Cost and Managerial Accounting Online MCQ Set 16

QN01. Contribution margin contributes to meet which one of the following options?

  1. Variable cost
  2. Fixed cost
  3. Operating cost
  4. Net profit
Answer

(B)Fixed cost

QN02. Non-monetary incentives may include the following except:

  1. Health and safety
  2. Housing facilities
  3. Education and training
  4. Dearness allowance
Answer

(D)Dearness allowance

QN03. Which of the following is calculated by a formula that uses net sales as denominator?

  1. Inventory turnover ratio
  2. Gross profit rate
  3. Return on Investment
  4. None of the given options
Answer

(D)None of the given options

QN04. Which of the following is not a production department?

  1. Power department
  2. Machining department
  3. Refining department
  4. Finishing department
Answer

(A)Power department

QN05. An overhead absorption rate is used to:

  1. Share out common costs over benefiting cost canters
  2. Find the total overheads for a cost centre
  3. Charge overheads to products
  4. Control overheads
Answer

(C)Charge overheads to products

QN06. Which of the following is/are not associated with ordering costs?

  1. Interest
  2. Insurance
  3. Opportunity costs
  4. All of the given options
Answer

(D)All of the given options

QN07. If Direct Material = 12,000; Direct Labor = 8000 and other Direct Cost = 2000 then what will be the Prime Cost?

  1. 12000
  2. 14000
  3. 20000
  4. 22000
Answer

(D)20000

QN08. Which of the following is/are reported in production cost report?

  1. The costs charged to the department
  2. How the costs were assigned to the output?
  3. The equivalent units of production by the department
  4. All of the given options
Answer

(D)All of the given options

QN09. Which of the following statement is TRUE about FOH applied rates?

  1. They are used to control overhead costs
  2. They are based on actual data for each period
  3. They are predetermined in advance for each period
  4. None of the given
Answer

(C)They are predetermined in advance for each period

QN10. Which of the following is NOT an assumption of the basic economic-order quantity model?

  1. Annual demand is known
  2. Ordering cost is known
  3. Carrying cost is known
  4. Quantity discounts are available
Answer

(D)Quantity discounts are available

QN11. What is the company's break-even in units?

  1. 48,000 units
  2. 72,000 units
  3. 80,000 units
  4. None of the given options
Answer

(D)None of the given options

QN12. The contribution margin ratio is calculated by using which one of the given formula?

  1. (Sales - Fixed Expenses)/Sales
  2. (Sales - Variable Expenses)/Sales
  3. (Sales - Total Expenses)/Sales
  4. None of the given options
Answer

(B)(Sales - Variable Expenses)/Sales

QN13. Which of the following represents a CVP equation?

  1. Sales = Contribution margin (Rs.) + Fixed expenses + Profits
  2. Sales = Contribution margin ratio + Fixed expenses + Profits
  3. Sales = Variable expenses + Fixed expenses + profits
  4. Sales = Variable expenses -Fixed expenses + profits
Answer

(C)Sales = Variable expenses + Fixed expenses + profits

QN14. ______________ 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.

  1. FIFO
  2. Weighted average method
  3. Most recent price method
  4. LIFO
Answer

(D)LIFO

QN15. Which of the following are the characteristics of management accounting?

  1. It must follow generally accepted accounting principles.
  2. It is concerned with information for the internal use of management.
  3. It emphasizes relevance and flexibility of data.
  1. (1) and (2)
  2. (1) and (3)
  3. (2) and (3)
  4. (1), (2) and (3)
Answer

(C)(2) and (3)

QN16. Time study serves the following purposes except:

  1. Standardizing jobs, operation etc.
  2. Assessing labour time
  3. Fixation of factory overhead rate
  4. Fixation of wage rates and introduction of incentive schemes
Answer

(C)Fixation of factory overhead rate

QN17. The purposes served by preparation of payroll or wages sheet include:

  1. Spreading the volume of work to be done
  2. Computation of labour rate for each department
  3. Comparing actual wages with budgeted wages for control
  4. All of the above
Answer

(D)All of the above

QN18. Sales commissions are classified as

  1. Prime costs
  2. Period costs
  3. Product costs
  4. Indirect labour
Answer

(B)Period costs

QN19. A variable cost is?

  1. One which varies in proportion to the level of fixed cost incurred.
  2. One which tends to vary with the level of activity.
  3. One which changes over time.
  4. One which cannot be estimated with any great degree of accuracy.
Answer

(B)One which tends to vary with the level of activity.

QN20. In automobile industry cost unit is

  1. Number
  2. Automobile quality
  3. Number of automobile industry
  4. Either (a) or (c)
  5. None of these
Answer

(B)Automobile quality

QN21. Out of pocket payment involves payment to

  1. Managers
  2. Promoters
  3. Directors
  4. Shareholders
  5. Outsiders
Answer

(E)Outsiders

QN22. Material control aims at achieving effective ______________ management.

  1. Marketing
  2. Production
  3. Organization
  4. Material
  5. None of these
Answer

(D)Material

QN23. Raymond Corporation estimates factory overhead of 345,000 for next fiscal year. It is estimated that 60,000 units will be produced at a material cost of 575,000. Conversion will require 34,500 direct labor hours at a cost of 10 per hour, with 25,875 machine hours.
FOH rate on the bases on Budgeted Production would be?

  1. 5.75 per unit
  2. 6.65 per unit
  3. 6.0 per unit
  4. 1 per unit
Answer

(A)5.75 per unit

QN24. Interest on own capital is a:

  1. Cash cost
  2. Notional cost
  3. Sunk cost
  4. Part of prime cost
Answer

(B)Notional cost

QN25. Which of the following is/are the basic object/s of job analysis?

  1. Determination of wage rates
  2. Ascertain the relative worth of each job
  3. Breaking up job into its basic elements
  4. All of the given options
Answer

(B)Ascertain the relative worth of each job

QN26. Which of the following is not a production cause of idle capacity?

  1. Set-up and change-over time
  2. Lack of supervision and instruction
  3. Lack of materials and tools
  4. Strike
Answer

(D)Strike

QN27. The unavoidable causes of labour turnover include the following except:

  1. Personal betterment
  2. Dissatisfaction with the job
  3. Illness
  4. Retirement
Answer

(B)Dissatisfaction with the job

QN28. Labour cost control embraces the following activities except:

  1. Recruitment and promotion
  2. Formulation of wage policy and payment and accounting for wages
  3. Allocation of cost
  4. Preparation of financial statement
Answer

(D)Preparation of financial statement

QN29. Group bonus schemes are generally suitable where:

  1. Output depends on individual efforts
  2. Output of individual workers can be measured easily
  3. It is necessary to create a collective interest in the work
  4. Normal loss rate is high
Answer

(C)It is necessary to create a collective interest in the work

QN30. Which of the following inventory valuation methods shows higher profits during the period of rising prices?

  1. FIFO method.
  2. LIFO method.
  3. Weighted average method.
  4. Simple average method.
Answer

(A)FIFO method.

QN31. Some overhead charges tend to vary almost directly, some tend to remain constant while some again vary in part with the volume and in part remain constant. This statement describes sequentially the following:

  1. Variable, fixed and semi-variable overheads
  2. Fixed, semi-variable and variable overheads
  3. Semi-variable, variable and fixed overheads
  4. Variable, semi-variable and fixed overheads
Answer

(A)Variable, fixed and semi-variable overheads

QN32. A method of dealing with overheads involves spreading common costs over cost centres on the basis of benefit received. This is known as

  1. Overhead absorption
  2. Overhead apportionment
  3. Overhead identification
  4. Overhead analysis
Answer

(B)Overhead apportionment

QN33. Annual requirement is 7800 units; consumption per week is 150 units. Unit price 5, order cost 10 per order. Carrying cost 1 per unit and lead time is 3 week, The Economic order quantity would be.

  1. 395 units
  2. 300 units
  3. 250 units
  4. 150 units
Answer

(A)395 units

QN34. The short run is a time period in which:

  1. All resources are fixed.
  2. The level of output is fixed.
  3. The size of the production plant is variable.
  4. Some resources are fixed and others are variable
Answer

(D)Some resources are fixed and others are variable

QN35. Which of the following is / are time based incentive wage plan?

  1. Hasley Premium Plan
  2. Hasley Weir Premium Plan
  3. Rowan Premium Plan
  4. All of the given options
Answer

(D)All of the given options

QN36. When prices are rising over time, which of the following inventory costing methods will result in the lowest gross margin/profits?

  1. FIFO
  2. LIFO
  3. Weighted Average
  4. Cannot be determined
Answer

(B)LIFO

QN37. Which of the following is a mechanical device to record the exact time of the workers?

  1. Clock Card
  2. Store Card
  3. Token System
  4. Attendance Register
Answer

(A)Clock Card

QN38. If, COGS = 50,000 GP Margin = 25% of sales what will be the value of Sales?

  1. 200,000
  2. 66,667
  3. 62,500
  4. None of the given options
Answer

(B)66,667

QN39. The Economic order quantity can be calculated by

  1. Formula Method
  2. Table Method
  3. Graph Method
  4. All of the given
Answer

(D)All of the given

QN40. While preparing the Cost of Goods Sold and Income Statement, the over applied FOH is;

  1. Add back, subtracted
  2. Subtracted, add back
  3. Add back, add back
  4. Subtracted, subtracted
Answer

(B)Subtracted, add back

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