ASSIGNMENT QUESTIONS
1. Choose all that apply
S Ltd. operates a system of standard costing in respect of one of its products which is
manufactured within a single cost centre. For one unit of product the standard material
input is 20 litres at a standard price of Rs.2/- per litre. The standard wage rate is Rs.6/-
per hour and 5 hours are allowed to produce one unit. Fixed production overhead is
absorbed at the rate of 100% of direct wages cost. During the month just ended the
following occurred : acutal price paid for materials purchased Rs.1.95 per litre; total
direct wages cost was Rs.156,000/- and fixed production overheads was Rs.158,000/-.
Direct material price variance-Rs.8,000/- (Fabourable); direct material usage variance –
Rs.5,000/- (Adverse); direct labour rate variance -Rs.5,760/-(Adverse); direct labour
efficiency variance -Rs.2,760/- (Favourable) and fixed produciton overheads
expenditure variance -Rs.8,000/-(Adverse). Calculate budgeted output in units for the
month, actual hours worked and number of litres purchased during the month.
a)____ Budgeted output - 5,000 units
b)____ Actual hours worked - 24,040 hours
c)____ Litres purchased - 160,000 litres
d)____ Litres purchased - 157,500 litres
Ans.
2. A cash payment of Rs.1,000/- for traveling expenses has been entered in the books but
not debited to traveling A/c. The trial balance will NOT agree.
a) true
b) false
Ans. A
3. Purchase of national saving certificates by the company from its profits, should be
debited to _____________ account.
Capital;Savings;Investments;Borrowings
Ans. Investments
4. Variable cost + Profit = Sales.
a) true
b) false
Ans. B
5. A business is an activity carried out with the intention of earning the profit.
a) true
b) false
Ans. A
6. Choose all that apply
Features of material usage variance are :-
a)____ Measures the difference between the quantity of materials actually used
and that should have been used.
b)____ Measures the difference between the quantity of materials actually
purchased and that should have been purchased.
c)____ Considers standard price X actual quantity
d)____ Considers standard price X standard quantity
Ans. A,c,d
7. Marginal costing rewards sales whereas absorption costing rewards production.
a) true
b) false
Ans. A
8. The term _________ indicates expenditure incurred on or attributable to a given thing.
Revenue;Loss;Expense;Cost
Ans. Cost
9. Under the average cost method of valuing material issues, new issue price is
determined after ________________ issue.
Each;Every alternative;The next;Previous
Ans. Each
10. An adjustment relating to outstanding expenses will ____________ the net profit.
Decrease;Enhance;Increase;Not affect
Ans. Decrease
11. Choose the correct answer.
In a factory, bonus to workmen is paid according to the Rowan plan. The allotted
time for a job is 40 hours and the normal rate of wages is Rs.1.25 per hour. The
factory overhead charges are 50 paisa per hour for the hours taken. The factory cost
of a work order, executed by one worker, X, is Rs.161.875 and that by another, Y, is
Rs.155.46. The cost of material in each case is Rs.100/-. Calculate the amount of time
taken by the workman X to complete the work order.
a) 25 hours
b) 28 hours
c) 30 hours
d) 32 hours
Ans.
12. Choose the correct answer.
A new computer worth Rs.35,000 was purchased on 18th June, 2003. The company
has 10 such computers costing Rs.20,000/- each. The depreciation is charged @ 18%
p.a. Find the depreciation on computers to be charged for the year.
a) Rs.36,000/-
b) Rs.40,953.70
c) Rs.37,353.70
d) Rs.32,400/-
Ans. B
13. Negative profit volume ratio means variable cost is ___________ the selling price.
One-fifth of;More than;Less than;Equal to
Ans. More than
14. Choose all that apply
Features of convention of consistency are :-
a)____ The accounting policies and procedures should be followed consistently
b)____ Facilitates the comparison of financial statements
c)____ The accounting policies and procedures should be changed consistently.
d)____ It facilitates comparison of financial statements on period-to-period basis
Ans. A,b,d
15. The actual hours taken by the labour are compared with the standard hours allowed
for output to find out the labour yield variance.
a) true
b) false
Ans. A
16. Predetermined rate of absorption of overheads helps in quick preparation of cost
estimates and quoting prices.
a) true
b) false
Ans. A
17. Choose the correct answer.
An analysis of the time card of a worker on a machine shows that of the total 48
hours, he worked 45 hours (including 4 hours overtime) on production and that 3
hours was idle due to machine break-down. The rate of the worker is rupees ten per
hour : but overtime is paid at 50 per cent extra. You are required to calculate the
earnings of the worker.
a) Rs.470/-
b) Rs.500/-
c) Rs.510/-
d) Rs.450/-
Ans. B
18. Choose the correct answer.
The profit volume ratio of BB & Co,. dealing in precision instruments, is 50% and the
margin of safety is 40%. You are required to work out the break-even point and the
net profit if the sale volume is Rs.50,00,000/-
a) Break even point-Rs.300,000/-, net profit-Rs.100,000/-
b) Break even point-Rs.30,00,000/-, net profit-Rs.10,00,000/-
c) Break even point-Rs.20,00,000/-, net profit-Rs.5,00,000/-
d) Break even point-Rs.200,000/-, net profit-Rs.50,000/-
Ans. B
19. Choose all that apply
The objectives of cost accounting are :-
a)____ Cost control
b)____ Cost reduction
c)____ Ascertainment of cost of each product
d)____ Assist in managerial decision-making
Ans. A,c,d
20. The greater the volume of production, the greater is the unit cost of production.
a) true
b) false
Ans. B
21. Choose the correct answer.
An order for goods worth Rs.18,000/- was placed on 25th March, 2004. The goods
were received on 1st April, 2004. Calculate the impact of this transaction on the final
statements of accounts for the year ended 31st March, 2004.
a) The net profit will not be affected
b) The purchases will be increase by Rs.18,000/-
c) The purchases will be decrease by Rs.18,000/-
d) The creditors will increase by Rs.18,000/-
Ans. A
22. Match the following
1. Trade Discount (1) 1. Not accounted for in the books of Accounts
2. Cash Discount (5) 2. Every asset has corresponding liability
3. Rs.1 Personal A/C (3) 3. Debit the receiver, Credit the giver
4. Real A/C (4) 4. Debit what comes in, Credit what goes out
5. Accounted for in the books of Accounts
6. Every profit has corresponding loss
23. 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.
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. The treatment of _____________ time in cost accounting depends upon the
distinction between normal and abnormal time.
Productive;Standard;Attendance;Idle
Ans. Idle
26. Choose the correct answer.
The following information is available regarding two orders for the same product.
Order I : material Rs.20,000/-; wages Rs.25,000/-; selling price Rs.120,000/- and
percentage of profit on cost 20%. Order II : material Rs.30,000/-; wages Rs.40,000/-;
selling price Rs.195,000/- and percentage of profit on cost 25%. Factory overheads
are charged on a fixed percentage basis on wages and office overheads are based on
percentage to works cost. Find out percentage of office overheads.
a) 20% of works cost
b) 60% of works cost
c) 100% of works cost
d) 140% of works cost
Ans.
27. Choose the correct answer.
The gross profit before considering closing stock in the trading account is
Rs.117,560/-. Total current assets excluding closing stock is Rs.267,500/-. The value
of closing stock is Rs.45,060/-. Find the gross profit and total of current assets
considering the closing stock.
a) Gross profit -Rs.72,500/-; Total current assets-Rs.222,400/-
b) Gross profit -Rs.117,560/-; Total current assets-Rs.267,500/-
c) Gross profit -Rs.162,620/-; Total current assets-Rs.312,560/-
d) Gross profit -Rs.162,560/-; Total current assets-Rs.310,560/-
Ans. C
28. Choose the correct answer.
Ram is the owner of Dashrath & Sons. He is entitled to annual salary of Rs.8,000/-.
Find its impact on profit of the enterprise.
a) The net profit will not be affected
b) The gross profit will decrease by Rs.8,300/-
c) The net profit will increase by Rs.8,300/-
d) The net profit will decrease by Rs.8,000/-
Ans. D
29. Bank reconciliation statement must be prepared before the preparation of profit and
loss account and balance sheet.
a) true
b) false
Ans. A
30. Choose the correct answer.
The type of costs presented to management for elimination of a product-line should
be limited to :-
a) Relevant costs
b) Standard costs
c) Controllable costs
d) Conversion costs
Ans. A
31. Choose all that apply
Features of convention of conservation are :-
a)____ Anticipates all future losses and expenses
b)____ Ignores all future incomes and profits, unless they are actually realized
c)____ Applicable to valuation of current assets
d)____ Applicable to valuation of non-current asset
Ans. A,b,c
32. Choose all that apply
From the following select the examples of errors of commission :-
a)____ Purchases of fixed assets recorded in the purchase register
b)____ Sales recorded in the sales register as Rs.2,020/- instead of Rs.2,200/-
c)____ Received cash from Sham, credited to Ram's account
d)____ Paid transport charges, credited to transport charges account
Ans. B,c,d
33. 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
34. Choose the correct answer.
The integrated form of all functional budgets is known as :-
a) Budget manual
b) Operating budget
c) Master budget
d) Budgeted Balance Sheet
Ans. C
35. Token or disc method is a related to the system of ______________________.
Time-keeping;Recording idle time;Time-booking;Recording units produced
Ans. Time-keeping
36. Choose the correct answer.
Where, in the final statements of accounts, should we disclose the closing balance of
income received in advance?
a) Trading account
b) Profit and Loss account
c) Balance sheet - on the asset side
d) Balance sheet - on the liability side
Ans. D
37. Match the following
1. Freight inwards (4) 1. Balance sheet
2. Sales (6) 2. Profit and loss account
3. Freight outwards (2) 3. Capital account
4. Dividend paid (5) 4. Manufacturing account
5. Profit and loss appropriation account
6. Trading account
38. 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. A,b,c
39. A firm earns profit when contribution is equal to fixed costs under variable costing.
a) true
b) false
Ans. B
40. The expenses relating to maintenance and creation of demand for the product should
be included in the _________________________ budget.
Financial;Production;Selling expenses;Administrative expenses
Ans. Selling expenses
41. Balance sheet indicates the financial status of the business at given period.
a) true
b) false
Ans. A
42. Choose all that apply
The balance as per bank book as on 30th June, 2004 is Rs.10,298/- while the balance
as per pass book as on the same date is Rs.10,123.60. Select the transactions
representing the reasons for this difference :-
a)____ Interest credited by bank, not entered in the bank book, Rs.125.60
b)____ Cheques dishonoured not entered in the bank book Rs.200/-
c)____ Debit side of the cash book is overcast by Rs.100/-
d)____ Debit side of the cash book is undercast by Rs.100.60
Ans. A,b,c
43. Choose all that apply
The advantages of Halsey plan are :-
a)____ Bonus goes on increasing with increase in time saved.
b)____ Bonus goes on decreasing with increase in time saved
c)____ Provides more incentive to speed up production
d)____ Guaranteed time rate payment is made
Ans. A,c,d
44. Choose all that apply
Different types of tenders are :-
a)____ Singly tender
b)____ Multiple tender
c)____ Open tender
d)____ Global tender
Ans. A,c,d
45. Choose all that apply
From the following, select intangible assets:-
a)____ Goodwill
b)____ Patents
c)____ Trade Marks
d)____ Investments
Ans. A,b,c
46. Choose the correct answer.
Select the cost that indicates increased or decreased total cost due to the increased or
decreased volume of operations :-
a) Differential cost
b) Opportunity cost
c) Sunk cost
d) Variable cost
Ans. A
47. Choose the correct answer.
Which of the following aspects are mainly responsible for difficulty in application of
Uniform costing system?
a) Capital investment
b) Plant size
c) Location
d) Loans taken
Ans. A,b,c
48. The _______________________ variance is the difference between the actual
variable overhead incurred and the standard variable overhead charged to production.
Variable overhead volume; Total fixed overhead;
Total variable overhead; Variable overhead efficiency
Ans.
49. Accounting is an art of recording, classifying & summarizing in a significant manner.
a) true
b) false
Ans. A
50. Choose the correct answer.
A company manufactures and sells four products, viz. A, B, C and D. The details are
as follows : Profit volume ratio:-Product A- 20%, Product B- 40%, Product C-25%,
Product D-18%; Incremental rupee sale for each Rupee spent on advertisement:-
Product A- Rs.11/-, Product B-Rs.6/-, Product C-Rs.12/-, Product D-Rs.10/-. Amount
of advertisement available is only Rs.5,000/-. On which product should the company
spend this amount of Rs.5,000/-?
a) Product A
b) Product B
c) Product C
d) Product D
Ans.
51 Profitability statement indicates the amount of assets & liabilities.
a) true
b) false
Ans. B
52. Choose the correct answer.
Calculate inventory holding period. Safety stock - 250 units; maximum stock - 6,500
units; re-order quantity - 3,800 units and material issued during 2003 is 24,000 units.
a) 66 days
b) 66.9 days
c) 67 days
d) 67.9 days
Ans.
53. Balance sheet indicates the expenditure & income from the business.
a) true
b) false
Ans. B
54. If the owner brings in personal calculator for office use, _______________ account
should be credited.
Capital;Cash;Donation;Drawings
Ans. Capital
55. If the profit volume ratio is 25%, then the variable cost is equal to ___________ of
sales value.
0.25;1;0.75;0.5
Ans.
56. The process of accounting split into three steams i.e. financial, cost, management
accounting.
a) true
b) false Ans. A
Showing posts with label Management Accounting (Set 4). Show all posts
Showing posts with label Management Accounting (Set 4). Show all posts
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
Ans.
13. Indirect Cost is termed as ____________.
Prime cost;Overhead;Direct expenses;Production cost
Ans.
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.
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
Ans.
13. Indirect Cost is termed as ____________.
Prime cost;Overhead;Direct expenses;Production cost
Ans.
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.
Management Accounting - A11
MANAGEMENT ACCOUNTING ASSIGNMENT QUESTIONS
1. Choose the correct answer.
Benefits available from revenue expenditure are received in the :-
a) Same year
b) Next year
c) Future year
d) Previous year
Ans. A
2. Bank reconciliation statement must be prepared before the preparation of profit and
loss account and balance sheet.
a) true
b) false
Ans. A
3. Choose the correct answer.
Uniform costing system is useful in the following areas :-
a) Classification of cost accounts
b) Preparing financial statements
c) Completing statutory audit
d) Getting loans
Ans. A
4. Re-order level for materials is determined considering maximum consumption and
maximum delivery period.
a) true
b) false
Ans. A
5. Profit volume ratio is also known as ______________________________.
Contribution to cost ratio; Cost to contribution ratio;
Sales to contribution ratio; Contribution to sales ratio
Ans. Contribution to sales ratio
6. Choose all that apply
Management Accounting is :-
a)____ Designed particularly for internal use
b)____ Helpful in estimating the future along with past period
c)____ Useful in furnishing the necessary information to the management
d)____ A legal requirement.
Ans. A,b,c
7. Choose the correct answer.
A textile mill has two production departments, spinning and weaving and two service
departments, S and R. Variable cots of operating the two service departments, their
output and quantum of service rendered to other department is as follows : Department
S : Service rendered to spinning department - 30%, weaving department - 20% and
department R - 50%; variable cost Rs.120,000/- and output -1,000 tons. Department R
: Service rendered to spinning department - 25%, weaving department - 35% and
department S - 40%; variable cost Rs.260,000/- and output - 2,000 tons. Calculate the
total cost of service received by spinning and weaving departments.
a) Spinning department -Rs.196,000/-; Weaving department -Rs.184,000/-
b) Spinning department -Rs.148,000/-; Weaving department -Rs.169,000/-
c) Spinning department -Rs.169,000/-; Weaving department -Rs.148,000/-
d) Spinning department -Rs.184,000/-; Weaving department -Rs.196,000/-
Ans. D
8. Choose the correct answer.
From the given information compute the total cost variance. Material cost variance –
Rs.4,400/- (Favourable); labour cost variance -Rs.450/- (Adverse); fixed overhead cost
variance -Rs.22,000/- (Adverse); variable overhead cost variance -Rs.6,000/-(adverse).
a) Rs.32,850/- (Adverse)
b) Rs.32,850/- (Favourable)
c) Rs.24,050/- (Adverse)
d) Rs.24,050/- (Favourable)
Ans. C
9. The final result disclosed by trading account is the ___________ profit earned by the
organization.
Gross; Net; Marginal; Incremental
Ans. Gross
10. Measurement of _______________ gives an idea of the degree of mobility of labour.
Labour cost; Labour turnover; Idle time; Standard time
Ans. Labour turnover
11. Choose all that apply
Select the accounts to be disclosed on the assets side of the Balance sheet :-
a)____ Furniture
b)____ Loan to Bank of U.S.A.
c)____ Loan from Bank of America
d)____ Land & building
Ans. A,b,d
12. 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
13. A ______________________ can be defined as a part of the organization for which
separate budget can be prepared and implemented.
Responsibility centre; Budget centre; Cost centre; Profit centre
Ans. Budget centre
14. Choose the correct answer.
Journal is popularly known as 'Book of :-
a) Original Entry
b) Secondary Entry
c) Rectification Entry
d) Adjustment Entry
Ans. A
15. In order to rectify the totaling mistake, wherein the sales return ledger was undercast
by Rs.2,000/-, the suspense account should be ___________ with Rs.2,000/-
Appended; Adjusted; Debited; Credited
Ans. Credited
16. Match the following
1. Bank Book (1) 1. Maintained by the trader/ businessman
2. Pass Book (4) 2. Issued by the Bank
3. Bank reconciliation (6) 3. Issued by the organization
statement
4. Advise stating dividend (2) 4. Maintained by the Bank
collected on your behalf
5. Maintained by the Government
6. Prepared by the organization
17. Match the following
1. Contribution - Fixed cost (6) 1. Contribution
2. Total cost + Profit (4) 2. Variable cost
3. Fixed cost + Variable cost (5) 3. Semi-variable cost
4. Total cost - Fixed cost (2) 4. Sales
5. Total cost
6. Profit
18. Choose the correct answer.
A manufacturer is producing alloy for which standard mix is 25% copper and 75%
iron. Standard price for copper is Rs.80/- per kg. and for iron Rs.20/- per kg. 20% of
input is standard loss. Actual output is 8,000 kg. of alloy using 2,000 kg of copper at
Rs.90/- per kg. and 9,000 kg of iron at Rs.15/- per kg. Calculate the standard cost of
copper.
a) Rs.200,000/-
b) Rs.150,000/-
c) Rs.350,000/-
d) Rs.180,000/-
Ans. c
19. Choose all that apply
Cost control procedure deals with :-
a)____ Establishment of plans
b)____ Computation of profit
c)____ Comparison of actual and planed performance
d)____ Computation of variance
Ans. A,c,d
20. In calculation of total sales margin variance, the ____________ cost of sales is
deducted from the actual sales revenue.
Standard; Planned; Scheduled; Actual
Ans. Standard
21. Choose the correct answer.
The gross profit for the year 2004 is Rs.184,326/-. The depreciation on furniture for
the year is Rs.24,561/-; dividend received amounted to Rs.12,000/- and the director's
remuneration worked out to be Rs.95,784/-. Find the net profit for the year 2004.
a) Rs.75,980/-
b) Rs.75,981/-
c) Rs.63,980/-
d) Rs.51,981/-
Ans. B
22. Choose the correct answer.
Standard time required for a job is 10 hours, i.e.10 X 60 = 600 'Bs'. The worker has
actually completed the job in 6 hours, i.e.6 X 60 = 360 'Bs'. Time wage rate is Rs.20/-
per hour. Bonus is shared between the worker and the foreman in the ratio of 3:1.
Calculate total earning of the worker as per Bedeaux Point System.
a) Rs.120/-
b) Rs.160/-
c) Rs.180/-
d) Rs.200/-
Ans. c
23. Profitability statement indicates the amount of assets & liabilities.
a) true
b) false
Ans. B
24. Choose all that apply
Actual costs determined on the basis of costing records maintained have following
limitations :-
a)____ No practical utility from control point of view
b)____ No practical utility for price fixation
c)____ Expensive
d)____ Very difficult to understand
Ans. A,b,c
25. Depreciation under Reducing Balance Method is calculated as (Number of units *
Rate of depreciation per unit).
a) true
b) false
Ans. B
26. Choose all that apply
Features of convention of conservation are :-
a)____ Anticipates all future losses and expenses
b)____ Ignores all future incomes and profits, unless they are actually realized
c)____ Applicable to valuation of current assets
d)____ Applicable to valuation of non-current asset
Ans. A,b,c
27. Under Differential Time Rate method payment is made at Rs. 1.40 per hour when the
level of efficiency is between __________________.
90% to 100%; 80% to 100%; 70% to 90%; 50% to 75%
Ans. 90% to 100%
28. Choose all that apply
Which of the following aspects are mainly responsible for difficulty in application of
Uniform costing system?
a)____ Capital investment
b)____ Plant size
c)____ Location
d)____ Loans taken
Ans. A,b,c
29. Choose all that apply
Merits of break even point analysis are as follows:-
a)____ Useful diagnostic tool.
b)____ Used for analyzing the risk implication of alternative actions.
c)____ Used to graphically represent complicated data.
d)____ Useful in the long run.
Ans. A,b,c
30. The ___________ ledger carries the individual accounts, whereas the general ledger
records the consolidated effect of the individual transactions.
Control; Journal; Main; Original
Ans. Control
31. Overhead absorption rate will be different at different capacity levels.
a) true
b) false
Ans. A
?32. Choose the correct answer.
At 60% capacity utilization the overhead recovery rate is Rs.35/- per unit. At 70%
capacity the rate gets reduced to Rs.32/- per unit. What should be the recovery rate if
the production attains 90% capacity utilization?
a) Rs.35/- per unit
b) Rs.32/- per unit
c) Rs.30/- per unit
d) Rs.28/- per unit
Ans.
33. Accounting is an art of recording, classifying & summarizing in a significant manner.
a) true
b) false
Ans. A
34. In case the standards are too difficult to achieve, they will provide additional
incentive for improvement.
a) true
b) false
Ans. B
35. Balance sheet indicates the expenditure & income from the business.
a) true
b) false
Ans. B
36. Interim dividend paid by the company should be debited to the profit and loss
appropriation account.
a) true
b) false
Ans. A
37. Choose the correct answer.
Which document is a part of the perpetual inventory system?
a) Bin card
b) Purchase order
c) Material requisition note
d) Goods received note
Ans. A
38. An amount of Rs.200/- is received from P and is credited to Q. The rectification entry
would affect __________________________.
P's A/c and Q's A/c; Cash A/c and P's A/c; P's A/c; Q's A/c
Ans. P's A/c and Q's A/c
39. Choose all that apply
Select the correct statements. Ram's account…….Dr. Rs.10,000 To Bank account
Rs.10,000
a)____ Ram is a creditor
b)____ Ram is an employee
c)____ Rs.10,000/- has been paid to Ram
d)____ The payment is made by cheque
Ans. A,c,d
40. According to the standard costing principles, only adverse variance must be further
investigated.
a) true
b) false
Ans. B
41. Fixed expenses will move up by jumps if the output exceeds the capacity.
a) true
b) false
Ans. A
42. The Balance Sheet method of cash budget ignores any excess or shortage of cash
during the budget period.
a) true
b) false
Ans. A
43. If the firm is operating with zero margin of safety, decline of even a single unit in
sales will result in ___________________.
Net profit; Loss; Gross profit; Contribution
Ans. Loss
44. If the physical stock is less than the stock as per the stores ledger, such shortage
should be treated as an issue of material.
a) true
b) false
Ans. A
45. The closing stocks should ___________________ the cost of the goods which sent on
approval basis.
Be increased by; Exclude; Be decreased by; Not get affected by
Ans. Be increased by
46. Choose the correct answer.
Hourly wage rate is Rs.25/- and the time allowed for a job is 15 hours. Harry
completed the job in 12 hours. Calculate the effective hourly earnings for Harry under
Halsey Plan.
a) Rs.25/-
b) Rs.30/-
c) Rs.28.12
d) Rs.33.12
Ans. C
47. Choose all that apply
Features of Taylor's differential piece rate system are as follows :-
a)____ Strong incentive to inefficient and new workers.
b)____ Minimal clerical work is involved in calculating the wages
c)____ Helps in building up an efficient labour force
d)____ Strong incentive to efficient and ambitious workers.
Ans. B,c,d
P.T.O.
?48. Choose the correct answer.
The details regarding a food product manufactured by ABC Co. for the last one week
are as follows : Standard cost (for one unit) : direct material -10 units @ Rs.1.50;
direct wages - 5 hours @ Rs.8/-; production overheads -5 hours @ Rs.10/-. Actual
(for whole activity) : direct materials -Rs.6,435/-; direct wages -Rs.16,324/-. Analysis
of variances : direct materials price variance -Rs.585/- (Adverse); direct material
usage variance -Rs.375/- (Favourable); direct wages rate variance -Rs.636/-
(Favourable); direct wages efficiency variance -Rs.360/- (Adverse); production
overheads expenditure variance -Rs.400/- (Favourable) and production overheads
volume variance -Rs.750/- (Favourable). You are required to calculate the amount of
production overheads incurred.
a) Rs.16,900/-
b) Rs.19,600/-
c) Rs.20,750/-
d) Rs.17,250/-
Ans.
49. The process of accounting split into three steams i.e. financial, cost, management
accounting.
a) true
b) false
Ans. A
50. Choose all that apply
The productive causes of idle time are :-
a)____ Instructions are not clearly given
b)____ Power failures
c)____ Machine breakdown
d)____ Excess machine capacity
Ans.a b c
51. 1) Financial statements are basically in two forms i.e. profitability statement and
balance sheet.
a) true
b) false
Ans. A
1. Choose the correct answer.
Benefits available from revenue expenditure are received in the :-
a) Same year
b) Next year
c) Future year
d) Previous year
Ans. A
2. Bank reconciliation statement must be prepared before the preparation of profit and
loss account and balance sheet.
a) true
b) false
Ans. A
3. Choose the correct answer.
Uniform costing system is useful in the following areas :-
a) Classification of cost accounts
b) Preparing financial statements
c) Completing statutory audit
d) Getting loans
Ans. A
4. Re-order level for materials is determined considering maximum consumption and
maximum delivery period.
a) true
b) false
Ans. A
5. Profit volume ratio is also known as ______________________________.
Contribution to cost ratio; Cost to contribution ratio;
Sales to contribution ratio; Contribution to sales ratio
Ans. Contribution to sales ratio
6. Choose all that apply
Management Accounting is :-
a)____ Designed particularly for internal use
b)____ Helpful in estimating the future along with past period
c)____ Useful in furnishing the necessary information to the management
d)____ A legal requirement.
Ans. A,b,c
7. Choose the correct answer.
A textile mill has two production departments, spinning and weaving and two service
departments, S and R. Variable cots of operating the two service departments, their
output and quantum of service rendered to other department is as follows : Department
S : Service rendered to spinning department - 30%, weaving department - 20% and
department R - 50%; variable cost Rs.120,000/- and output -1,000 tons. Department R
: Service rendered to spinning department - 25%, weaving department - 35% and
department S - 40%; variable cost Rs.260,000/- and output - 2,000 tons. Calculate the
total cost of service received by spinning and weaving departments.
a) Spinning department -Rs.196,000/-; Weaving department -Rs.184,000/-
b) Spinning department -Rs.148,000/-; Weaving department -Rs.169,000/-
c) Spinning department -Rs.169,000/-; Weaving department -Rs.148,000/-
d) Spinning department -Rs.184,000/-; Weaving department -Rs.196,000/-
Ans. D
8. Choose the correct answer.
From the given information compute the total cost variance. Material cost variance –
Rs.4,400/- (Favourable); labour cost variance -Rs.450/- (Adverse); fixed overhead cost
variance -Rs.22,000/- (Adverse); variable overhead cost variance -Rs.6,000/-(adverse).
a) Rs.32,850/- (Adverse)
b) Rs.32,850/- (Favourable)
c) Rs.24,050/- (Adverse)
d) Rs.24,050/- (Favourable)
Ans. C
9. The final result disclosed by trading account is the ___________ profit earned by the
organization.
Gross; Net; Marginal; Incremental
Ans. Gross
10. Measurement of _______________ gives an idea of the degree of mobility of labour.
Labour cost; Labour turnover; Idle time; Standard time
Ans. Labour turnover
11. Choose all that apply
Select the accounts to be disclosed on the assets side of the Balance sheet :-
a)____ Furniture
b)____ Loan to Bank of U.S.A.
c)____ Loan from Bank of America
d)____ Land & building
Ans. A,b,d
12. 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
13. A ______________________ can be defined as a part of the organization for which
separate budget can be prepared and implemented.
Responsibility centre; Budget centre; Cost centre; Profit centre
Ans. Budget centre
14. Choose the correct answer.
Journal is popularly known as 'Book of :-
a) Original Entry
b) Secondary Entry
c) Rectification Entry
d) Adjustment Entry
Ans. A
15. In order to rectify the totaling mistake, wherein the sales return ledger was undercast
by Rs.2,000/-, the suspense account should be ___________ with Rs.2,000/-
Appended; Adjusted; Debited; Credited
Ans. Credited
16. Match the following
1. Bank Book (1) 1. Maintained by the trader/ businessman
2. Pass Book (4) 2. Issued by the Bank
3. Bank reconciliation (6) 3. Issued by the organization
statement
4. Advise stating dividend (2) 4. Maintained by the Bank
collected on your behalf
5. Maintained by the Government
6. Prepared by the organization
17. Match the following
1. Contribution - Fixed cost (6) 1. Contribution
2. Total cost + Profit (4) 2. Variable cost
3. Fixed cost + Variable cost (5) 3. Semi-variable cost
4. Total cost - Fixed cost (2) 4. Sales
5. Total cost
6. Profit
18. Choose the correct answer.
A manufacturer is producing alloy for which standard mix is 25% copper and 75%
iron. Standard price for copper is Rs.80/- per kg. and for iron Rs.20/- per kg. 20% of
input is standard loss. Actual output is 8,000 kg. of alloy using 2,000 kg of copper at
Rs.90/- per kg. and 9,000 kg of iron at Rs.15/- per kg. Calculate the standard cost of
copper.
a) Rs.200,000/-
b) Rs.150,000/-
c) Rs.350,000/-
d) Rs.180,000/-
Ans. c
19. Choose all that apply
Cost control procedure deals with :-
a)____ Establishment of plans
b)____ Computation of profit
c)____ Comparison of actual and planed performance
d)____ Computation of variance
Ans. A,c,d
20. In calculation of total sales margin variance, the ____________ cost of sales is
deducted from the actual sales revenue.
Standard; Planned; Scheduled; Actual
Ans. Standard
21. Choose the correct answer.
The gross profit for the year 2004 is Rs.184,326/-. The depreciation on furniture for
the year is Rs.24,561/-; dividend received amounted to Rs.12,000/- and the director's
remuneration worked out to be Rs.95,784/-. Find the net profit for the year 2004.
a) Rs.75,980/-
b) Rs.75,981/-
c) Rs.63,980/-
d) Rs.51,981/-
Ans. B
22. Choose the correct answer.
Standard time required for a job is 10 hours, i.e.10 X 60 = 600 'Bs'. The worker has
actually completed the job in 6 hours, i.e.6 X 60 = 360 'Bs'. Time wage rate is Rs.20/-
per hour. Bonus is shared between the worker and the foreman in the ratio of 3:1.
Calculate total earning of the worker as per Bedeaux Point System.
a) Rs.120/-
b) Rs.160/-
c) Rs.180/-
d) Rs.200/-
Ans. c
23. Profitability statement indicates the amount of assets & liabilities.
a) true
b) false
Ans. B
24. Choose all that apply
Actual costs determined on the basis of costing records maintained have following
limitations :-
a)____ No practical utility from control point of view
b)____ No practical utility for price fixation
c)____ Expensive
d)____ Very difficult to understand
Ans. A,b,c
25. Depreciation under Reducing Balance Method is calculated as (Number of units *
Rate of depreciation per unit).
a) true
b) false
Ans. B
26. Choose all that apply
Features of convention of conservation are :-
a)____ Anticipates all future losses and expenses
b)____ Ignores all future incomes and profits, unless they are actually realized
c)____ Applicable to valuation of current assets
d)____ Applicable to valuation of non-current asset
Ans. A,b,c
27. Under Differential Time Rate method payment is made at Rs. 1.40 per hour when the
level of efficiency is between __________________.
90% to 100%; 80% to 100%; 70% to 90%; 50% to 75%
Ans. 90% to 100%
28. Choose all that apply
Which of the following aspects are mainly responsible for difficulty in application of
Uniform costing system?
a)____ Capital investment
b)____ Plant size
c)____ Location
d)____ Loans taken
Ans. A,b,c
29. Choose all that apply
Merits of break even point analysis are as follows:-
a)____ Useful diagnostic tool.
b)____ Used for analyzing the risk implication of alternative actions.
c)____ Used to graphically represent complicated data.
d)____ Useful in the long run.
Ans. A,b,c
30. The ___________ ledger carries the individual accounts, whereas the general ledger
records the consolidated effect of the individual transactions.
Control; Journal; Main; Original
Ans. Control
31. Overhead absorption rate will be different at different capacity levels.
a) true
b) false
Ans. A
?32. Choose the correct answer.
At 60% capacity utilization the overhead recovery rate is Rs.35/- per unit. At 70%
capacity the rate gets reduced to Rs.32/- per unit. What should be the recovery rate if
the production attains 90% capacity utilization?
a) Rs.35/- per unit
b) Rs.32/- per unit
c) Rs.30/- per unit
d) Rs.28/- per unit
Ans.
33. Accounting is an art of recording, classifying & summarizing in a significant manner.
a) true
b) false
Ans. A
34. In case the standards are too difficult to achieve, they will provide additional
incentive for improvement.
a) true
b) false
Ans. B
35. Balance sheet indicates the expenditure & income from the business.
a) true
b) false
Ans. B
36. Interim dividend paid by the company should be debited to the profit and loss
appropriation account.
a) true
b) false
Ans. A
37. Choose the correct answer.
Which document is a part of the perpetual inventory system?
a) Bin card
b) Purchase order
c) Material requisition note
d) Goods received note
Ans. A
38. An amount of Rs.200/- is received from P and is credited to Q. The rectification entry
would affect __________________________.
P's A/c and Q's A/c; Cash A/c and P's A/c; P's A/c; Q's A/c
Ans. P's A/c and Q's A/c
39. Choose all that apply
Select the correct statements. Ram's account…….Dr. Rs.10,000 To Bank account
Rs.10,000
a)____ Ram is a creditor
b)____ Ram is an employee
c)____ Rs.10,000/- has been paid to Ram
d)____ The payment is made by cheque
Ans. A,c,d
40. According to the standard costing principles, only adverse variance must be further
investigated.
a) true
b) false
Ans. B
41. Fixed expenses will move up by jumps if the output exceeds the capacity.
a) true
b) false
Ans. A
42. The Balance Sheet method of cash budget ignores any excess or shortage of cash
during the budget period.
a) true
b) false
Ans. A
43. If the firm is operating with zero margin of safety, decline of even a single unit in
sales will result in ___________________.
Net profit; Loss; Gross profit; Contribution
Ans. Loss
44. If the physical stock is less than the stock as per the stores ledger, such shortage
should be treated as an issue of material.
a) true
b) false
Ans. A
45. The closing stocks should ___________________ the cost of the goods which sent on
approval basis.
Be increased by; Exclude; Be decreased by; Not get affected by
Ans. Be increased by
46. Choose the correct answer.
Hourly wage rate is Rs.25/- and the time allowed for a job is 15 hours. Harry
completed the job in 12 hours. Calculate the effective hourly earnings for Harry under
Halsey Plan.
a) Rs.25/-
b) Rs.30/-
c) Rs.28.12
d) Rs.33.12
Ans. C
47. Choose all that apply
Features of Taylor's differential piece rate system are as follows :-
a)____ Strong incentive to inefficient and new workers.
b)____ Minimal clerical work is involved in calculating the wages
c)____ Helps in building up an efficient labour force
d)____ Strong incentive to efficient and ambitious workers.
Ans. B,c,d
P.T.O.
?48. Choose the correct answer.
The details regarding a food product manufactured by ABC Co. for the last one week
are as follows : Standard cost (for one unit) : direct material -10 units @ Rs.1.50;
direct wages - 5 hours @ Rs.8/-; production overheads -5 hours @ Rs.10/-. Actual
(for whole activity) : direct materials -Rs.6,435/-; direct wages -Rs.16,324/-. Analysis
of variances : direct materials price variance -Rs.585/- (Adverse); direct material
usage variance -Rs.375/- (Favourable); direct wages rate variance -Rs.636/-
(Favourable); direct wages efficiency variance -Rs.360/- (Adverse); production
overheads expenditure variance -Rs.400/- (Favourable) and production overheads
volume variance -Rs.750/- (Favourable). You are required to calculate the amount of
production overheads incurred.
a) Rs.16,900/-
b) Rs.19,600/-
c) Rs.20,750/-
d) Rs.17,250/-
Ans.
49. The process of accounting split into three steams i.e. financial, cost, management
accounting.
a) true
b) false
Ans. A
50. Choose all that apply
The productive causes of idle time are :-
a)____ Instructions are not clearly given
b)____ Power failures
c)____ Machine breakdown
d)____ Excess machine capacity
Ans.a b c
51. 1) Financial statements are basically in two forms i.e. profitability statement and
balance sheet.
a) true
b) false
Ans. A
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