1. The business environmental factors are ___
A. Static
B. Dynam
C. C. Both of the above
D. None of the above
Answer
B. Dynam
2. The control ratios used by the management to know whether the deviations of the actual performance from the budgeted performance are favourable or unfavourable are ___
A. Capacity ratio and calendar ratio.
B. Efficiency ratio and calendar ratio.
C. Both A a
D. B D. None of these
Answer
A. Capacity ratio and calendar ratio.
3. The problems associated with marginal costing are
A. Difficulties in divisions of costs
B. Problem of valuation of stocks
C. Ignores time elements
D. All of the above
Answer
D. All of the above
4. ___ is not suitable where selling price is determined on the basis of cost-plus method.
A. Absorption costing
B. Marginal costing
C. Both A a
D. B D. None of the above
Answer
B. Marginal costing
5. Managers utilizes marginal costing for
A. Make or buy decision
B. Utilisation of additional capacity
C. Determination of dumping price
D. All of the above
Answer
D. All of the above
6. Which of the following are advantages of marginal costing?
A. Makes the process of cost accounting more simple
B. Helps in proper valuation of closing stock
C. Useful for standa
D. and budgetary control D. All of the above
Answer
D. and budgetary control D. All of the above
7. Given production is 1,00,000 units, fixed costs is Rs 2,00,000 Selling price is Rs 10 per unitand variable cost is Rs 6 per unit. Determine profit using technique of marginal costing.
A. Rs 2, 00,000
B. Rs 8, 00,000
C. Rs 6, 00,000
D. None of the above
Answer
A. Rs 2, 00,000
8. Contribution margin is also known as
A. Gross profit
B. Net profit
C. Earning before tax
D. Marginal income
Answer
D. Marginal income
9. Contribution is the difference between
A. Sales and variable cost
B. Sales and fixed cost
C. Sales a
D. total cost D Factory cost and profit
Answer
A. Sales and variable cost
10. When fixed cost is Rs. 20,000 and Profit volume ratio is 25 per cent, then breakeven pointwill occur at
A. Rs. 5000
B. 5000 units
C. Rs. 80,000
D. 80,000 units
Answer
C. Rs. 80,000
11. Period cost means
A. Variable cost
B. Fixed costs
C. Prime cost
D. Factory cost
Answer
B. Fixed costs
12. If profit-volume ratio is 25 per cent and sales is Rs. 100,000, the variable cost will be
A. Rs. 25,000
B. Rs. 50,000
C. Rs. 75,000
D. None of the above
Answer
C. Rs. 75,000
13. The valuation of stock in marginal costing as compared to absorption costing is
A. Higher
B. Lower
C. Same
D. None of the above
Answer
D. None of the above
14. The term standard cost refers to the:
A. Average unit cost of product produced in the previous period
B. Budgeted unit cost of product produced in a particular period
C. Average unit cost of product produc
D. by other companies
Answer
B. Budgeted unit cost of product produced in a particular period
15. The term budgeted cost refers to the:
A. Estimated expenses of budgeted production
B. Actual expenses of budgeted production
C. Estimat
D. expenses of actual production
Answer
A. Estimated expenses of budgeted production
16. ___ is concerned with providing information to management for taking managerialdecisions.
A. Management Accounting
B. Financial accounting
C. Cost accounting
D. All of these
Answer
A. Management Accounting
17. Which among the following is not a management accounting technique?
A. Standard costing
B. marginal costing
C. Project appraisal
D. None
Answer
D. None
18. The essence of marginal costing is that ___ cost is considered on the whole asseparate.
A. Fixed
B. variable
C. both of these
D. none of these
Answer
A. Fixed
19. A document that records the standard cost of a single unit of product is known as:
A. Bill of materials
B. Bill of product
C. Standa
D. cost card D. product expense card
Answer
C. Standa
20. Following is used as tool for Cost Control
A. Marginal cost
B. Historical cost
C. Standa
D. cost (D) All of the above
Answer
D. cost (D) All of the above
21. Which phrase best describes the current role of the managerial accountant?
A. Managerial accountants prepare the financial statements for an organization.
B. Managerial accountants facilitate the decision-making process within an organization.
C. Managerial accountants make the key decisions within an organization.
D. Managerial accountants are primarily information collectors.
Answer
B. Managerial accountants facilitate the decision-making process within an organization.
22. In comparison to the traditional manufacturing environment, overhead costs in a JITenvironment all the following are true except
A. is more easily tracked to products.
B. is frequently direct in nature.
C. includes rent, insurance a
D. utilities.
Answer
D. utilities.
23. As production increases within the relevant range,
A. variable costs will vary on a per unit basis.
B. variable costs will vary in total.
C. fix
D. costs will vary in total.
Answer
B. variable costs will vary in total.
24. Which of the following statements regarding graphs of fixed and variable costs is true?
A. Variable costs can be represented by a straight line where costs are the same for each data point.
B. Fixed costs can be represented by a straight line starting at the origin and continuing through each data point.
C. Fix
D. costs are zero when production is equal to zero.
Answer
D. costs are zero when production is equal to zero.
25. All of the following statements regarding budgeting is true except
A. Budgeting helps managers determine the resources needed to meet their goals and objectives.
B. Budgeting is a key ingredient in good decision-making.
C. Budgeting is a bookkeeping task
D. The focus of budgeting is planning.
Answer
C. Budgeting is a bookkeeping task
26. A ‘direct’ cost is a cost that is classified by:
A. behaviour
B. traceability
C. controllability
D. Relevance
Answer
B. traceability
27. Which of the following costs is not capitalized as inventory?
A. costs of delivering finished goods
B. factory (manufacturing) overhead
C. insurance of factory building a
D. equipment
Answer
B. factory (manufacturing) overhead
28. A management concept under which all managers and employees at all stages of companyoperations strive toward higher standards and a reduced number of defective units are called:
A. Continuous Improvement
B. Total Quality Management (TQM)
C. Theory of Constraints (TOC)
D. Total Quality Control (TQC)
Answer
B. Total Quality Management (TQM)
29. The following information belongs to John Manufacturing Company that uses a standardcosting system: • Basic wage rate:Rs.12 per hour • Fringe benefits: Rs. 2 per hour • Basic time: 2 hours per unit • Allowance for down time: 0.3 hours per unit • Allowance for brakes: 0.2 hours per unit Based on the above information, what is the standard direct labor cost per unit?
A. RS.35
B. RS.28
C. RS.30
D. RS.32.2
Answer
A. RS.35
30. Which of the following is a correct formula for computing direct materials price variance?
A. Standard quantity purchased × (Actual rate – Standard rate)
B. Actual quantity purchased × (Actual rate – Standard rate)
C. Standa
D. quantity purchased × (Actual rate + Standard rate)
Answer
B. Actual quantity purchased × (Actual rate – Standard rate)
31. A favorable direct materials price variance occurs when:
A. Actual rate of direct materials is higher than standard rate of direct materials
B. Actual rate of direct materials is equal to standard rate of direct materials
C. Actual rate of direct materials is less than standa
D. rate of direct materials
Answer
C. Actual rate of direct materials is less than standa
32. The “standard hours allowed” or “standard quantity allowed” is equal to:
A. Actual output in units × standard input allowed
B. Actual output in units × standard output allowed
C. Actual output in units × standa
D. output allowed
Answer
B. Actual output in units × standard output allowed
33. During the month of January, the standard cost of actual hours worked amounted toRs.25, 000, the standard direct labor rate was Rs.10 per hour and the direct labor efficiency variance amounted to Rs.1, 000 favorable. The standard hours allowed for actual production were:
A. 2,500 hours
B. 2,400 hours
C. 10,000 hours
D. 2,600 hours
Answer
D. 2,600 hours
34. Which one of the following does measure risk?
A. Coefficient of variation
B. Standard deviation
C. Expect
D. value D. All of the above are measures of risk.
Answer
C. Expect
35. A situation in which a decision maker knows all of the possible outcomes of a decision and also knows the probability associated with each outcome is referred to as
A. Certainty.
B. Risk.
C. Uncertainty.
D. Strategy.
Answer
B. Risk.
36. A situation in which a decision maker must choose between strategies that have more thanone possible outcome when the probability of each outcome is unknown is referred to as
A. Diversification.
B. Certainty.
C. Risk.
D. Uncertainty.
Answer
D. Uncertainty.
37. Circumstances that influence the profitability of a decision are referred to as
A. Strategies.
B. A payoff matrix.
C. States of nature.
D. The marginal utility of money.
Answer
C. States of nature.
38. The analysis of a complex decision situation by constructing a mathematical model of thesituation and then performing a large number of iterations in order to determine the probability distribution of outcomes is called
A. Sensitivity analysis.
B. Expected utility analysis.
C. Simulation
D. A decision tree.
Answer
C. Simulation
39. The tendency for low-quality cars to drive high quality cars out of the used car market is anexample of
A. Hedging.
B. Adverse selection.
C. Portfolio analysis.
D. Moral hazard.
Answer
B. Adverse selection.
40. Which of the following is a way to deal with decision making under uncertainty?
A. Simulation
B. Diversification
C. Acquisition of additional information
D. Application of the maximin criterion
Answer
A. Simulation
