QN1. Which of the following statement measures the financial position of the entity on particular time?
a) Income Statement
b) Balance Sheet
c) Cash Flow Statement
d) Statement of Retained Earning
Answer
Answer: b) Balance Sheet
QN2. The Process of cost apportionment is carried out so that
a) Cost may be controlled
b) Cost unit gather overheads as they pass through cost centers
c) Whole items of cost can be charged to cost centers
d) Common costs are shared among cost centers
Answer
Answer: d) Common costs are shared among cost centers
QN3. Direct materials cost is Rs. 80,000. Direct labor cost is Rs. 60,000. Factory overhead is Rs. 90,000. Beginning goods in process were Rs. 15,000. The cost of goods manufactured is Rs. 245,000. What is the cost assigned to the ending goods in process?
a) Rs. 45,000
b) Rs. 15,000 Rs.
c) 30,000
d) There will be no ending Inventory Solution:
Answer
Answer: d) There will be no ending Inventory Solution:
QN4. When prices are rising over time, which of the following inventory costing methods will result in the lowest gross margin/profits?
a) FIFO
b) LIFO
c) Weighted Average
d) Cannot be determined
Answer
Answer: b) LIFO
QN5. The main difference between the profit center and investment center is
a) Decision making
b) Revenue generation
c) Cost in occurrence
d) Investment
Answer
Answer: a) Decision making
QN6. Which of the following is a characteristic of process cost accounting system?
a) Material, Labor and Overheads are accumulated by orders
b) Companies use this system if they process custom orders
c) Opening and Closing stock of work in process are related in terms of completed units
d) Only Closing stock of work in process is restated in terms of completed units
Answer
Answer: c) Opening and Closing stock of work in process are related in terms of completed units
QN7. Which of the following manufacturers is most likely to use a job order cost accounting system?
a) A soft drink producer
b) A flour mill
c) A textile mill
d) A builder of offshore oil rigs
Answer
Answer: d) A builder of offshore oil rigs
QN8. Production volume of 1,200 units cost incurred Rs. 10,000 and production volume of 1,400 units cost incurred Rs.20, 000. The variable cost per unit would be?
a) Rs. 50.00 per unit
b) Rs. 8.33 per unit
c) Rs. 14.20 per unit
d) Rs. 100 per unit
Answer
Answer: a) Rs. 50.00 per unit
QN9. Cost accounting concepts include all of the following EXCEPT
a) Planning
b) Controlling
c) Sharing
d) Delegating.
Answer
Answer: c) Sharing
QN10. The main purpose of cost accounting is to
a) Maximize profits
b) Help in inventory valuation
c) Provide information to management for decision making
d) Aid in the fixation of selling price
Answer
Answer: c) Provide information to management for decision making
QN11. Period costs are
a) Expensed when the product is sold
b) Included in the cost of goods sold
c) Related to specific Period
d) Not expensed
Answer
Answer: c) Related to specific Period
QN12. An organization sold units 4000 and have closing finished goods 3500 units and opening finished goods units were 1000.The quantity of unit produced would be
a) 7500 units
b) 6500 units
c) 4500 units
d) 5500 units
Answer
Answer: b) 6500 units
QN13. Examples of industries that would use process costing include all of the following EXCEPT
a) Beverages
b) Food
c) Hospitality
d) Petroleum
Answer
Answer: c) Hospitality
QN14. The components of the prime cost are
a) Direct Material + Direct Labor + Other Direct Cost
b) Direct Labor + Other Direct Cost + FOH
c) Direct Labor + FOH
d) None of the given options
Answer
Answer: a) Direct Material + Direct Labor + Other Direct Cost
QN15. Opportunity cost is the best example of
a) Sunk Cost
b) Standard Cost
c) Relevant Cost
d) Irrelevant Cost
Answer
Answer: a) Sunk Cost
QN16. Fixed cost per unit decreases when
a) Production volume increases.
b) Production volume decreases.
c) Variable cost per unit decreases.
d) Variable cost per unit increases.
Answer
Answer: a) Production volume increases.
QN17. Prime cost + Factory overhead cost is
a) Conversion cost.
b) Production cost.
c) Total cost.
d) None of given option.
Answer
b) Production cost.
QN18. Find the value of purchases if Raw material consumed Rs. 90,000; Opening and closing stock of raw material is Rs. 50,000 and 30,000 respectively.
a) Rs. 10,000
b) Rs. 20,000
c) Rs. 70,000
d) Rs. 1,60,000
Answer
Answer: c) Rs. 70,000
QN19. Annual requirement is 7800 units; consumption per week is 150 units. Unit price Rs 5, order cost Rs 10 per order. Carrying cost Rs 1 per unit and lead time is 3 week, The Economic order quantity would be
a) 365 units.
b) 300 units
c) 250 units
d) 150 units
Answer
Answer: b) 300 units
QN20. For which one of the following industry would you recommend a Job Order Costing system?
a) Oil Refining
b) Grain dealing
c) Beverage production
d) Law Cases
Answer
Answer: d) Law Cases
QN21. ________ method assumes that the goods received most recently in the stores or produced recently are the first ones to be delivered to the requisitioning department.
a) FIFO
b) Weighted average method
c) Most recent price method
d) LIFO
Answer
Answer: d) LIFO
QN22. Cost of production report is a___
a) Financial statement
b) Production Process report
c) Order Sheet
d) None of above
Answer
Answer: b) Production Process report
QN23. Opening work in process inventory can be calculated as under
a) FIFO and Average costing
b) LIFO and Average costing
c) FIFO and LIFO costing
d) None of given option
Answer
Answer: a) FIFO and Average costing
QN24. Jan 1; finished goods inventory of Manuel Company was Rs.3, 00,000. During the year Manuel’s cost of goods sold was Rs. 19, 00,000, sales were Rs. 2, 000,000 with a 20% gross profit. Calculate cost assigned to the December 31; finished goods inventory.
a) Rs. 4,00,000
b) Rs. 6,00,000
c) Rs. 16,00,000
d) None of given options
Answer
Answer: d) None of given options
QN25. The cost expended in the past that cannot be retrieved on product or service
a) Relevant Cost
b) Sunk Cost
c) Product Cost
d) Irrelevant Cost
Answer
Answer: b) Sunk Cost
QN26. When a manufacturing process requires mostly human labor and there are widely varying wage rates among workers, what is probably the most appropriate basis of applying factory costs to work in process?
a) Machine hours
b) Cost of materials used
c) Direct labor hours
d) Direct labor dollars
Answer
Answer: c) Direct labor hours
QN27. A typical factory overhead cost is
a) Audit
b) Compensation of plant manager
c) Design distribution
d) Internal
Answer
Answer: b) Compensation of plant manager
QN28. Complete the following table
| Per unit | Total | |
| Fixed cost | Increased | Constant |
| Variable Cost | ||
| Total Cost | Increase | Decrease |
a) Constant, Decrease
b) b. Decrease, Decrease
c) c. Increase, Increase
d) Increase, Decrease.
Answer
Answer: a) Constant, Decrease
QN29. The Kennedy Corporation uses Raw Material Z in a manufacturing process. Information as to balances on hand, purchases and requisitions of Raw Material Z is given below
Jan. 1 Balance:
200 lbs. @ $1.50
8 Received 500 lbs. @ $1.55
18 Issued 100 lbs.
25 Issued 260 lbs.
30 Received 150 lbs. @ $1.60
If a perpetual inventory record of Raw Material Z is maintained on a FIFO basis, it will show a month end inventory of
a) $240
b) $784
c) $759
d) $767
Answer
Answer: d) $767
QN30. The difference between total revenues and total variable costs is known as
a) Contribution margin
b) Gross margin
c) Operating income
d) Fixed costs
Answer
Answer: a) Contribution margin
QN31. Percentage of Margin of Safety can be calculated in which one of the following ways?
a) Based on budgeted Sales
b) Using budget profit
c) Using profit & Contribution ratio
d) All of the given options
Answer
Answer: d) All of the given options
QN32. Which of the following represents a CVP equation?
a) Sales = Contribution margin (Rs.) + Fixed expenses + Profits
b) Sales = Contribution margin ratio + Fixed expenses + Profits
c) Sales = Variable expenses + Fixed expenses + profits
d) Sales = Variable expenses – Fixed expenses + profits
Answer
Answer: c) Sales = Variable expenses + Fixed expenses + profits
d) Sales = Variable expenses – Fixed expenses + profits
QN33. For which one of the following industry would you recommend a Process Costing system?
a) Grain dealer
b) Television repair shop
c) Law office
d) Auditor
Answer
Answer: a) Grain dealer
QN34. If 120 units produced, 100 units were sold @ Rs. 200 per unit. Variable cost related to production & selling is Rs. 150 per unit and fixed cost is Rs. 5,000. If the management wants to decrease sales price by 10%, what will be the effect of decreasing unit sales price on profitability of company? (Cost & volume profit analysis keep in your mind while solving it)
a) Remains constant
b) Profits will increased
c) Company will have to face losses
d) None of the given options
Answer
Answer: c) Company will have to face losses
QN35. If 120 units produced, 100 units were sold @ Rs. 200 per unit. Variable cost related to production & selling is Rs. 150 per unit and fixed cost is Rs. 5,000. If the management wants to increase sales price by 10%, what will be increasing sales profit of company by increasing unit sales price? (Cost & volume profit analysis keep in mind while solving)
a) Rs.2,000
b) Rs. 5,000
c) Rs. 7,000
d) None of the given options
Answer
Answer: a) Rs.2,000
QN36. What is the company’s contribution margin ratio?
a) 30%
b) 70%
c) 150%
d) None of given options
Answer
Answer: a) 30%
QN37. What is the company’s break-even in units?
a) 48,000 units
b) 72,000 units
c) 80,000 units
d) None of the given options
Answer
Answer: a) 48,000 units
QN38. How many units would the company have to sell to attain target profits of Rs. 600,000?
a) 88,000 units
b) 100,000 units
c) 106,668 units
d) None of given options
Answer
Answer: a) 88,000 units
QN39. What is the company’s margin of safety in Rs?
a) Rs. 480,000
b) Rs. 1,600,000
c) Rs. 2,400,000
d) None of given options
Answer
Answer: b) Rs. 1,600,000
QN40. Inventory control aims at
a) Achieving optimization
b) Ensuring against market fluctuations
c) Acceptable customer service at low capital investment
d) Discounts allowed in bulk purchase
Answer
Answer: c) Acceptable customer service at low capital investment
