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Cost and Managment Accounting Mcqs Paper

Words: 4166, Paragraphs: 23, Pages: 14

Paper type: Essay , Subject: Accounting

Fixed cost per unit decreases when: a. Production volume increases. b. Production volume decreases. c. Variable cost per unit decreases. d. Variable cost per unit increases. 2). Prime cost + Factory overhead cost is: a. Conversion cost. b. Production cost. c. Total cost. d. None of given option. 3). Find the value of purchases if Raw material consumed Rs. 90,000; Opening and closing stock of raw material is Rs. 50,000 and 30,000 respectively. a. Rs. 10,000 b. Rs. 20,000 c. Rs. 70,000 d. Rs. 1,60,000 4). If Cost of goods sold = Rs. 40,000

GP Margin = 20% of sales Calculate the Gross profit margin. a. Rs. 32,000 b. Rs. 48,000 c. Rs. 8,000 d. Rs. 10,000 5). ______________ 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. a. FIFO b. Weighted average method c. Most recent price method d. LIFO Fill in the blanks: (5 x 1) 1). Indirect cost that is incurred in producing product or services but which can not traced in full. 2 Sunk cost is the cost that incurred or expended in the past which can not be retrieved. 3).

Conversion cost = Direct Labor + FOH 4). If cost of goods sold Rs. 20,000 and Sales Rs. 50,000 then Gross Markup Rate is 150% 5). Under Perpetual system, a complete and continuous record of movement of each inventory item is maintained. 1. Cost of production report is a _________________. a. Financial statement b. Production process report c. Order sheet d. None of given option. 2. There are ___________ parts of cost of production report. a. 4 b. 5 c. 6 ( 6th is concerned with calculation of loss) d. 7 3. Which one of the organization follows the cost of production report _________________? . Textile unit b. Chartered accountant firm c. Poultry forming d. None of the given option. 4. _____________________ part of cost of production report explains the cost incurred during the process. a. Quantity schedule b. Cost accounted for as follow c. Cost charge to the department d. None of given option Solve the question 5 to 7. If units put in the process 7,000, units completed and transfer out 5,000. Units still in process (100% Material, 50% Conversion cost). 500 units were lost. Cost incurred during the process Material and Labor Rs. 50,000 and 60,000. 5.

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Find the number of units that will appear in quantity schedule a. 5,750 b. 7,000 c. 5,000 d. 6,500 6. Find the value of per unit cost of both material and conversion cost a. Material 7. 69; Conversion cost 10. 43 b. Material 7. 14; Conversion cost 10. 43 c. Material 7. 14; Conversion cost 9. 23 d. None of given option 7. Find the value of cost transferred to next department: a. Rs. 57,500 b. Rs. 50,000 c. Rs. 70,000 d. None of given option. 8. In case of second department find the increase of per unit cost in case of unit lost. Cost received from previous department is Rs. ,40,000. a. 1. 43 b. (2. 13) c. 1. 54 d. 1. 67 9. Opening work in process inventory can be calculated under a. FIFO and Average costing b. LIFO and Average costing c. FIFO and LIFO costing d. None of given option 10 _________________ needs further processing to improve its marketability. a. By product b. Joint Product c. Augmented product d. None of the given option Choose one of the best choices. 1. Jan 1; finished goods inventory of Manuel Company was $3, 00,000. During the year Manuel’s cost of goods sold was $19, 00,000, sales were $2, 000,000 with a 20% gross profit.

Calculate cost assigned to the December 31; finished goods inventory. a. $ 4,00,000 b. $ 6,00,000 c. $ 16,00,000 d. None of given options 2. The main purpose of cost accounting is to: a. Maximize profits. b. Help in inventory valuation c. Provide information to management for decision making d. Aid in the fixation of selling price 3. The combination of direct material and direct labor is a. Total production Cost b. Prime Cost c. Conversion Cost d. Total manufacturing Cost 4. The cost expended in the past that cannot be retrieved on product or service a. Relevant Cost b.

Sunk Cost c. Product Cost d. Irrelevant Cost 5. 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? a. Machine hours b. Cost of materials used c. Direct labor hours d. Direct labor dollars 6. A typical factory overhead cost is: a. distribution b. internal audit c. compensation of plant manager d. design 7. An industry that would most likely use process costing procedures is: a. tires b. home construction c. printing d. aircraft . 8. Complete the following table | |Per unit |Total | |Fixed cost |Increase |Constant | |Variable cost | | | |Total cost |Increase |Decrease | a. Constant, Decrease b. Decrease, Decrease c. Increase, Increase d. Increase, Decrease 9. The Kennedy Corporation uses Raw Material Z in a manufacturing process.

Information as to balances on hand, purchases and requisitions of Raw Material Z is given below: Jan. 1 Balance: 200 lbs. @ $1. 50 08 Received 500 lbs. @ $1. 55 18 Issued 100 lbs. 25 Issued 260 lbs. 30 Received 150 lbs. @ $1. 60 If a perpetual inventory record of Raw Material Z is maintained on a FIFO basis, it will show a month end inventory of: a. $240 b. $784 c. $759 d. $767 10. A disadvantage of an hourly wage plan is that it: a. Provides no incentive for employees to achieve and maintain a high level of production. b.

Is hardly ever used and is difficult to apply. c. Establishes a definite rate per hour for each employee. d. Encourages employees to sacrifice quality in order to maximize earnings. (10 x 1=10) (Question 2-a) From the following information calculate the Maximum stock level, Minimum stock level, Re-ordering level and Danger stock level;- (a) Average consumption 300 units per day (b) Maximum consumption 400 units per day (c) Minimum consumption 200 units per day (d) Re-order quantity 3,600 units (e) Re-order period 10 to 15 days (f) Emergency Re-order period 13 days (1. 25×4=5) Solution:

Order Level = Maximum Consumption x Lead Time (maximum) = 400 x 15 = 6,000 Maximum level =Order level – (Minimum consumption x Lead time) + EOQ = 6,000 – (200 x 10) + 3,600 = 7,600 Minimum Level = Order level— (Average consumption x lead time) = 6,000 – (300 x 12. 5) = 2,250 Danger Level = Average consumption x Emergency time = 300 x 13 = 3,900 (Question 2-b) Following data are available with respect to a certain material. |Annual requirement |1200 units | |Cost to place an order |Rs 3. 0 | |Annual interest rate |5% | |Per unit cost. |Rs 5. 00 | |Annual carrying cost per unit |Rs 0. 25 | Required: 1) Economic order quantity 2) Number of orders per year 3) Frequency of orders (2+1. 5+1. 5=5) Solution: (1)EOQ= (2 x 1200 x 3/0. 25 + 5% of 5)1/2 = 120 units (2)No of order= Annual order/order size = 1200/120 = 10 (3) Frequency of orders= No of days in a year / No of order = 360/10 = 36days Find out correct option from given MCQs & put your answer in above table: 1.

A manufacturing company manufactures a product which passes through two departments. 10,000 units were put in process. 9,400 units were completed & transferred to department-II. 400 units (1/2 complete) were in process at the end of month. Remaining 200 units were lost during processing. Costs incurred by the department were as follows: Particulars Rs. Direct Materials 19,400 Direct Labor 24,250 Factory overhead 14,550 Apportionment of the Accumulated Cost/Total Cost accounted for, for the month in CPR ____________ a. Rs. 24,250 Approximately b. Rs. 56,987 Approximately c. Rs. 58,200 Approximately d.

None of the given options MCQ # 2 and 3 are based on the following data: Allied chemical company reported the following production data for its department: Particulars Units Received in from department –1 55,000 Transferred out department –3 39,500 In process (1/3 labor & overhead) 10,500 All materials were put in process in Department No. 1. Costing department collected following figures for department No. 2: Particulars Rs. Unit cost received in 1. 80 Labor cost in department No. 2 27,520 Applied overhead in Department No. 2 15,480 2. Equivalent units of labor & FOH are _________ a. 3,500 units b. 39,500 units c. 3,000 units d. None of the given options 3. Unit cost of lost unit after adjustment (by using any method) _________ Cost & Management Accounting (mgt402) Quiz 02 Fall Semester 2007 a. Rs. 0. 64 b. Rs. 0. 36 c. Rs. 0. 18 d. None of the given options MCQ # 4, 5 and 6 are based on the following data: In Department No. 315 normal production losses are discovered at the end of process. During January 2007 following costs were charged to Department 315: Particulars Rs. Direct Materials 30,000 Direct Labor 20,000 Manufacturing overhead 10,000 Cost from preceding department 96,000 Data of production quantities is as follows:

Particulars Units Received in 12,000 Transferred out 7,000 Normal Production Loss 1,000 Partly processed units in Department No. 315 were completed 50%. 4. Cost of normal loss (where normal loss is discovered at the end of process) _________: a. Rs. 14,000 b. Rs. 44,000 c. Rs. 1, 12,000 d. None of the given options 5. Equivalent units of material __________ a. 2,000 units b. 7,000 units c. 10,000 units d. None of the given options 6. Unit cost of Direct Labor__________ a. Rs. 1 b. Rs. 2 c. Rs. 3 d. None of the given options Cost & Management Accounting (mgt402) Quiz 02 Fall Semester 2007 7.

During January, Assembling department received 60,000 units from preceding department at a unit cost of Rs. 3. 54. Costs added in the assembly department were: Particulars Rs. Materials 41,650 Labor 101,700 Factory overheads 56,500 There was no work in process beginning inventory. Particulars Units Units from preceding department 60,000 Units transferred out 50,000 Units in process at the end of month (all materials, 2/3converted) 9,000 Units lost (1/2 completed as to materials & conversion cost ) 1,000 The entire loss is considered abnormal & is to be charged to factory overhead. Equivalent units of material __________ . 9,000 units b. 56,500 units c. 59,500 units d. None of the given options 8. For which one of the following industry would you recommend a Job Order Costing system? a. Oil Refining b. Grain dealing c. Beverage production d. Law Cases 9. For which one of the following industry would you recommend a Process Costing system? a. Grain dealer b. Television repair shop c. Law office d. Auditor Cost & Management Accounting (mgt402) Quiz 02 Fall Semester 2007 10. The difference between total revenues and total variable costs is known as: a. Contribution margin b. Gross margin c. Operating income d. Fixed costs 11.

Percentage of Margin of Safety can be calculated in which one of the following ways? a. Based on budgeted Sales b. Using budget profit c. Using profit & Contribution ratio d. All of the given options 12. Which of the following represents a CVP equation? a. Sales = Contribution margin (Rs. ) + Fixed expenses + Profits b. Sales = Contribution margin ratio + Fixed expenses + Profits c. Sales = Variable expenses + Fixed expenses + profits d. Sales = Variable expenses – Fixed expenses + profits 13. If 120 units produced, 100 units were sold @ Rs. 200 per unit. Variable cost related to production & selling is Rs. 150 per unit and fixed cost is Rs. ,000. If the management wants to decrease sales price by 10%, what will be the effect of decreasing unit sales price on profitability of company? (Cost & volume profit analysis keep in your mind while solving it) a. Remains constant b. Profits will increased c. Company will have to face losses d. None of the given options 14. If 120 units produced, 100 units were sold @ Rs. 200 per unit. Variable cost related to production & selling is Rs. 150 per unit and fixed cost is Rs. 5,000. If the management wants to increase sales price by 10%, what will be increasing sales profit of company by increasing unit sales price. Cost & volume profit analysis keep in your mind while solving it) a. Rs. 2,000 b. Rs. 5,000 c. Rs. 7,000 d. None of the given options Cost & Management Accounting (mgt402) Quiz 02 Fall Semester 2007 MCQ # 15, 16, 17 and 18 are based on the following data: The following is the Corporation’s Income Statement for last month: Particulars Rs. Sales 4,000,000 Less: variable expenses 2,800,000 Contribution margin 1,200,000 Less: fixed expenses 720,000 Net income 480,000 The company has no beginning or ending inventories. A total of 80,000 units were produced and sold last month. 15. What is the company’s contribution margin ratio? . 30% b. 70% c. 150% d. None of given options 16. What is the company’s break-even in units? a. 48,000 units b. 72,000 units c. 80,000 units d. None of the given options 17. How many units would the company have to sell to attain target profits of Rs. 600,000? a. 88,000 units b. 100,000 units c. 106,668 units d. None of given options 18. What is the company’s margin of safety in Rs? a. Rs. 480,000 b. Rs. 1,600,000 c. Rs. 2,400,000 d. None of given options Cost & Management Accounting (mgt402) Quiz 02 Fall Semester 2007 19. Which of the following statement(s) is (are) true? a.

A manufacturer of ink cartridges would ordinarily use process costing rather than job-order costing b. If a company uses a process costing system it accumulates costs by processing department rather than by job c. The output of a processing department must be homogeneous in order to use process costing e. All of the given options 20. Which of the following statements is (are) true? a. Companies that produce many different products or services are more likely to use job-order costing systems than process costing systems b. Job-order costing systems are used by manufactures only and process costing systems are used by service firms only . Job-order costing systems are used by service firms and process costing systems are used by manufacturers e. All of the given options 21. Product cost is normally: a. Higher in Absorption costing than Marginal costing b. Higher in Marginal costing than Absorption costing c. Equal in both Absorption and Marginal costing d. None of the given options 22. Using absorption costing, unit cost of product includes which of the following combination of costs? a. Direct materials, direct labor and fixed overhead b. Direct materials, direct labor and variable overhead c. Direct materials, direct labor, variable overhead and fixed overhead d.

Only direct materials and direct labor 23. Marginal costing is also known as: a. Indirect costing b. Direct costing c. Variable costing d. Both (b) and (c) Cost & Management Accounting (mgt402) Quiz 02 Fall Semester 2007 MCQ # 24 & 25 are based on the following data: The following data related to production of ABC Company: Units produced 1,000 units Direct materials Rs. 6 Direct labor Rs. 10 Fixed overhead Rs. 6000 Variable overhead Rs. 6 Fixed selling and administrative Rs. 2000 Variable selling and administrative Rs. 2 24. Using the data given above, what will be the unit product cost under absorption costing? . Rs. 22 b. Rs. 28 c. Rs. 30 d. None of the given options 25. Using the data given above, what will be the unit product cost under marginal costing? a. Rs. 22 b. Rs. 24 c. Rs. 28 d. None of the given options 26. The break-even point is the point where: a. Total sales revenue equals total expenses (variable and fixed) b. Total contribution margin equals total fixed expenses c. Total sales revenue equals to variable expenses only d. Both a & b 27. The break-even point in units is calculated using_______ a. Fixed expenses and the contribution margin ratio b. Variable expenses and the contribution margin ratio . Fixed expenses and the unit contribution margin d. Variable expenses and the unit contribution margin Cost & Management Accounting (mgt402) Quiz 02 Fall Semester 2007 28. The margin of safety can be defined as: a. The excess of budgeted or actual sales over budgeted or actual variable expenses b. The excess of budgeted or actual sales over budgeted or actual fixed expenses c. The excess of budgeted sales over the break-even volume of sales d. The excess of budgeted net income over actual net income 29. The contribution margin ratio is calculated by using which one of the given formula? a. Sales – Fixed Expenses)/Sales b. (Sales – Variable Expenses)/Sales c. (Sales – Total Expenses)/Sales d. None of the given options 30. Data of a company XYZ is given below Particulars Rs. Sales 15,00,000 Variable cost 9,00,000 Fixed Cost 4,00,000 Break Even Sales in Rs. __________ a. Rs. 1, 00,000 b. Rs. 2, 00,000 c. Rs. 13, 00,000 d. None of the given options 1. Mr. Zahid received Rs. 100,000 at the time of retirement. He has invested in a profitable Avenue. From Company A, he received the dividend of 35% and from Company B he received the dividend of 25%. He has selected Company A for investment.

His opportunity cost will be: a) 35,000 b) 25,000 c) 10,000 d) 55,000 2. In increasing production volume situation, the behavior of Fixed cost & Variable cost will be: a) Increases, constant b) Constant, increases c) Increases, decreases d) Decreases, increases 3. While calculating the finished goods ending inventory, what would be the formula to calculate per unit cost? a) Cost of goods sold / number of units sold b) Cost of goods to be manufactured / number of units manufactured c) Cost of goods manufactured / number of units manufactured d) Total manufacturing cost / number of units manufactured . If the direct labor is Rs. 42,000 and FOH is 40% of conversion cost. What will be the amount of FOH? a) 63,000 b) 30,000 c) 28,000 d) 16,800 5. Which one of the following centers is responsible to earns sales revenue? a) Cost center b) Investment center c) Revenue center d) Profit center 6. Which one of the following cost would not be termed as Product Costs? a) Indirect Material b) Direct Labor c) Administrative Salaries d) Plant supervisor’s Salary 7. Which of the following ratios expressed that how many times the inventory is turning over towards the cost of goods sold? ) Inventory backup ratio b) Inventory turnover ratio c) Inventory holding period d) Both A & B 8. When opening and closing inventories are compared, if ending inventory is more than opening inventory, it means that: a) Increase in inventory b) Decrease in inventory c) Both a and b d) None of the given options 9. The total labor cost incurred by a manufacturing entity includes which one of the following elements? a) Direct labor cost b) Indirect labor cost c) Abnormal labor cost d) All of the given options 10. If, Opening stock1,000 units Material Purchase7,000 units Closing Stock500 units

Material consumed Rs. 7,500 What will be the inventory turnover ratio? a) 10 Times b) 12 times c) 14. 5 times d) 9. 5 times 1. 1. A manufacturing company manufactures a product which passes through two departments. 10,000 units were put in process. 9,400 units were completed & transferred to department-II. 400 units (1/2 complete) were in process at the end of month. Remaining 200 units were lost during processing. Costs incurred by the department were as follows: |Particulars |Rs. | |Direct Materials |19,400 | |Direct Labor |24,250 | Factory overhead |14,550 | Equivalent units of material, for the month in CPR ____________ 1. a. 200 units 2. b. 9400 units 3. c. 9600 units 4. d. None of the given options MCQ # 2 and 3 are based on the following data: Allied chemical company reported the following production data for its department: |Particulars |Units | |Received in from department –1 |55,000 | |Transferred out department –3 |39,500 | |In process (1/3 labor & overhead) |10,500 |

All materials were put in process in Department No. 1. Costing department collected following figures for department No. 2: |Particulars |Rs. | |Unit cost received in |1. 80 | |Labor cost in department No. 2 |27,520 | |Applied overhead in Department No. 2 |15,480 | 1. 2. Equivalent units of Material are _________ 1. a. 3,500 units 2. b. 39,500 units 3. c. 43,000 units 4. d. None of the given options

Cost & Management Accounting (mgt402) Solution to Quiz 02 Special Semester 2007 1. 3. Unit cost used for transferred out _________ 1. a. Rs. 0. 64 2. b. Rs. 0. 36 3. c. Rs. 0. 18 4. d. None of the given options 1. 4. During January, Assembling department received 60,000 units from preceding department at a unit cost of Rs. 3. 54. Costs added in the assembly department were: |Particulars |Rs. | |Materials |41,650 | |Labor |101,700 | |Factory overheads |56,500 | There was no work in process beginning inventory. Particulars |Units | |Units from preceding department |60,000 | |Units transferred out |50,000 | |Units in process at the end of month |9,000 | |(all materials, 2/3converted) | | |Units lost (1/2 completed as to materials & conversion cost ) |1,000 |

The entire loss is considered abnormal & is to be charged to factory overhead. Cost transferred to next department __________ 1. a. Rs. 55,703. 3 App. 2. b. Rs. 356,546. 6 App. 3. c. Rs. 412,249. 9 App. 4. d. None of the given options MCQ # 5, 6, 7 and 8 are based on the following data: The following is the Corporation’s Income Statement for last month: |Particulars |Rs. | |Sales |4,000,000 | |Less: variable expenses |1,800,000 | |Contribution margin |2,200,000 | Less: fixed expenses |720,000 | |Net income |1480,000 | Cost & Management Accounting (mgt402) Solution to Quiz 02 Special Semester 2007 The company has no beginning or ending inventories. A total of 80,000 units were produced and sold last month. 1. 5. What is the company’s contribution margin ratio? 1. a. 30% 2. b. 50% 3. c. 150% 4. d. None of given options 2. 6. What is the company’s break-even in units? 1. a. 48,000 units 2. b. 72,000 units 3. c. 80,000 units 4. d.

None of the given options 3. 7. How many units would the company have to sell to attain target profits of Rs. 600,000? 1. a. 48,000 units 2. b. 88,000 units 3. c. 106,668 units 4. d. None of given options 1. 8. What is the company’s margin of safety in Rs? 1. a. Rs. 1,600,000 2. b. Rs. 2,400,000 3. c. Rs. 25,60,000 4. d. None of given options MCQ # 9 & 10 are based on the following data: The following data related to production of ABC Company: |Units produced |2,000 units | |Direct materials |Rs. 6 | Direct labor |Rs. 10 | |Fixed overhead |Rs. 20,000 | |Variable overhead |Rs. 6 | Cost & Management Accounting (mgt402) Solution to Quiz 02 Special Semester 2007 |Fixed selling and administrative |Rs. 2000 | |Variable selling and administrative |Rs. 2 | 1. 9. Using the data given above, what will be the unit product cost under absorption costing? 1. a. Rs. 32 2. b. Rs. 30 3. c. Rs. 25 4. d. None of the given options 1. 10.

Using the data given above, what will be the unit product cost under marginal costing? 1. a. Rs. 22 2. b. Rs. 24 3. c. Rs. 28 4. d. None of the given options (11-15)Write the names of given five budgets. XYZ Ltd Production Budget For the month of Jan-March |Particulars |Units | |No. of units sold | |Add Desired closing stock | |Less Estimated opening stock | |No. of units manufactured | XYZ Ltd Budgeted income Statement For the month of________ Particulars |Rs. | |Sales | |Less Cost of goods sold | |Gross profit | |Less Operating expenses | |Administrative expenses | |Selling expenses | |Profit from operation | Cost & Management Accounting (mgt402) Solution to Quiz 02 Special Semester 2007 |Less Financial charges | |Add Other income | |Profit before tax | XYZ Ltd Cash Budget For the month of Jan-March Particulars |Jan |Feb |Mar | |Opening balance | |Add Receipts (Anticipated cash receipt from all sources) | |Less Payments (Anticipated utilization of cash) | |Excess / Deficit | |Bank barrowing / Overdraft | |Closing balance |ove its marketability. a) By product b) Joint Product c) Augmented product d) None of the given options

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