Cost and Managerial Accounting Online MCQ Set 15

QN01. When a firm doubles its inputs and finds that its output has more than doubled, this is known as:

  1. Economies of scale.
  2. Constant returns to scale.
  3. Diseconomies of scale.
  4. A violation of the law of diminishing returns.
Answer

(A)Economies of scale.

QN02. The standard time required per unit of a product is 20 minutes. In a day of 8 working hours a worker gave an output of 30 units. If he gets a time rate of 20/hr., his total earnings under Halsey bonus scheme was:

  1. 200
  2. 192
  3. 180
  4. 16
Answer

(C)180

QN03. Secondary packing expenses are:

  1. Part of prime cost
  2. Part of production overheads
  3. Part of distribution overheads
  4. Written-off to costing profit and loss account
Answer

(C)Part of distribution overheads

QN04. Which of the following is not an assumption underlying the accountant's break-even chart?

  1. Fixed costs remain fixed throughout the range charted
  2. Selling prices do not change
  3. Variable costs fluctuate inversely with volume
  4. Unit variable costs remain constant throughout the range charted
Answer

(C)Variable costs fluctuate inversely with volume

QN05. Depreciation on plant and machinery is:

  1. Not a cash cost, so is ignored in the cost accounts
  2. Part of manufacturing overheads
  3. Part of prime cost
  4. Always calculated using the straight-line method
Answer

(B)Part of manufacturing overheads

QN06. Functionally, administration expenses may comprise expenses of the following activities:

  1. Secretarial and board of directors
  2. Accounting, financing, tax and legal
  3. Audit and personnel
  4. All of these
Answer

(D)All of these

QN07. A manufacturing firm is very busy and is working overtime. The amount of overtime premium contained in direct wages would normally be classed as:

  1. Part of prime cost
  2. Factory overheads
  3. Direct labour cost
  4. Administrative overheads
Answer

(B)Factory overheads

QN08. Labour turnover can be measured by the following methods except:

  1. Attrition method
  2. Separation method
  3. Replacement method
  4. Flux method
Answer

(A)Attrition method

QN09. (1) Payment of higher wages does not necessarily mean that labour cost per unit is high.
(2) Control over payment of wages aims at reducing or eliminating irregularities during actual disbursements. 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

QN10. In a perpetual inventory system, an inventory flow assumption (i.e. LIFO or FIFO) is used primarily for determining costs which are used in

  1. Forecasts of future sale.
  2. Recording the cost of goods sold.
  3. Recording Sales Revenue.
  4. Forecasts of future operating results.
Answer

(B)Recording the cost of goods sold.

QN11. Which of the following bases would be most appropriate to apportion the cost of electric power to factory departments?

  1. Number of outlet points
  2. Amount metered out
  3. Cubic capacity of premises
  4. Kilowatt capacity of machines in department
Answer

(B)Amount metered out

QN12. A management consultancy recovers overheads on chargeable consulting hours. Budgeted overheads were 6,15,000 and actual consulting hours were 32,150. Overheads, were under recovered by 35,000. If actual overheads, were 6,94,075, what was the budgeted overhead absorption rate per hour?

  1. 19.13
  2. 20.50
  3. 21.59
  4. 22.68
Answer

(B)20.50

QN13. Opportunity cost is the best example of:

  1. Sunk Cost
  2. Standard Cost
  3. Relevant Cost
  4. Irrelevant Cost
Answer

(C)Relevant Cost

QN14. An investor invests in stock exchange he foregoes the opportunity to invest further in his hotel. The profit which the investor will be getting from the hotel is ______________.

  1. Opportunity cost
  2. Period Cost
  3. Product Cost
  4. Historical Cost
Answer

(A)Opportunity cost

QN15. Cost of Goods Manufactured can be calculated as follow

  1. Total factory Cost Add Opening Work in process inventory Less Closing Work in process inventory
  2. Total factory Cost Less Opening Work in process inventory Add Closing Work in process inventory
  3. Total factory Cost Less Opening Work in process inventory Less Closing Work in process inventory
  4. Total factory Cost Add Opening Work in process inventory Add Closing Work in process inventory
Answer

(A)Total factory Cost Add Opening Work in process inventory Less Closing Work in process inventory

QN16. Which of the following is / are element / s of production payroll?

  1. Direct labor force wages
  2. Administrative wages
  3. Selling wages
  4. All of the given options
Answer

(D)All of the given options

QN17. When a manufacturing Company has highly automated manufacturing plant producing many different products, the most appropriate basis for applying FOH cost to work in process is:

  1. Direct labor hours
  2. Direct labor costs
  3. Machine hours
  4. Cost of material used
Answer

(B)Direct labor costs

QN18. Which of the following is not a method of pricing raw material issues from stock?

  1. Standard costing.
  2. Unit cost.
  3. Marginal cost.
  4. Continuous weighted average.
Answer

(C)Marginal cost.

QN19. Marginal costing is also known as:

  1. Indirect costing
  2. Direct costing
  3. Variable costing
  4. Both (b) and (c)
Answer

(D)Both (b) and (c)

QN20. Fixed cost per unit decreases when:

  1. Production volume increases.
  2. Production volume decreases.
  3. Variable cost per unit decreases.
  4. Variable cost per unit increases.
Answer

(A)Production volume increases.

QN21. Which would be an implicit cost for a firm? The cost:

  1. Of worker wages and salaries for the firm.
  2. Paid for leasing a building for the firm.
  3. Paid for production supplies for the firm.
  4. Of wages foregone by the owner of the firm.
Answer

(D)Of wages foregone by the owner of the firm.

QN22. The factors to be taken into consideration in formulating incentive schemes include:

  1. Quantity and quality of output
  2. Incidence of overhead, and effect upon workers
  3. Simplicity and legal provisions
  4. All of the above
Answer

(D)All of the above

QN23. 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

QN24. 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.

QN25. 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.

QN26. 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

QN27. Cost accounting is based on ______________ figures.

  1. Approximated
  2. Estimated
  3. Historical
  4. Either (a) or (c)
  5. None of these
Answer

(B)Estimated

QN28. Depreciation is ______________ expenditure.

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

(E)Semi-variable

QN29. The quantity of material to be ordered at one time is known as

  1. EOQ
  2. BOQ
  3. EBQ
  4. Re-order period
  5. All of these
Answer

(A)EOQ

QN30. Which of the following is not a relevant cost information in a make or buy decision?

  1. Variable cost of making
  2. General fixed cost
  3. Purchase price
  4. Loss of contribution to make the product
Answer

(B)General fixed cost

QN31. In a shutdown decision, one has to consider:

  1. Contribution
  2. Identifiable fixed cost, if any
  3. Impact of shutdown on other products, if any
  4. All of the above
Answer

(D)All of the above

QN32. The firms monthly cost of production is 1,46,000 at an output level of 8,000 units. If it achieves an output level of 12,000 units it will incur production cost of 1,94,000 cost of production for 15,000 units is

  1. 1,80,000
  2. 2,00,000
  3. 50,000
  4. 2,30,000
Answer

(D)2,30,000

QN33. Angle of incidence defines:

  1. Systematic risk in CAPM model
  2. Post BEP relationship between total cost and total revenue
  3. Incidental factors in investments
  4. Marginal cost of production
Answer

(B)Post BEP relationship between total cost and total revenue

QN34. If you know that with 8 units of output, average fixed cost is 12.50 and average variable cost is 81.25, then total cost at this output level is:

  1. 93.75.
  2. 97.78.
  3. 750.
  4. 880.
Answer

(C)750.

QN35. For exercising control over selling and distribution overheads, the following techniques may be used:

  1. Comparison with past results
  2. Budgetary control
  3. Standard costing
  4. All of the above
Answer

(D)All of the above

QN36. Types of maintenance include the following except:

  1. Routine
  2. Overhaul
  3. Emergency
  4. Periodic
Answer

(B)Overhaul

QN37. Which of the following is not a possible method of accounting for administration overheads?

  1. Include as part of production overheads
  2. Apportion to production, selling and distribution functions
  3. Treat administration as a separate entity and treat the costs as such
  4. Transfer to costing profit and loss account
Answer

(A)Include as part of production overheads

QN38. Overtime premium may be treated, depending on the circumstances, as:

  1. Part of direct wages
  2. Part of production overheads
  3. Part of capital order
  4. All of the above
Answer

(D)All of the above

QN39. Preventive costs of labour turnover include the following except:

  1. Cost of recruitment and training
  2. Medical services
  3. Welfare
  4. Gratuity and pension
Answer

(A)Cost of recruitment and training

QN40. Cost of production is equal to

  1. Prime costs+ other manufacturing costs.
  2. Production costs + Administration expenses.
  3. Prime costs + Manufacturing costs + Opening W.I.P - Closing W.I.P.
  4. None of the above.
Answer

(D)None of the above.

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