1. Which of the following is true of standards?
A. Standards represent a benchmark or a norm
B. Standards relate to input quantity
C. Standards relate to input cost
D. All of the above
Answer
D. All of the above
2. Standards that can be attained only under the best circumstances are referred to as:
A. Attainable standards
B. Budget standards
C. Ideal standards
D. Practical standards
Answer
C. Ideal standards
3. Which of the following equations can be used to calculate a material price variance?
A. (AQ X AP) – (AQ X SP)
B. (AP X SP) – (AQ X SP)
C. (AQ X SP) – (SQ X SP)
D. (AQ X SP) – (AQ X AP)
Answer
A. (AQ X AP) – (AQ X SP)
4. Who is most likely to be held responsible for a material price variance?
A. Line workers
B. Production supervisors
C. Purchasing managers
D. Production schedulers
Answer
C. Purchasing managers
5. Which of the following equations can be used to calculate a material quantity variance?
A. (AQ X AP) – (AQ X SP)
B. (AP X SP) – (AQ X SP)
C. (AQ X SP) – (SQ X SP)
D. (AQ X SP) – (AQ X AP)
Answer
C. (AQ X SP) – (SQ X SP)
6. To produce a particular batch of product, Falcon Corporation paid its workers 12.00 per hour for 4,000hours of work. The standards for the quantity of work represented by the batch were 12.50 per hour and 4,400 hours. What was the labour efficiency variance?
A. 2,000.00 favourable
B. 5,000.00 favourable
C. 5,000.00 unfavourable
D. None of these
Answer
B. 5,000.00 favourable
7. The firm’s direct-labour rate variance was 4,800 unfavourable. Actual labour was 24,000 direct-labourhours, at a cost of 1,68,000, for 25,000 units of finished product that require 1 hour of direct labour each, at standard. What is the standard rate per direct-labour hour?
A. 7.20
B. 6.80
C. 7.00
D. Cannot be determined from the information given
Answer
D. Cannot be determined from the information given
8. Which of the following is not an advantage of standard costing?
A. It provides a basis for sensible cost comparisons
B. It enables managers to employ management by exception
C. It provides a mean of performance evaluation and employee rewards
D. It is usually less expensive than actual or normal costing
Answer
C. It provides a mean of performance evaluation and employee rewards
9. Which of the following is NOT a criticism of a standard-costing system?
A. It is more expensive than other systems
B. Variances calculated under standard-costing come too late to be useful
C. It can cause dysfunctional behaviour in a JIT/FMS environment
D. Traditional cost variances are not tied to specific product line
Answer
B. Variances calculated under standard-costing come too late to be useful
10. The organization budgeted 400,000 for 40,000 hours of direct labour to complete 16,000 units offinished product. The firm used 42,000 direct-labour hours and completed 17,000 units of finished product. What is the direct-labour rate variance?
A. 20,000 unfavourable
B. 25,000 favourable
C. 25,000 unfavourable
D. Cannot be determined from the information provided
Answer
C. 25,000 unfavourable
11. The monetary value attributed to normal losses in a process should be:
A. A share of the process cost according to the stage of completion of the losses.
B. A nil value with no other monetary adjustment under any circumstances.
C. A full share of process cost on the same as good output.
D. A nil share of process costs which have been reduced by the scrap value of the normal loss.
Answer
D. A nil share of process costs which have been reduced by the scrap value of the normal loss.
12. An abnormal gain in a process occurs in which of the following situations?
A. When actual losses are greater than the normal loss level.
B. When costs are reduced through increased machine speed.
C. When actual losses are less than the normal level.
D. When the process output is greater than planned.
Answer
C. When actual losses are less than the normal level.
13. Where process scrap is recycled for use in conjunction with new material as well as being so externally, which of the following is most likely to be the value at which is debited to the process?
A. At the same price as it sold externally
B. At the cost of normal losses.
C. At the cost attached to abnormal losses
D. Nil value.
Answer
A. At the same price as it sold externally
14. Which of the following is the best explanation of the relevance of equivalent production units in process costing?
A. A means of equalising production charged into stock each period.
B. The conversion partly completed units into an equivalent number of completed units in order that costs may be shared on an equitable basis.
C. The expression of losses in terms of an equivalent number of units of good production in order that their value may be calculat
Answer
B. The conversion partly completed units into an equivalent number of completed units in order that costs may be shared on an equitable basis.
15. Purchased materials are added in the second department of a three-department process, this order doesnot increase the number of units produced in the second department and would:
A. Not change the amount transferred to the next department.
B. Decrease total work in process inventory.
C. Increase the factory overhead portion of the ending work-in-process inventory.
D. Increase total unit cost.
Answer
D. Increase total unit cost.
16. The physical flow of units into and out of departments is shown on the:
A. Quantities schedule.
B. Equivalent production schedule.
C. Cost of account for schedule.
D. Cost of Accounted for schedule.
Answer
B. Equivalent production schedule.
17. Purchased materials are added in the second department of a three-department process; thisincreases the number of units produced in the second department and would always:
A. Change the direct labour cost percentage in the ending work-in-process inventory.
B. Cause no adjustment to the unit cost transferred in from the first department.
C. Increase total units costs.
D. Decrease total ending work-in-process inventory.
Answer
B. Cause no adjustment to the unit cost transferred in from the first department.
18. An equivalent unit of material or conversion cost is equal to:
A. The amount of material conversion cost necessary to complete one unit of production.
B. A unit of work-in-process inventory.
C. The amount of material or conversion cost necessary to start a unit of production into work in process inventory.
D. Fifty percent of material or conversion cost of a unit to finished goods inventory.
Answer
A. The amount of material conversion cost necessary to complete one unit of production.
19. Financial Accounting is concerned with the:
A. recording of business expenses and revenues
B. recording of the cost of products and services
C. recording of day-to-day business transactions
D. none of the above
Answer
C. recording of day-to-day business transactions
20. The nature of financial accounting is:
A. historical
B. forward-looking
C. analytical
D. social
Answer
A. historical
21. The main object of cost accounting is:
A. to record day-to-day transactions of the business
B. to reveal managerial efficiency
C. to ascertain true cost of products and services
D. to determine tender price
Answer
C. to ascertain true cost of products and services
22. Cost accounting emerged mainly on account of:
A. Statutory requirements
B. Competition in the market
C. Labour unrest
D. Limitations of financial accounting
Answer
D. Limitations of financial accounting
23. Advantages of cost accounting system accrue:
A. only to workers
B. only to government
C. only to consumers
D. to management, workers, consumers and government
Answer
D. to management, workers, consumers and government
24. Cost Accounting is applied to:
A. Public undertakings only
B. Large business enterprises only
C. Small business enterprises only
D. Manufacturing and services concerns
Answer
D. Manufacturing and services concerns
25. A colliery company employs:
A. Contract Costing
B. Batch Costing
C. Operating Costing
D. Single Costing
Answer
D. Single Costing
26. Marginal Costing is concerned with:
A. Fixed Costs
B. Variable Costs
C. Semi-fixed Costs
D. None of the above three
Answer
B. Variable Costs
27. A biscuit manufacturing concern employs:
A. Operating costing
B. Departmental Costing
C. Batch Costing
D. Contract Costing
Answer
C. Batch Costing
28. A just in time manufacturing system should lead to:
A. A wider range of stock items being made available
B. An increase in the number of suppliers of stocks.
C. Higher levels of stock being held in the warehouse
D. Lower stock holding costs being incurred
Answer
D. Lower stock holding costs being incurred
29. TQM revolves around the concept of:
A. Providing adequate back up support once the product leaves the factory
B. Recruiting the best managers in their field
C. Making the best quality products regardless of the cost
D. Getting things right first time
Answer
D. Getting things right first time
30. Which of the following management accounting systems places a very strong emphasis onincorporating external data into the preparation of management reports?
A. Sales variance analysis
B. Activity based management
C. Strategic management accounting
D. Flexible budgeting
Answer
C. Strategic management accounting
31. What term is given to the idea that traditional budgeting should be replaced by a new type of budgeting?
A. Behavioural budgeting
B. Beyond budgeting
C. Flexible budgeting
D. Better budgeting
Answer
B. Beyond budgeting
32. Which of the following statements is true?
A. There is an accounting standard covering environmental reporting
B. Professional accountancy bodies are encouraging the development of environmental reporting
C. By law company directors must report to shareholders on environmental matters.
D. The Chartered Institute of Management Accountants (CIMA) requires its members to prepare reports on environmental issues for company directors
Answer
B. Professional accountancy bodies are encouraging the development of environmental reporting
33. What term best describes the use of both financial and non-financial measures in assessingwhether an entity has achieved its objectives?
A. balanced scorecard
B. Benchmarking
C. performance measurement
D. target setting
Answer
C. performance measurement
34. Which management accounting technique is sometimes referred to as super variable costing?
A. Throughput accounting
B. Marginal costing
C. Direct costing
D. Product life cycle costing
Answer
A. Throughput accounting
35. Which management accounting technique involves the identification of value adding activities?
A. Backflush costing
B. Target costing
C. Activity based management
D. Value chain analysis
Answer
D. Value chain analysis
36. Which one of the following items is relatively unimportant in decision making?
A. Relevant costs
B. Net cash flow
C. Opportunity costs
D. Accruals and prepayments
Answer
D. Accruals and prepayments
37. What is an alternative term for expected value?
A. Estimated profit
B. Forecasted profit
C. Eventual outcome
D. Weighted average
Answer
D. Weighted average
38. Which of the following cost classification categories is almost identical to a relevant cost?
A. Opportunity cost
B. Sunk cost
C. Committed cost
D. Avoidable cost
Answer
D. Avoidable cost
39. Which costs may normally be ignored when determining whether to close a factory for a short period?
A. Fixed costs
B. Opportunity costs
C. Variable costs
D. Total costs
Answer
A. Fixed costs
40. What is the minimum cost below which a company would be unwilling to price a one-off special contract?
A. Between variable cost and total cost
B. Total cost
C. Variable cost
D. Below variable cost
Answer
C. Variable cost
