Cost and Managerial Accounting Online MCQ Set 4

QN01. Which of these is not a Material control technique:

1. ABC Analysis
2. Fixation of raw material levels
3. Maintaining stores ledger
4. Control over slow moving and non moving items

Answer

(C)Maintaining stores ledger

QN02. Which one out of the following is not an inventory valuation method?

1. FIFO
2. LIFO
3. Weighted Average
4. EOQ

Answer

(D)EOQ

QN03. Cost of abnormal wastage is:

1. Charged to the product cost
2. Charged to the profit & loss account
3. charged partly to the product and partly profit & loss account
4. not charged at all.

Answer

(B)Charged to the profit & loss account

QN04. Costs associated with the labour turnover can be categorised into:

1. Preventive Costs only
2. Replacement costs only
3. Both of the above
4. Machine costs

Answer

(C)Both of the above

QN05. A worker is allowed 60 hours to complete the job on a guaranteed wage of Rs. 10 per hour. Under the Rowan Plan, he gets an hourly wage of Rs. 12 per hour. For the same saving in time, how much he will get under the Halsey Plan?

1. Rs. 720
2. Rs. 540
3. Rs. 600
4. Rs. 900

Answer

(B)Rs. 540

QN06. During September, 300 labour hours were worked for a total cost of Rs 4800. The variable overhead expenditure variance was Rs 600 (A). Overheads are assumed to be related to direct labour hours of active working.

What was the standard cost per labour hour?

1. Rs 14
2. Rs 16.50
3. Rs 17.50
4. Rs 18

Answer

(A)Rs 14

QN07. A Local Authority is preparing cash Budget for its refuse disposal department. Which of the following items would not be included in the cash budget?

1. Capital cost of a new collection vehicle
2. Depreciation of the machinery
3. Operatives wages
4. Fuel for the collection Vehicles

Answer

(B)Depreciation of the machinery

QN08. A ltd is a manufacturing company that has no production resource limitations for the foreseeable future. The Managing Director has asked the company mangers to coordinate the preparation of their budgets for the next financial year. In what order should the following budgets be prepared?

1. Sales budget
2. Cash budget
3. Production budget
4. Purchase budget
5. Finished goods inventory budget

1. (2), (3), (4), (5), (1)
2. (1), (5), (3), (4), (2)
3. (1), (4), (5), (3), (2)
4. (4), (5), (3), (1), (2)

Answer

(B)(1), (5), (3), (4), (2)

QN09. A process costing system for J Co used an input of 3,500Kg of materials at Rs20 per Kg and labour hours of 2,750 at Rs25 per hour. Normal loss is 20% and losses can be sold at a scrap value of Rs5per Kg. Output was 2,950 Kg. What is the value of the output?

1. Rs 142,485
2. Rs 146,183
3. Rs 149,746
4. Rs 152,986

Answer

(A)Rs 142,485

QN10. State which of the following are the characteristics of service costing.

1. High levels of indirect costs as a proportion of total costs
2. Use of composite cost units
3. Use of equivalent units

1. (1) only
2. (1) and (2) only
3. (2) only
4. (2) and (3) only

Answer

(B)(1) and (2) only

QN11. The following information is available for the W hotel for the latest thirty day period.
Number of rooms available per night 40
Percentage occupancy achieved 65%
Room servicing cost incurred Rs. 3900
The room servicing cost per occupied room-night last period, to the nearest Rs, was:

1. Rs 3.25
2. Rs 5.00
3. Rs 97.50
4. Rs 150.00

Answer

(B)Rs 5.00

QN12. After inviting tenders for supply of raw materials, two quotations are received as follows-
Supplier P Rs. 2.20 per unit, Supplier Q Rs. 2.10 per unit plus Rs. 2,000 fixed charges irrespective of the units ordered. The order quantity for which the purchase price per unit will be the same-

1. 22,000 units
2. 20,000 units
3. 21,000 units
4. None of the above.

Answer

(B)20,000 units

QN13. Statutory cost audit are applicable only to:

1. Firm
2. Company
3. Individual
4. Society

Answer

(B)Company

QN14. The summarized balance sheet of Autolight Limited shows the balances of previous and current year of retained earnings Rs. 25,000 and Rs. 35,000. If dividend paid during the current year amounted to Rs. 5,000 then profit earned during the year will be:

1. Rs. 5,000
2. Rs. 55,000
3. Rs. 15,000
4. Rs. 65,000

Answer

(C)Rs. 15,000

QN15. When the sales increase from Rs. 40,000 to Rs. 60,000 and profit increases by Rs. 5,000, the P/V ratio is ______________

1. 20%
2. 30%
3. 25%
4. 40%.

Answer

(C)25%

QN16. A profit centre is a centre

1. Where the manager has the responsibility of generating and maximising profits
2. Which is concerned with earning an adequate Return on Investment
3. Both of the above
4. Which manages cost

Answer

(A)Where the manager has the responsibility of generating and maximising profits

QN17. Sunk costs are:

1. relevant for decision making
2. Not relevant for decision making
3. cost to be incurred in future
4. future costs

Answer

(B)Not relevant for decision making

QN18. Calculate value of closing stock from the following:
Opening stock of finished goods (500 units) : Rs. 2,000
Cost of production (10000 units) : Rs. 50,000 Closing stock (1000 units):?

1. Rs. 4,000
2. Rs. 4,500
3. Rs. 5,000
4. Rs. 6,000

Answer

(C)Rs. 5,000

QN19. Economic order quantity is that quantity at which cost of holding and carrying inventory is:

1. Maximum and equal
2. Minimum and equal
3. It can be maximum or minimum depending upon case to case.
4. Minimum and unequal

Answer

(B)Minimum and equal

QN20. Calculate Re-order level from the following:
Consumption per week: 100-200 units
Delivery period: 14-28 days

1. 5600 units
2. 800 units
3. 1400 units
4. 200 units

Answer

(B)800 units

QN21. Calculate re-order level from the following:
Safety stock: 1000 units
Consumption per week: 500 units
It takes 12 weeks to reach material from the date of ordering.

1. 1000 units
2. 6000 units
3. 3000 units
4. 7000 units

Answer

(D)7000 units

QN22. Which of the following is not an avoidable cause of labour turnover:

1. Dissatisfaction with Job
2. Lack of training facilities
3. Low wages and allowances
4. Disability, making a worker unfit for work

Answer

(D)Disability, making a worker unfit for work

QN23. Calculate the labour turnover rate according to Separation method from the following:
No. of workers on the payroll:
- At the beginning of the month: 500
- At the end of the month: 600
During the month, 5 workers left, 20 workers were discharged and 75 workers were recruited. Of these, 10 workers were recruited in the vacancies of those leaving and while the rest were engaged for an expansion scheme.

1. 4.55%
2. 1.82%
3. 6%
4. 3%

Answer

(A)4.55%

QN24. Most suitable basis for apportioning insurance of machine would be:

1. Floor Area
2. Value of Machines
3. No. of Workers
4. No. of Machines

Answer

(B)Value of Machines

QN25. Which of the following is not a reason for an idle time variance?

1. Wage rate increase
2. Machine breakdown
3. Illness or injury to worker
4. Non- availability of material

Answer

(A)Wage rate increase

QN26. The actual output of 162,500 units and actual fixed costs of Rs. 87000 were exactly as budgeted.
However, the actual expenditure of Rs 300,000 was Rs. 18,000 over budget.
What was the budget variable cost per unit?

1. Rs 1.20
2. Rs 1.31
3. Rs1.42
4. Rs 1.50

Answer

(A)Rs 1.20

QN27. S produces and sells one product, P, for which the data are as follows:
Selling price Rs 28
Variable cost Rs 16
Fixed cost Rs 4
The fixed costs are based on a budgeted production and sales level of 25,000 units for the next period.

Due to market changes both the selling price and the variable cost are expected to increase above the budgeted level in the next period.

If the selling price and variable cost per unit increase by 10% and 8% respectively, by how much must sales volume change, compared with the original budgeted level, in order to achieve the original
budgeted profit for the period?

1. 10.1% decrease
2. 11.2% decrease
3. 13.3% decrease
4. 16.0% decrease

Answer

(B)11.2% decrease

QN28. A company calculates the prices of jobs by adding overheads to the prime cost and adding 30% to total costs as a profit margin. Job number Y256 was sold for Rs1690 and incurred overheads of Rs 694. What was the prime cost of the job?

1. Rs 489
2. Rs 606
3. Rs 996
4. Rs 1300

Answer

(B)Rs 606

QN29. A company makes a single product and incurs fixed costs of Rs. 30,000 per annum. Variable cost per unit is Rs. 5 and each unit sells for Rs. 15. Annual sales demand is 7,000 units. The breakeven point is:

1. 2,000 units
2. 3,000 units
3. 4,000 units
4. 6,000 units

Answer

(B)3,000 units

QN30. The cost per unit of a product manufactured in a factory amounts to Rs. 160 (75% variable) when the production is 10,000 units. When production increases by 25%, the cost of production will be Rs. per unit.

1. Rs. 145
2. Rs. 150
3. Rs. 152
4. Rs. 140

Answer

(C)Rs. 152

QN31. ____________ is a detailed budget of cash receipts and cash expenditure incorporating both revenue and capital items.

1. Cash Budget
2. Capital Expenditure Budget
3. Sales Budget
4. Overhead Budget

Answer

(A)Cash Budget

QN32. If credit sales for the year is Rs. 5,40,000 and Debtors at the end of year is Rs. 90,000 the Average Collection Period will be

1. 30 days
2. 61 days
3. 90 days
4. 120 days

Answer

(B)61 days

QN33. Following information is available of PQR for year ended March, 2013: 4,000 units in process, 3,800 units output, 10% of input is normal wastage, Rs. 2.50 per unit is scrap value and Rs. 46,000 incurred towards total process cost then amount on account of abnormal gain to be transferred to Costing P&L will be:-

1. Rs. 2,500
2. Rs. 2,000
3. Rs. 4,000
4. Rs. 3,500

Answer

(A)Rs. 2,500

QN34. Responsibility Centre can be categorised into:

1. Cost Centres only
2. Profit Centres only
3. Investment Centres only
4. Cost Centres, Profit Centres and Investment Centres

Answer

(D)Cost Centres, Profit Centres and Investment Centres

QN35. Calculate the prime cost from the following information:
Direct material purchased: Rs. 1,00,000
Direct material consumed: Rs. 90,000
Direct labour: Rs. 60,000
Direct expenses: Rs. 20,000
Manufacturing overheads: Rs. 30,000

1. Rs. 1,80,000
2. Rs. 2,00,000
3. Rs. 1,70,000
4. Rs. 2,10,000

Answer

(C)Rs. 1,70,000

QN36. Bin Card is a

1. Quantitative as well as value wise records of material received, issued and balance;
2. Quantitative record of material received, issued and balance
3. Value wise records of material received, issued and balance
4. a record of labour attendance

Answer

(B)Quantitative record of material received, issued and balance

QN37. Calculate EOQ (approx.) from the following details:
Annual Consumption: 24000 units
Ordering cost: Rs. 10 per order
Purchase price: Rs. 100 per unit
Carrying cost: 5%

1. 310
2. 400
3. 290
4. 300

Answer

(A)310

QN38. Calculate the value of closing stock from the following according to Weighted Average method:
1st January, 2014: Opening balance: 50 units @ Rs. 4
Receipts:
5th January, 2014: 100 units @ Rs. 5
12th January, 2014: 200 units @ Rs. 4.50
Issues:
2nd January, 2014: 30 units
18th January, 2014: 150 units

1. Rs. 765
2. Rs. 805
3. Rs. 786
4. Rs. 700

Answer

(C)Rs. 786

QN39. Labour turnover means:

1. Turnover generated by labour
2. Rate of change in composition of labour force during a specified period
3. Either of the above
4. Both of the above

Answer

(B)Rate of change in composition of labour force during a specified period

QN40. Overhead refers to:

1. Direct or Prime Cost
2. All Indirect costs
3. only Factory indirect costs
4. Only indirect expenses

Answer

(B)All Indirect costs