Cost and Managerial Accounting Online MCQ Set 17

QN01. How many units would the company have to sell to attain target profits of 600,000?

  1. 48,000 units
  2. 88,000 units
  3. 106,668 units
  4. None of given options
Answer

(A)48,000 units

QN02. Percentage of Margin of Safety can be calculated in which one of the following ways?

  1. Based on budgeted Sales
  2. Using budget profit
  3. Using profit & Contribution ratio
  4. All of the given options
Answer

(D)All of the given options

QN03. If Cost of goods sold = 40,000; GP Margin = 20% of sales Calculate the Gross profit margin.

  1. 32,000
  2. 48,000
  3. 8,000
  4. 10,000
Answer

(D)10,000

QN04. The difference between gate time and time booked for jobs in respect of a worker in due to the following reasons except:

  1. Change-over time
  2. Illness
  3. Waiting for materials, instructions, etc.
  4. Breakdown of machine
Answer

(B)Illness

QN05. 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

QN06. The authorized heads of deduction from wages payable include the following except:

  1. Car allowance
  2. Income tax
  3. Provident fund
  4. Employees'state insurance
Answer

(A)Car allowance

QN07. XYZ Ltd has the following alternative planned activity levels:

Level A Level B Level C
Total costs 1,00,000 1,50,000 2,00,000
Number of units produced 5,000 10,000 15,000

(Fixed overhead remains constant over the activity range shown.) The fixed overhead cost per unit is:

  1. 20.00
  2. 15.00
  3. 13.33
  4. 10.00
Answer

(D)10.00

QN08. Cost unit in a college may be

  1. teacher
  2. Non teacher staff
  3. Student
  4. Number of departments
  5. None of these
Answer

(C)Student

QN09. Work cost is the total of

  1. Direct cost
  2. Indirect cost
  3. Variable cost
  4. Controllable cost
  5. Uncontrollable cost
Answer

(D)Controllable cost

QN10. ______________ represents that quantity of material which is normally ordered when a particular material reaches the ordering level.

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

(D)Re-order period

QN11. Stores ledger is maintained in the ______________ department.

  1. Cost accounting
  2. Stores
  3. Purchase
  4. Production
  5. None of these
Answer

(A)Cost accounting

QN12. About 50 items are required every day for a machine. A fixed cost of 50 per order is incurred for placing an order. The inventory carrying cost per item amounts to Re. 0.02 per day. The lead period is 32 days. Compute reorder level.

  1. 1,200 items
  2. 1,400 items
  3. 1,600 items
  4. 1,800 items
Answer

(C)1,600 items

QN13. Normal stores losses are:

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

(B)Part of production overheads

QN14. Depreciation is a:

  1. Measure of consumption of assets
  2. Process of allocation and not of valuation
  3. Wear and tear due to use and/or lapse of time
  4. All of the above
Answer

(D)Wear and tear due to use and/or lapse of time

QN15. Regular maintenance expenses are:

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

(B)Part of manufacturing overheads

QN16. Productive causes of idle time include the following except:

  1. Power failure
  2. Fall in demand
  3. Machine breakdown
  4. Waiting for materials, tools, instructions, etc.
Answer

(B)Fall in demand

QN17. At the start of the quarter there were 14,630 workers. 750 employees left during the quarter while 600 joined the organization during the same period. Using the flux method, the labour turnover was:

  1. 5.13%
  2. 9.23%
  3. 9.32%
  4. 9.28%
Answer

(D)9.28%

QN18. The cost of goods sold is equal to

  1. Total Purchases - Total Sales.
  2. Opening stock + Total Purchase.
  3. Opening stock - Total Purchases +Closing Stock+ Direct Costs.
  4. Opening stock + Total Purchases - Closing Stock + Direct Costs.
Answer

(D)Opening stock + Total Purchases - Closing Stock + Direct Costs.

QN19. 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

QN20. 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

QN21. The inventory method where the cost per unit is recomputed after every addition in the inventory is known as.

  1. Specific identification method.
  2. Moving average method.
  3. Last-in- First - Out method.
  4. First-in-First-Out method.
Answer

(B)Moving average method.

QN22. Direct Labor is an element of:

  1. Prime cost
  2. Conversion cost
  3. Total production cost
  4. All of the given options
Answer

(D)All of the given options

QN23. The capacity which is based on the long-term average of sales expectancy is known as:

  1. Theoretical capacity
  2. Operating capacity
  3. Normal capacity
  4. Derated capacity
Answer

(C)Normal capacity

QN24. FOH absorption rate is calculated by the way of:

  1. Estimated FOH Cost/Direct labor hours
  2. Estimated FOH Cost/No of units produced
  3. Estimated FOH Cost/Prime Cost
  4. All of the given options
Answer

(D)All of the given options

QN25. The term Maximum level represents:

  1. The maximum stock level indicates the maximum quantity of an item of material which can be held in stock at any time.
  2. The maximum stock level indicates the maximum quantity of an item of material which cannot be held in stock at any time.
  3. The average stock level indicates the maximum quantity of an item of material which can be held in stock at any time.
  4. The available stock level indicates the maximum quantity of an item of material which can be held in stock at any time.
Answer

(A)The maximum stock level indicates the maximum quantity of an item of material which can be held in stock at any time.

QN26. Under Periodic Inventory system Purchase of inventory is treated as:

  1. Assets
  2. Expense
  3. Income
  4. Liability
Answer

(B)Expense

QN27. The flux method of labor turnover denotes:

  1. Workers appointed against the vacancy caused due to discharge or quitting of the organization
  2. Workers appointed in replacement of existing employees
  3. Workers employed under the expansion schemes of the company
  4. The total change in the composition of labor force
Answer

(D)The total change in the composition of labor force

QN28. If labor is satisfied with high wages it may ultimately lead to:

  1. Increased production and productivity
  2. Increased efficiency
  3. Reduced labor and overhead costs
  4. All of the given options
Answer

(D)All of the given options

QN29. In cost Accounting, abnormal loss is charged to:

  1. Factory overhead control account
  2. Work in process account
  3. Income Statement
  4. Entire production
Answer

(B)Work in process account

QN30. The first in, first out method of pricing raw material issues, exhibits which one of the following features?

  1. The issue price is recalculated each time new deliveries are made into stock.
  2. The issue price is always at the latest price.
  3. The goods are always issued strictly in the physical order in which they are received.
  4. The issue price is always at the earliest price.
Answer

(C)The goods are always issued strictly in the physical order in which they are received.

QN31. In ______________ costing the cost of a group of products is ascertained.

  1. Process
  2. Job
  3. Batch
  4. Service
  5. Marginal
Answer

(C)Batch

QN32. Data of a company XYZ is given below
Particulars
Sales 15,00,000
Variable cost 9,00,000
Fixed Cost 4,00,000
Break Even Sales in ______________

  1. 1, 00,000
  2. 2, 00,000
  3. 13, 00,000
  4. None of the given options
Answer

(D)None of the given options

QN33. 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?

  1. Machine hours
  2. Cost of materials used
  3. Direct labor hours
  4. Direct labor dollars
Answer

(C)Direct labor hours

QN34. 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

(B)300 units

QN35. The period of time for which a work station is available for production but is not utilized due to shortage of tooling, materials, operators, etc. is known as:

  1. Down time
  2. Operation time
  3. Idle time
  4. Set-up time
Answer

(B)Operation time

QN36. Merit rating helps the following except:

  1. Determining right worker for the right job/work
  2. Delinking rewards with merits
  3. Simplifying wage structure
  4. Improving labour relations and reducing labour turnover
Answer

(B)Delinking rewards with merits

QN37. 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

QN38. XYZ Ltd has the following data relating to its assembly plant in the year ended 31 December 2012:’000
Direct material costs 500
Direct labour cost 250
Assembly plant indirect costs 100
In addition, the stores department has total costs of 30,000 and spends 50% of its time servicing the assembly plant. There were 50,000 labour hours worked and 25,000 machine hours run in the assembly plant in 2012.
The overhead cost per direct labour hour was:

  1. 2.0
  2. 4.0
  3. 2.3
  4. 4.6
Answer

(C)2.3

QN39. 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.

QN40. ______________ costing is suitable for mines, quarries, cement works etc.

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

(D)Operation

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