Cost and Managerial Accounting Online MCQ Set 14

QN01. If time allowed for a job is 10 hours, time taken for the job is 8 hours and rate of pay is 2 per hour, the bonus to the worker is:

  1. 1.20
  2. 2.00
  3. 3.20
  4. None of the above
Answer

(C)3.20

QN02. Wages analysis include:

  1. Gross wages per product
  2. Gross wages per operation or department
  3. Gross wages per labour classification
  4. Analysis of constituent of gross wages - direct/ lost time
Answer

(A)Gross wages per product

QN03. Which of the following systems of inventory valuation computes cost of goods sold as a residual amount?

  1. Weighted Average.
  2. Last-in-First-out.
  3. Periodic Inventory System.
  4. Specific Identification.
Answer

(C)Periodic Inventory System.

QN04. Example of semi-variable items include the following except:

  1. Telephone
  2. Repairs and maintenance
  3. Depreciation of plant and machinery
  4. Insurance of plant and building
Answer

(D)Insurance of plant and building

QN05. (1) Departmentalization of items of costs is known as primary distribution.
(2) Redistribution of service departments, costs is known as secondary distribution. True or false?

  1. (1) and (2) true
  2. (1) and (2) false
  3. (1) False; (2) True
  4. (1) True; (2) False
Answer

(A)(1) and (2) true

QN06. Which of the following is not a means whereby factory overheads can be charged out to production?

  1. Direct labour rate
  2. Overtime rate
  3. Machine hour rate
  4. Blanket rate
Answer

(B)Overtime rate

QN07. Maximum capacity of a plant refers to its:

  1. Theoretical capacity
  2. Normal capacity
  3. Practical capacity
  4. Capacity based on sales expectancy
Answer

(A)Theoretical capacity

QN08. Alpha company purchased a machine worth Rs 200,000 in the last year. Now that machine can be use in a new project which company has received this year. Now the cost of that machine is to be called:

  1. Project cost
  2. Sunk cost
  3. Opportunity cost
  4. Relevant cost
Answer

(D)Relevant cost

QN09. The Hino Corporation has a breakeven point when sales are 160,000 and variable costs at that level of sales are 100,000. How much would contribution margin increase or decrease, if variable expenses dropped by 20,000?

  1. 37.5%.
  2. 60%.
  3. 12.5%.
  4. 26%
Answer

(C)12.5%.

QN10. The FIFO inventory costing method (when using a perpetual inventory system) assumes that the cost of the earliest units purchased is allocated in which of the following ways?

  1. First to be allocated to the ending inventory
  2. Last to be allocated to the cost of goods sold
  3. Last to be allocated to the ending inventory
  4. First to be allocated to the cost of goods sold
Answer

(D)First to be allocated to the cost of goods sold

QN11. It is possible for an item of overhead expenditure to be shared amongst many departments. It is also possible that this same item may relate to just one specific department. If the item was not charged specifically to a single department this would be an example of:

  1. Apportionment
  2. Allocation
  3. Re-apportionment
  4. Absorption
Answer

(A)Apportionment

QN12. Beginning goods in process were 15,000. The cost of goods manufactured is 245,000. What is the cost assigned to the ending goods in process?

  1. 45,000
  2. 15,000
  3. 30,000
  4. There will be no ending Inventory
Answer

(D)There will be no ending Inventory

QN13. The Inventory Turnover ratio is 5 times and numbers of days in a year is 365.Inventory holding period in days would be

  1. 100 days
  2. 73 days
  3. 50 days
  4. 10 days
Answer

(B)73 days

QN14. In furniture manufacturing use of nail, pins, glue, and polish which use to increase its esteem value that cost is treated as:

  1. Direct material cost
  2. Indirect material cost
  3. FOH cost
  4. Prime cost
Answer

(B)Indirect material cost

QN15. If a predetermined FOH rate is not applied and the volume of production is reduced from the planned capacity level, the cost per unit expected to:

  1. Remain unchanged for fixed cost and increase for variable cost
  2. Increase for fixed cost and remain unchanged for variable cost
  3. Increase for fixed cost and decrease for variable cost
  4. Decrease for both fixed and variable costs
Answer

(B)Increase for fixed cost and remain unchanged for variable cost

QN16. Which of the following cost is used in the calculation of cost per unit?

  1. Total production cost
  2. Cost of goods available for sales
  3. Cost of goods manufactured
  4. Cost of goods Sold
Answer

(C)Cost of goods manufactured

QN17. Which of the following would be considered a major aim of a job order costing system?

  1. To determine the costs of producing each job or lot
  2. To compute the cost per unit
  3. To include separate records for each job to track the costs
  4. All of the given option.
Answer

(D)All of the given option.

QN18. A chemical process has normal wastage of 10% of input. In a period, 2,500 Kg of material were input and there was abnormal loss of 75 Kg. What quantity of good production was achieved?

  1. 2,175 kg
  2. 2,250 kg
  3. 2,425 kg
  4. 2,500 kg
Answer

(A)2,175 kg

QN19. Which of the following ratios expressed that how many times the inventory is turning over towards the cost of goods sold?

  1. Net profit ratio
  2. Gross profit ratio
  3. Inventory turnover ratio
  4. Inventory holding period
Answer

(C)Inventory turnover ratio

QN20. What is the company's margin of safety in?

  1. 1,600,000
  2. 2,400,000
  3. 25,60,000
  4. None of the given options
Answer

(C)25,60,000

QN21. The break-even point is the point where:

  1. Total sales revenue equals total expenses (variable and fixed)
  2. Total contribution margin equals total fixed expenses
  3. Total sales revenue equals to variable expenses only
  4. Both a & b
Answer

(D)Both a & b

QN22. The difference between total revenues and total variable costs is known as:

  1. Contribution margin
  2. Gross margin
  3. Operating income
  4. Fixed costs
Answer

(A)Contribution margin

QN23. If 120 units produced, 100 units were sold @ 200 per unit. Variable cost related to production & selling is 150 per unit and fixed cost is 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?

  1. Remains constant
  2. Profits will increased
  3. Company will have to face losses
  4. None of the given options
Answer

(C)Company will have to face losses

QN24. The main purpose of cost accounting is to:

  1. Maximize profits.
  2. Help in inventory valuation
  3. Provide information to management for decision making
  4. Aid in the fixation of selling price
Answer

(C)Provide information to management for decision making

QN25. Find the value of purchases if Raw material consumed 90,000; Opening and closing stock of raw material is 50,000 and 30,000 respectively.

  1. 10,000
  2. 20,000
  3. 70,000
  4. 1,60,000
Answer

(C)70,000

QN26. Remuneration based on piece work is not suitable when:

  1. The amount of output cannot be accurately measured.
  2. The nature of work is repetitive.
  3. The quantity of work is more important than quality.
  1. (1) only
  2. (3) only
  3. (1) and (3)
  4. (2) and (3)
Answer

(A)(1) only

QN27. The methods of job evaluation include:

  1. Grading
  2. Ranking
  3. Points value
  4. All of the above
Answer

(D)All of the above

QN28. Favorable conditions for the operation of piece rates include:

  1. Homogeneous products
  2. Long, uninterrupted run of production
  3. Inspection
  4. High proportion of indirect labour
Answer

(B)Long, uninterrupted run of production

QN29. In a profit sharing scheme the available surplus is shared by the following except:

  1. Government
  2. Shareholders
  3. Employees
  4. Firm
Answer

(A)Government

QN30. Which of the following is a direct labour cost?

  1. Supervisors'salaries in the factory.
  2. Costs of the payroll accounting section.
  3. A bonus paid to the store man.
  4. The wages of an operative paid on the basis of output achieved.
Answer

(D)The wages of an operative paid on the basis of output achieved.

QN31. If there has been an over recovery of overheads, at the end of the accounting period the amount concerned should be?

  1. Debited to the company profit and loss account.
  2. Credited to the company profit and loss account.
  3. Carried forward to the next accounting period as a cost saving.
  4. Used to reduce next period's overhead recovery rate.
Answer

(B)Credited to the company profit and loss account.

QN32. the term = contribution' refers to?

  1. The actual amount of profit made per unit.
  2. The budgeted profit per unit.
  3. The amount of profit which goes towards meeting the overheads of the business.
  4. The difference between sales revenue and variable costs per unit.
Answer

(D)The difference between sales revenue and variable costs per unit.

QN33. When a business is faced with a limiting factor (one which limits the activity of an entity) and there is a choice to be made between options to follow, which of the following statements describes the optimal course of action?

  1. Choose the option which gives the highest unit profit.
  2. Choose the option which gives the highest unit contribution.
  3. Aim to achieve a balance of activities covering all of the options.
  4. Choose the option which gives highest contribution per unit of limiting factor.
Answer

(D)Choose the option which gives highest contribution per unit of limiting factor.

QN34. Cost accountancy is the science, art and ______________ of cost accountant.

  1. Profession
  2. Management
  3. Administration
  4. Practice
  5. All of these
Answer

(D)Practice

QN35. The main types of costing for ascertaining costs do not include

  1. Uniform costing
  2. Standard costing
  3. Marginal costing
  4. Historical costing
Answer

(D)Historical costing

QN36. When job is very big and spread over long periods of time the method of costing adopted is

  1. Process
  2. Job
  3. Contract
  4. Operation
  5. Batch
Answer

(C)Contract

QN37. An opportunity cost is a

  1. Direct expense
  2. Indirect expense
  3. Variable expense
  4. Fixed expense
  5. Semi-variable expense
Answer

(A)Direct expense

QN38. Stock verification sheets are maintained to record the result of ______________ verification.

  1. Conceptual
  2. Physical
  3. Economic
  4. Detailed
  5. All of these
Answer

(B)Physical

QN39. Sun Ltd. Makes a single product which it sells for 10 per unit. Fixed costs are 48,000 per month and the product has a contribution to sales ratio of 40%. In a period when actual sales were 1, 40,000. Sun Ltd.'s margin of safety in units was:

  1. 2,000
  2. 6,000
  3. 8,000
  4. 12,000
Answer

(A)2,000

QN40. If Happy Ltd. Is subject to an effective income tax rate of 40%, the number of units Happy Ltd. Would have to sell to earn an after-tax profit of 90,000 is:

  1. 1,00,000 units
  2. 1,20,000 units
  3. 1,12,000 units
  4. 1,45,000 units
Answer

(B)1,20,000 units

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