Management Accounting - A11

MANAGEMENT ACCOUNTING ASSIGNMENT QUESTIONS
1. The term 'scheduled costs' is used interchangeably with the word 'standard costs'.
a) true
b) false
Ans. B

2. The selection of may depend upon the various factors like characteristics of
the business organization, tax considerations, statutory requirements etc.
Ans. Accounting period

3. 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

4. The column which refers to the page number of the ledger is known as ________.
Ans. Ledger folio

5. Choose all that apply.
Select the appropriate rectification entries for the following transactions (i) Rs.200/-
received in respect of a bad debt previously written off was credited to Debtors
account. (ii) Paid Rs.6,000/- to a Mr. Rao, clerk, as salary in lieu of notice. This
amount was debited to his personal account (iii) Interest @ 5% p.a. on a loan of
Rs.5,000/- was debited to general expenses account.
Ans. Debtors A/c ..........Dr. Rs.200/- to bad debts recovered A/c Rs.200/- , Rs.6,000/- to
Rao's A/c Rs.6,000/- , Rs.250/- to General Expenses A/c Rs.250/-

6. Accounting refers to the process of analyzing & interpreting the information already
recorded in the books of accounts.
a) true
b) false
Ans. A

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

8. Choose all that apply.
The advantages of Halsey plan are :-
Ans. Bonus goes on increasing with increase in time saved. , Provides more incentive to
speed up production , Guaranteed time rate payment is made

9. Choose all that apply.
Direct Cost includes :-
Ans. Direct material , Direct labour , Direct expenses

10. Choose all that apply.
If you are required to enforce uniform costing system in your industry, how would
you proceed?
Ans. Collecting data from all units of your industry , Ensuring that the data collected is
complete and correct , Maintaining secrecy of the data collected

11. Match the following:
Question Answer
1. [( Actual sales - Break even sales) ]/ 1. Margin of safety as a percentage of
Actual sales actual sales
2. Fixed cost / Contribution margin ratio 2. Break even point
3. Fixed cost - (Sales X Profit volume ratio) 3. Profit
4. (Sales X Profit volume ratio) -Fixed cost 4. Loss

12. All costs are controllable.
a) true
b) false
Ans. B

13. Choose all that apply.
The selection of the supplier may depend upon the following aspects:-
Ans. Geographical location of the supplier , Price quoted by the supplier , Goodwill of
the supplier

14. Choose the correct answer.
Which section of the Companies Act, 1956, states that cost audit is compulsory for
certain industries?
Ans. 209(1) (d)

15. A ________ inventory turnover period indicates efficient utilization of material.
Ans. Low

16. 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

17. Choose the correct answer.
Information for the year 2003-04 is given below : Opening stock 1,000 units @
Rs.15/- per unit. Purchases during the year 30,000 units @ Rs.17/- per unit. Sales
during the year 25,000 units @ Rs.20/- per unit. Find the gross profit for the year,
valuing the closing stock on the basis of first in first out method (FIFO).
Ans. Rs.77,000/-

18. Choose the correct answer.
Presentation of information to enable managerial decision making is one of the
objects of which of the following?
Ans. Cost Accounting

19. Choose the correct answer.
Which of the following aspects is ignored by financial accounting?
Ans. Efficiency and loyalty of employees

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

21. Choose the correct answer.
Debtors as on 31st March, 2004 stood as Rs.75,400/-. Out of this amount, Rs.15,884/-
is receivable from ABC & Co. Also, Rs.21,555/- included in the creditors, indicates
amount due to ABC & Co. Total creditors as on 31st March, 2004 = Rs.88,466/-.
Find the amount of debtors and creditors that should be disclosed in the balance sheet
as on 31st March, 2004.
Ans. Debtors - Rs.59,516/-; Creditors - Rs.66,911/-

22. Choose all that apply.
Identify the fixed expenses from the following :-
Ans. Rent and taxes of the factory , Wages paid to indirect workers like cleaners, helpers,
etc. , Salary paid to factory supervisor

23. Choose the correct answer.
Unearned commission of Rs.5,000/- needs to be recorded in the books of accounts.
Find its correct impact.
Ans. The asset side of the balance sheet will increase by Rs.5,000/-
24. Loans which are borrowed from financial institutions are to be paid off in 8 years,
should be disclosed as ________ in the balance sheet.
Ans. Long term liabilities

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

26. Choose the correct answer.
Which of the following source documents in a cost accounting system is designed to
exercise control over the delivery of and accurate recording of the receipts of goods?
Ans. Goods received note

27. Choose all that apply.
Labour turnover means :-
Ans. Influx and exit of employees , Quantitative measurement of instability of working
force , Rate of change in the average working force

28. The lowest profit volume ratio can be ________%.
Ans. 0

29. Profit and loss account indicates the profit earned as on a particular date.
a) true
b) false
Ans. B

30. Control on purchase of material is exercised by the storekeeper.
a) true
b) false
Ans. B

31. Interest on ________ is credited to Capital account.
Ans. Capital

32. While preparing trial balance, the balance as per ________ book is considered as
bank balance.
Ans. Bank

33. Expenditure on repairs may be ideally allocated on the basis of ________.
Ans. Cost of repairs spread over the working life of the machine

34. Depreciation can be defined as a permanent, continuous and gradual reduction in the
book value of a fixed asset.
a) true
b) false
Ans. A

35. Choose all that apply
A company produces 2.50 units of a product from one kg of raw material, which is
purchased at Rs.60/- per kg. The handling cost is Rs.360/- and freight is Rs.390/- per
order. The incremental carrying cost of raw material is Re.0.50 per kg per month. In
addition, the cost of working capital finance on the investment in inventory of raw
materials is Rs.9/- per kg per annum. The annual production of the product is 100,000
units. Select the statements which are true for this problem.
Ans. 20 orders should be placed in a year , Economic order quantity is 2,000 kg ,
Storage cost is Rs.15/- per kg

36. Under the accelerating premium system incentive increases at a fast rate with the
decrease in output.
a) true
b) false
Ans. B

37. Material mix and material yield variance can be calculated even when only one raw
material is used for production.
a) true
b) false
Ans. B

38. Choose all that apply
From the available information calculate sales value variance and budgeted sales
quantity of X. Actual sales of X -500 units; budgeted price per unit -Rs.12/-; actual
price per unit-Rs.15/- and sales volume variance -Rs.1,200/- (Favourable).
Ans. Budgeted sales - 400 units , Sales value variance -Rs.2,700/- , The sales value
variance is favourable

39. 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?
Ans. Inventory turnover period for material P is 40.5 days , Material P is faster moving
material , Consumption of material Q is Rs.860,000/-

40. The sum of indirect material cost, indirect labour cost and indirect expenses is termed
as Overheads.
a) true
b) false
Ans. A

41. Under Bedaux Point system the standard time is divided into standard minutes and
each standard minute identified as ________.
Ans. Bedaux point or B

42. Match the following:
Question Answer
1. Cost of material consumed 1. Can be obtained subtracting closing stock from
the sum of material cost and opening stock
2. Ordering cost 2. Cost of administrative efforts
3. Carrying cost 3. Cost of holding the inventory
4. Material cost 4. Sum of possession cost, ordering cost and
purchase cost

43. If the owner brings in personal calculator for office use, ________ account should be
credited.
Ans. Capital

44. Choose the correct answer.
If a predetermined overhead rate is not employed an the volume of production is
increased over the level planned, the cost per unit would be expected to :-
Ans. Decrease for fixed costs and remain unchanged for variable costs

45. The indirect material cost, indirect labour cost and indirect expenses cost, collectively
are termed as ________.
Ans. Overhead

46. Choose the correct answer.
The cost that indicates historical cost, which is incurred in past, is known as :-
Ans. Sunk cost

47. Trading account is used to analyze how successfully and how efficiently the firm
runs, particularly with regards to the maintenance of the gross profit margin.
a) true
b) false
Ans. A

48. Choose the correct answer.
An operator engaged in machining certain components receives an ordinary day rate
of Rs.160/- per day of 8 hours. The standard output for machining the components has
been fixed at 80 pieces per hour (time fixed for premium bonus). On a certain day, the
output of the worker on this machine is 800 pieces. Find the labour cost per 100 pieces
if a bonus of Rs.25/- is paid per 100 pieces of the extra output.
a) Rs.25/-
b) Rs.20/-
c) Rs.15/-
d) Rs.10/-
Ans.

49. Choose all that apply
A company produces 2.50 units of a product from one kg of raw material, which is
purchased at Rs.60/- per kg. The handling cost is Rs.360/- and freight is Rs.390/- per
order. The incremental carrying cost of raw material is Re.0.50 per kg per month. In
addition, the cost of working capital finance on the investment in inventory of raw
materials is Rs.9/- per kg per annum. The annual production of the product is 100,000
units. Select the statements which are true for this problem.
a)____ 20 orders should be placed in a year
b)____ Economic order quantity is 2,000 kg
c)____ Storage cost is Rs.15/- per kg
d)____ 50 orders should be placed in a year
Ans.

50. Large angle of incidence indicates __________amount of profits.
a)Adujusted b)Same c)Higher d)Lower
51. Choose the correct answer.
If a predetermined overhead rate is not employed an the volume of production is
increased over the level planned, the cost per unit would be expected to :-
a) Decrease for fixed costs and remain unchanged for variable costs
b) Remain unchanged for fixed costs and increase for variable costs
c) Decrease for fixed costs and increase for variable costs
d) Increase for fixed costs and increase for variable costs
Ans.

52. Choose the correct answer.
In a unit, 10 men work as a group. When the production of the group exceeds the
standard output of 200 pieces per hour each man is paid an incentive for the excess
production, in addition to his wages at hourly rate. The percentage which the excess
production, over the standard, bears to the standard production is calculated: The
incentive is at half of this percentage. Each man is paid an incentive considering the
rate of Rs.20/- per hour multiplied by this percentage. There is no relation between the
individual workman's hourly rate and the bonus rate. In a week, the hours worked are
500 and total production is 120,000 pieces. Compute the total amount of bonus for the
week.
a) Rs.2,000/-
b) Rs.1,500/-
c) Rs.1,000/-
d) Rs.500/-
Ans.

53. Choose the correct answer.
Judge the sentence according to criteria given below : "It is difficult to adopt Uniform
costing system when a product can be manufactured by employing more than one
method because the cost of production will vary according to the method used."
a) The assertion and the reason are both correct
b) The assertion is correct but the reason is incorrect
c) The assertion is incorrect but the reason is correct
d) The assertion and the reason are both incorrect
Ans.

54. Choose the correct answer.
The direct material usage budget and direct material purchase budget differ because of
which of the following?
a) The level of material scrap forecast to occur
b) The level of efficiency of men or machines
c) A planned change in the level of finished goods stock
d) A planned change in the level of material stock
Ans.