Management Accounting - A12

ASSIGNMENT QUESTIONS
1. Re-order level should be higher than ________________but lesser than maximum stock level.
Annual requirement;Monthly requirement;Average stock level;Minimum level
Ans. mini
2. Match the following:
1. Debit side of bank book is
overcast (1 ) 1. Overdraft as per bank book < book =" Balances" book =" Overdraft">
Overdraft as per pass book
6. Henceforth, there shall be
maximum differences in overdraft balances
3. Match the following:
1. Plan of investment in fixed assets (2) 1. Capital Expenditure Budget
2. Plan for surplus/shortage of cash (3) 2. Income and expenditure budget 3. Operating income (1) 3. Revenue expenditure budget
4. Non-Operating income (4) 4. Cash Budget
5. Issue of shares
6. Cash Sales
?4. Choose all that apply.
You have received tenders from two suppliers - X & Co. and Y & Co. The details regarding price and other terms and conditions are as follows : X & Co. : Price Rs.5/- per unit; trade discount 15% and cash discount 4% if bills are paid within a fortnight; freight Rs.2/- per 100 units. Y & Co. : Price Rs.4/- per unit upto 2,000 units; no cash discount but 15% per annum interest is charged if bills are paid within a fortnight from receipt of materials; freight Rs.3/- per 100 units. 10,000 units are required every month. The organization pays 50% of total monthly bills every fortnight. Compare the total cost for the organization for transacting with X & Co. and Y & Co. and advise the supplier with whom the order should be placed.
a)___ Cost to the organization :Y & Co. -Rs.40,425.94
b)___ Cost to the organization : Y & Co.-Rs.41,850/-
c)___ Order should be placed with Y & Co.
d)___ Total cost is lower with Y & Co.
Ans.
5. A forecast is mere estimate of what is likely to happen, but ____________is the action plan to be followed.
Budget;Estimate;Performance report;Cost report
Ans.
6. Choose all that apply.
Select the various methods adopted for treatment of under or over absorbed overheads :- a)____ Use of supplementary rates
b)____ Carrying over the amount to remaining period
c)____ Writing off to the Costing Profit and Loss Account
d)____ Writing off to the Financial Profit and Loss Account
Ans.
7. Choose the correct answer.
A firm employs ten workers at an hourly rate of Rs.20/-. They worked for 40 hours each and completed the job for which standard time was 48 hours for each worker. Calculate labour cost for the job under the Rowan Plan.
a) Rs.8,000/-
b) Rs.8,800/-
c) Rs.9,666.67
d) Rs.9,333.33
Ans.d
8. Uniform costing may lead to monopolistic conditions within the industry, prices may be raised and customers may suffer.
a) true
b) false
Ans.
9. Choose the correct answer.
In a certain factory Type A and Type B machines have been designed to produce the same product but Type A is less automatic than Type B and requires somewhat more labour to operate. Pertinent costs are as follows : Type A : set up cost Rs.400/-; variable cost per unit Rs.4.90. Type B : set up cost Rs.600/-; variable cost per unit Rs.4.40. Find the level of activity at which the total cost of both these machines will be same?
a) 400 units
b) 500 units
c) 600 units
d) 700 units
Ans.
10. The variance that attempts to ascertain the effect of change in sales volume on the difference between actual and budgeted contribution is known as _______________variance.
Sales margin price;Total sales margin;Sales margin yield;Sales margin volume
Ans.
11. Choose all that apply.
The disadvantages of supplementary overhead rates are:-
a)____ It can be determined only after the end of the accounting period
b)____ Defeats the basic concept of normal cost
c)____ Involves lot of clerical activity
d)____ It can be determined only in the beginning of the accounting period
Ans.
12. Choose all that apply
Features of Sunk cost are :-
a)____ Indicates historical cost
b)____ Not relevant in decision making process
c)____ Incurred in past
d)____ Relevant in decision making process
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13. Indirect Cost is termed as ____________.
Prime cost;Overhead;Direct expenses;Production cost
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14. Margin of safety = Contribution / Profit volume ratio
a) true
b) false
Ans.
15. Financial Accounting discloses the financial performance & financial statements of the business as a whole.
a) true
b) false
Ans.
16. Choose all that apply
The principal functions of the cost accounting department are :-
a)____ Classifying labour cost according to jobs, processes, etc.
b)____ Preparation of different reports based on direct, indirect labour cost, etc
c)____ To focus on areas where labour cost may be reduced.
d)____ Preparation of wage sheet and procedural aspects of wage payment
Ans.
17. Choose all that apply
Preference Shares can be classified as :-
a)____ Simple Shares
b)____ Cumulative Shares
c)____ Redeemable Shares
d)____ Deferred Shares
Ans. A,b,c
18. Choose the correct answer.
Accounting policy adopted by different companies may differ when it comes to valuation of :-
a) Inventory
b) Debtors
c) Credit sales
d) Credit purchases
Ans.
19. Indirect material indicates that material which can be identified with the individual cost centre.
a) true
b) false
Ans.
20. Loss of uninsured goods by fire was debited incorrectly to United India Assurance Company's account instead of debiting it to _____________________-account.
Profit and loss;Insurance;General expenses;Goods lost by fire
Ans.
21. Receipts and payments method of cash budget is useful for preparing long term estimates.
a) true
b) false
Ans.
22. Choose all that apply
These are the preventive costs of labour turnover :-
a)____ Cost of maintaining good relations with the workers
b)____ Cost of medical services
c)____ Training costs
d)____ Cost of welfare facilities
Ans.
23. 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.
24. Choose all that apply
Select the cases where convention of conservation is applied :-
a)____ Closing stock is valued at cost or market price whichever is lower
b)____ Providing for discount on debtors
c)____ Amortization of goodwill (goodwill being written off to Profit and Loss Account) d)____ Providing for discount on creditors
Ans.
Entry for dishonour of cheque appears only in the pass book, this entry should be in the bank book.
Passed , ignored,adjusted, promoted
Ans.
If the ordering cost s, then the economic order quantity will Increase.
Increase,remain constant,become nil,decrease
Ans.
27. Choose all that apply
Marginal costing technique is useful in taking decisions relating to which of the following courses of action?
a)____ Decision to drop a product line
b)____ Decision to accept a special offer at price lower than the normal selling price c)____ Decision to accept a special offer at price higher than the normal selling price d)____ Decision regarding temporary shut-downs
Ans.
28. Choose the correct answer.
A good purchase system, for materials, prevents production hold-ups due to:-
a) Lack of material
b) Excess receipt of material
c) Untrained workers
d) Lack of machines
Ans.
29. The system which provides an opportunity to the small units to take advantage of the research work taken by the large scale units of the same industry is known as system.
Uniform accounting,uniform costing,cost accounting,cost
Ans.
30. Choose the correct answer.
An important feature of management accounting is :-
a) Considers only historical data
b) Optimizing the use of resources
c) Minimizing the number of resources
d) Considers only financial data
Ans.
31. Choose the correct answer.
The following data is extracted from the books of a manufacturing concern for the year 2003-04: Direct materials Rs.205,000/-; direct labour Rs.75,000/-; fixed overheads Rs.60,000/-; variable overheads Rs.100,000/- and sales Rs.500,000/-. Calculate the break even point if there is an increase of 10% in the fixed expenses
a) Rs.250,000/-
b) Rs.275,000/-
c) Rs.350,000/-
d) Rs.375,000/-
Ans.
32. Choose all that apply
Locate the error and its features in the following :-
a)____ Compensating errors
b)____ Trial balance will not be affected
c)____ Trial balance will be affected
d)____ The level of unemployment decreases rapidly
Ans
33. Choose all that apply
Select the entries which need to be rectified :-
a)____ Purchase A/c ......... Dr. to Damodar's A/c (Being furniture purchased from Damodar)
b)____ Gopal's A/c ........... Dr. to cash A/c (Being entry for payment of railway freight for goods purchased)
c)____ Joshi's A/c ........... Dr. to Bank A/c. (Being entry for dishonour of cheque which was originally issued by Joshi)
d)_____ Cash A/c ............Dr. to Suresh's A/c (Being cash received from Suresh for goods sold to him for)
Ans.
34. The combination in which different products are sold by a company is known as .
Production mix,standard mix,sales mix,actual mix
Ans.
35.Cost Accounting is concerned with calculation of the profitability and state of affairs of the organization as a whole
a)true
b)false
Ans.
36.Accounting is an art of recording, classifying & summarizing in a significant manner
a)true
b)false
Ans.
37. Generally all the liabilities will have balance
Debit,credit,nil,positive
Ans.
38. Choose all that apply
Essentials for effective implementation of budgetary control system are
a. ____ Commitment of top management
b. ____ Clearly defined objectives
c. ____ Continuous budget education
d. ____ Zero involvement of top management
Ans.
39..Choose the correct answer
The reporting method used in the costing system should be based on the principle of
a) Management by exception
b) Management by objectives
c) Cost control
d) Cost reduction
Ans.
40. Choose the correct answer.
Loan @ 12% p.a. of Rs.50,000/- was taken on 1st March, 2004. Find the interest expenditure on 31st March, 2004
a) Rs.500/-
b) Rs.600/-
c) Rs.700/-
d) Rs.800/-
Ans.
41. Choose the correct answer.
At a break even point of 400 units, the variable costs are Rs.400/- and the fixed costs are Rs.200/-. What will the 401st unit sold contribute to profit?(
a) Re.0
b) Re.0.50
c) Re.1.00
d) Rs.1.50
Ans.
42. Factory rent is a direct cost to the factory as a whole but indirect to the production departments
a.true
b.false
Ans.
43 The difference between sales and margin of safety is equal to budgeted sales.
a.true
b.false
Ans.
44. Choose all that apply.
The factors which influence the selection of the method for absorption of overheads are a) ____ Type of industry
b) ____ Nature of products
c) ____ Manufacturing process
d) ____ Demand for products
Ans.
45. The difference between sales and cost of sales is termed as Gross profit,net profit,operating margin,contribution margin
Ans.
46. Under time rate system a worker is paid on the basis of production achieved by him in a given time.
a) true
b) false
Ans.
47. . Piece rate system is suitable when quality of goods produced is of extreme importance
a. True
b.false
Ans
48. P&L statement which is a period statement & relates to a certain period tells about results of operations.
A.true
b.false
Ans.
49 Choose the correct answer
Calculate the machine hour rate. The amount of overhead pertaining to June, 2004 to be apportioned is Rs.170,010/-. The machine cannot work without an operator. During the month June, 2004 the machine operator has been paid for 5,670 hours.
a) Rs.29.98
b) Rs.30/-
c) Rs.30.98
d) Rs.29/-
Ans.
50. Choose the correct answer
Net sales Rs,7,50,000/-, opening stock Rs.1,14,375/-, purchases Rs.483,375/- and closing stock Rs.1,47,750/-. Calculate the Gross Profit.(not over)
a) Rs.233,250/-
b) Rs.232,250/-
c) Rs.3,00,000/-
d) Rs.350,000/-
Ans.
51. Choose the correct answer.
XYZ Ltd. has set up the following standards for variable production overheads : standard hours per unit -3 hours; standard variable overhead per hour -Rs.10/-. The actual data for the month is as follows : actual variable overheads incurred Rs.620,000/-; actual output -20,000 units and actual hours worked- 54,000 hours. Find variable overheads cost variance.
a) Rs.20,000/- (Adverse)
b) Rs.20,000/- (Favourable)
c) Rs.60,000/- (Adverse)
d) Rs.60,000/- (Favourable)
Ans.