum product mix, when the limiting
factor is number of labour hours and sales demand :-
Ans. For each product find the contribution per unit and per labour hour , Award ranks to
each of the products based on contribution per limiting factor , Priority is given to
fulfill the market demand of the product which gives maximum contribution per
labour hour.

18. Penalty paid for delay in payment to creditors represents uncontrollable cost.
a) true
b) false
Ans.

19. A complete list of all material required, with quantities, for a particular job is given in
the ________.
Ans. Bill of material

20. Match the following:
Question Answer
1. Time Recording Clock Method 1. Ticket number & clock card allotted to worker
2. Daily Time sheets 2. Time spent by worker on job is recorded
3. Time Keeping Department 3. Recording of workers time
4. Time booking department 4. Jobwise booking of time.

21. Choose all that apply.
Labour efficiency variance Rs.1,000/- (favourable); labour mix variance Rs.260/-
(adverse) and labour rate variance Rs.300/- (adverse). Compute labour cost variance
and labour yield variance.
Ans. Labour cost variance -Rs.700/- (Favourable) , Labour yield variance -Rs.1,260/- ,
Labour yield variance is favourable

22. High time wages means necessarily high cost of production.
a) true
b) false
Ans. B

23. A business is an activity carried out with the intention of earning the profit.
a) true
b) false
Ans. A

24. Accounting refers to the process of analyzing & interpreting the information already
recorded in the books of accounts.
a) true
b) false
Ans. A
25. Match the following:

Question Answer
1. Operating income 1. Cash Sales
2. Non-Operating income 2. Issue of shares
3. Plan of investment in fixed assets 3. Capital Expenditure Budget
4. Plan for surplus/shortage of cash 4. Cash Budget

26. Preparation of direct material ________ budget is the responsibility of the Purchase
manager.
Ans. Purchase

27. Choose all that apply.
Select the various methods adopted for treatment of under or over absorbed overheads :-
Ans. Use of supplementary rates , Carrying over the amount to remaining period ,
Writing off to the Costing Profit and Loss Account

28. Interim dividend paid by the company should be debited to the profit and loss
appropriation account.
a) true
b) false
Ans. A

29. Choose all that apply.
Features of purchase requisition slip are :-
Ans. Raised when the stock of a raw material has fallen to the re-order level. , Indicates
the type, quantity and quality of material required , The information about the price
of material is excluded

30. The process of finding the reasons for the difference in the balance as per bank book
and pass book is known as ________.
Ans. Reconciliation

31. Choose the correct answer.
Net profit for the year before charging commission to the manager, is Rs.111,775/-.
The manager of the company is entitled to commission @ 8% on net profits after
charging commission. Find the amount of commission due to the manager.
Ans. Rs.8,279.63

32. The difference between sales and prime cost is known as ________.
Ans. Gross Profit

33. Choose all that apply
The key factor determines the :-
Ans. Level of activity , Capacity utilization , Level of sales


34. Choose all that apply
The disadvantages of supplementary overhead rates are:-
Ans. It can be determined only after the end of the accounting period , Defeats the basic
concept of normal cost , Involves lot of clerical activity

35. Choose all that apply
Features of material usage variance are :-
Ans. Measures the difference between the quantity of materials actually used and that
should have been used. , Considers standard price X actual quantity , Considers
standard price X standard quantity

36. In practical circumstances, the ________ are referred to as application of funds.
Ans. Assets

37. Choose the correct answer.
Which of the following is a correct definition of the key factor?
Ans. The factor which limits the activities of the undertaking

38. Under ABC analysis, category A represents items with high volumes.
a) true
b) false
Ans. B

39. Choose the correct answer.
A worker completes a job in a certain number of hours. The standard time allowed
for the job is 10 hours, and the hourly rate of wages is Rs.10/-. The worker earns at
50% rate, a bonus of Rs.20/- under Halsey plan. Find out his total earnings under the
Rowan plan.
Ans. Rs.84/-

40. Choose all that apply
Following errors affect the trial balance :-
Ans. Wrong totaling of subsidiary books , Posting on the wrong side of an account ,
Omission of posting an account in the ledger

41. Choose all that apply
Piece rate systems are very useful in the following circumstances:-
Ans. Units of output are measurable , Job is standardized , The flow of work is regular

42. The final result disclosed by Profit & Loss Account is the ________ profit after taxes
earned by the organization.
Ans. Net




43. Choose all that apply
The organization chart shows the following aspects :-
Ans. Functional responsibility of different functional managers , Delegation of authority
to various managers , Inter-functional relationships of these managers

44. If Rs.15,000/- has been paid to Kargil Relief Fund as the owner's personal
contribution, ________ account should be debited in the books of accounts of the
business.
Ans. Drawings

45. Narration must be mentioned in the ledger.
a) true
b) false
Ans. B

46. Category C items, as per the ABC analysis, usually refers to indirect material.
a) true
b) false
Ans. A

47. Choose the correct answer.
Determine re-order level from the following : Maximum daily consumption - 200
units; maximum delivery period - 12 days; average daily consumption - 150 units and
average delivery period - 8 days.
Ans. 2,400 units

48. Choose the correct answer.
A firm has purchased a plant to manufacture a new product, the cost data for which is
given below : Estimated annual sales 24,000 units. Estimated costs : Materials Rs.4/-
per unit; labour Re.0.60 per unit; overheads Rs.24,000/- per year; administrative
expenses Rs.28,800/- per year and selling expenses are 15% of sales; Calculate the
selling price per unit if profit per unit is Rs.1.02.
a) Rs.9.02/-
b) Rs. 9.20/-
c) Rs. 7.82/-
d) Rs.7.74/-
Ans.

49. Choose the correct answer.
A wholesaler supplies 40 cricket bats to different shopkeepers on each working day.
Presently the wholesaler is purchasing bats in lots of 200 at a cost of Rs.60,000/- per
lot. On every order he incurs a handling charge of Rs.150/- and freight charge of
Rs.250/- per order. Multiple and fractional lots can also be ordered. All orders are
supplied the next day. The wholesaler finances investment in inventory by paying 2%
monthly interest on borrowed funds. Incremental storage cost per bat is Rs.8/-. How
many bats should be ordered at a time to minimize total annual inventory cost,
assuming that there are 300 working days in a year?
a) 1,200 bats
b) 746 bats
c) 500 bats
d) 346 bats
49Ans.

50. Match the following
1. Advantage of budgetary 1. Motivates the managers to exceed the budgeted
control system ( ) targets
2. Fixed budget ( ) 2. Restricts the efforts of the managers to the
budgeted targets
3. Disadvantage of budgetary 3. Managerial tool which increases effectiveness
control system ( ) of managerial control
4. Flexible budget ( ) 4. Difficult to implement in fast changing
industrial scenario
5. More elastic and practical
6. Managerial tool which decreases effectiveness
of managerial control

51 Choose all that apply
Special aspects of co-partnership include:-
a)____ Workers are granted ownership rights
b)____ Indirect monetary remuneration
c)____ The morale of the workers is increased
d)____ The workers are rewarded for individual efficiency
Ans.

52. Choose the correct answer.
Interest on bank loan, was paid till the quarter ending 30th September, 2003,
Rs.36,000/-. Find the amount to be debited to the profit and loss account for the year
ending on 31st March, 2004, assuming the loan is not yet repaid as on this date.
a) Rs.72,000/-
b) Rs.70,000/-
c) Rs.36,000/-
d) Rs.30,000/-
Ans.