Prepare Strategic Cost Accounting mcq set 2 for your bba mba management program. Then you can try exam quiz of Strategic Cost Accounting for assess your knowledge, so you can get better mark in your exam.
MCQ of Strategic Cost Accounting set 2
41. Which of the following is not correct about process costing and job order costing?
A. Both the system classify materials as direct material and or indirect materials.
B. Both the system classify labor ans direct labor and or indirect labor
C. Direct materials under job order costing might be indirect under process costing and vice versa.
D. Both the systems assigns costs by process.
Answer
D. Both the systems assigns costs by process.
42. In process costing system, when partially completed units are expressed in terms of fullycompleted units they are known as
A. Completed units
B. Equivalent units
C. Unfinished units
D. Transferred units
Answer
B. Equivalent units
43. The direct material costing Rs. 4000 has been used in mixing department. The correct journalentry would be
A. Direct materials Dr. and work in process-mixing department CR
B. Work-in –process-mixing department Dr and Direct materials Cr
C. Finished goods DR and Direct materials Cr
D. Mixing department Dr and Direct material Cr
Answer
B. Work-in –process-mixing department Dr and Direct materials Cr
44. In a process costing system, the manufacturing overhead (or factory OH) is usually appliedusing
A. Predetermined overhead rate
B. An actual overhead rate
C. A conversion overhead rate
D. An indirect labor rate
Answer
A. Predetermined overhead rate
45. In process costing system, the predetermined overhead rate is computed.
A. Only once and used for all the processing department
B. Separately for each processing department
C. Only for the first processing department where units are started
D. Only for the last department where units are completed and transferred to finished goods area.
Answer
B. Separately for each processing department
46. Where the normal loss in a department is identified at the end of process, its cost is :-
A. Ignored
B. Charged to work in progress ending inventory only
C. Charged to units completed and transferred out only
D. Charged to work in process ending inventory as well as to units completed and transferred out
Answer
C. Charged to units completed and transferred out only
47. While preparing the cost of production report of a processing department, use per unit costfrom producing department needs to be adjusted when the
A. Normal loss is identified during the process.
B. Normal loss is identified at the end of the process
C. Abnormal loss is identified during the process
D. Abnormal loss is identified at the end of the process.
Answer
A. Normal loss is identified during the process.
48. The normal or standard loss in processing department is generally considered
A. An avoidable loss
B. Un avoidable loss
C. An additional loss
D. A basic loss
Answer
B. Un avoidable loss
49. A loss in processing departments which can be avoided under normal and efficient working conditions is generally known as
A. Normal loss
B. Extra loss
C. Abnormal loss
D. Department loss
Answer
C. Abnormal loss
50. In process costing the abnormal loss occurred in a production department is
A. Charged to finished goods
B. Charged to unfinished goods
C. Charged to factory overhead
D. Ignored
Answer
C. Charged to factory overhead
51. Which of the following characteristics is relevant to process costing but not to job order costing?
A. Averaging process
B. Identifiable batches of production
C. Equivalent units
D. Use of standard cost
Answer
C. Equivalent units
52. Which of the following types of spoilage should not affect the recorded cost of inventories
A. Normal spoilage
B. Standard spoilage
C. Abnormal spoilage
D. Seasonal spoilage
Answer
C. Abnormal spoilage
53. A section of the cost of production report which shows the physical flow of units through various producing departments is usually labeled as
A. Schedule of physical flow
B. Quantity schedule
C. Equivalent units of production
D. Cost to be accounted for
Answer
B. Quantity schedule
54. What does FIFO mean?
A. Finished stock In Finished stock out
B. Fabrications Inward Fabrications Outward
C. Final Input Final Output
D. First In First Out
Answer
D. First In First Out
55. Regardless of how long it takes to produce and sell inventory, inventory is alwaysconsidered to be a?
A. Current asset
B. Current liability
C. Long-term asset
D. Stockholder’s equity
Answer
A. Current asset
56. The latest cost of inventories is changed to production but the old prices are changed to inventories on hand?
A. Average
B. LIFO
C. FIFO
D. Perpetual
Answer
B. LIFO
57. An increase in inventories indicates that?
A. More merchandise was purchased then the amount sold to customer
B. Less merchandise was purchased then sold to the customer
C. Not all purchases were cash
D. Cash payments were more than purchases on account
Answer
A. More merchandise was purchased then the amount sold to customer
58. Which type of inventory system is updated inventory system?
A. Periodic inventory system
B. Contingency inventory system
C. LIFO
D. Perpetual inventory system
Answer
D. Perpetual inventory system
59. What is the principal criterion used to distinguish between tangible assets andinventories?
A. The physical substance of the asset
B. The acquisition cost of the asset
C. The nature of the company’s activity, which determines the purpose for which the asset is held
D. The moment in the accounting period when the asset is acquired
Answer
A. The physical substance of the asset
60. Which of the following method is suitable for calculating the cost of inventorywhen actual costs of individual units of merchandise can be determined from the accounting records?
A. FIFO Method
B. LIFO Method
C. Specific Identification Method
D. Average Method
Answer
C. Specific Identification Method
61. The inventories are recorded at the latest price but the production cost is changedold cost price?
A. FIFO
B. Average
C. Both A & B
D. None
Answer
A. FIFO
62. Which one of the following methods for inventory valuation may be misleading when the units are identical?
A. FIFO Method
B. LIFO Method
C. Specific Identification Method
D. None
Answer
A. FIFO Method
63. During September, Khan had sales of 148,000, which made a gross profit of 40,000. Purchases amounted to 100,000 and opening inventory was 34,000. The value of closing inventory was?
A. Rs. 24,000
B. Rs. 26,000
C. Rs. 42,000
D. Rs. 54,000
Answer
B. Rs. 26,000
64. Which type of inventory system requires updating the inventory balance at the endof the accounting period?
A. Periodic inventory system
B. LIFO
C. Perpetual inventory system
D. FIFO
Answer
A. Periodic inventory system
65. In LIFO method of inventory valuation?
A. Issue of stocks to production is at latest price
B. Closing stock is at latest price
C. Both (a) & (b)
D. Neither (a) nor (b)
Answer
A. Issue of stocks to production is at latest price
66. The inventory method that will always produce the same amount for cost of goods sold in a periodic inventory system as in a perpetual inventory system would be?
A. FIFO
B. LIFO
C. Weighted average
D. None of these
Answer
D. None of these
67. Inventory does not include?
A. Materials used in the production of goods to be sold
B. Assets intended to be sold in the normal course of business
C. Equipment used in the manufacturing are sold
D. Assets currently in production for normal sales
Answer
C. Equipment used in the manufacturing are sold
68. Net Purchases equal the invoice amount and?
A. Plus freight-in, plus discounts
B. Less purchase returns, plus purchase allowances
C. Plus freight-in, less purchase discounts
D. Plus discounts, less purchase returns
Answer
C. Plus freight-in, less purchase discounts
69. In FIFO method of inventory valuation?
A. Closing stock is at latest price
B. Issue of stocks to production is at earliest price
C. Both (a) & (b)
D. Neither (a) nor (b)
Answer
A. Closing stock is at latest price
70. The average inventory costing method which results in a changed unit inventorycost after each successive purchase?
A. Weighted average
B. Moving average
C. Specific cost
D. Simple average
Answer
A. Weighted average
71. The specific cost identification inventory cost flow method has all of the following characteristics except?
A. It identifies the cost of each physical item available for sale with either the ending inventory or cost of goods sold
B. It relates cost flow to the specific flow of physical goods
C. It is especially applicable when small and inexpensive items are handled in large quantities
D. It requires individual identification of items some device like tags or serial numbers
Answer
B. It relates cost flow to the specific flow of physical goods
72. Sales revenues are usually considered earned when?
A. Cash is received from credit sales
B. An order is received
C. Goods have been transferred from the seller to the buyer
D. Adjusting entries are made
Answer
C. Goods have been transferred from the seller to the buyer
73. A retail firm would normally use an inventory account titled?
A. Finished Goods Inventory
B. Merchandise Inventory
C. Goods in Process Inventory
D. Raw Materials Inventory
Answer
B. Merchandise Inventory
74. Which one of the following does not describe a type of transfer pricing?
A. Target based
B. Cost based
C. Negotiated
D. Administered
Answer
A. Target based
75. Systematic evaluation of the trade-offs between product functionality and product cost whilestill satisfying customer needs is the definition of
A. Activity based management
B. Theory of constraints
C. Total quality management
D. Value engineering
Answer
D. Value engineering
76. Productivity is the ratio between input and ___
A. Product
B. Output
C. Value
D. Cost
Answer
B. Output
77. Labour productivity measures the growth in value added ___ per unit of labour used.
A. Input
B. Output
C. Cost
D. Energy
Answer
B. Output
78. Pareto Principle is ___ rule.
A. 80/20
B. 50/50
C. 60/40
D. 10/90
Answer
A. 80/20
79. The Theory of Constraints is an organizational change method that is focused on ___ improvement.
A. Profit
B. Cost
C. Product
D. Economics
Answer
A. Profit
80. The essential concept of TOC is that every organization must have at least one ___
A. Process
B. Function
C. Constraint
D. Cost
Answer
C. Constraint
