MCQ Portal

1. Prime Cost is:

All costs incurred in manufacturing a product the total of direct costs the material cost of a product the cost of operating a department

2. A company employs three drivers to deliver goods to its customers. The salaries paid to these drivers are:

a part of prime cost a direct production expense a production overhead a selling & distribution overhead

3. A company has to pay a Rs. 1 per unit royalty to the designer of a product which it manufactures and sells. The royalty charge would be classified in the company’s accounts as a ____

Direct expense Production overhead Administrative overhead Selling overhead

4. _______ is a method of dealing with overheads which involves spreading common costs over cost centers on the basis of benefit received.

Overhead absorption Overhead apportionment Overhead allocation Overhead analysis

5. Which of the following classification is meant for distinction between direct cost and indirect cost?

Function Element Variability Controllability

6. Which of the following is applicable for Cost Control?

It is related with the future It is a corrective function It ends when the targets are achieved It challenges the standards set

7. ____________ is anything for which a separate measurement of cost is required

Cost driver Cost centre Cost unit Cost object

8. Ticket counter in a Metro Station is an example of

Profit centre Investment centre Cost centre Revenue centre

9. Which of the following is an example of functional classification of cost?

Direct labour cost Direct material cost Factory overhead Indirect material cost

10. Absorption costing is also referred as _______

Historical costing Traditional costing Full costing All of the above terms

11. The main purpose of cost accounting is

to maintain profit to help in inventory valuation to enter into price war with competitive firms to provide information to management for decision-making

12. ________ is anything for which a separate measurement is required

cost unit cost object cost driver cost centre

13. Which of the following is true about Cost Control?

It is a corrective function It challenges the set standards It ends when targets achieved It is concerned with future

14. Cost Units used in Power Sector is:

Kilo-meter (K.M.) Kilo - Watt-Hour (kWh) Number of Electric Points Machine Hours

15. Process Costing method is suitable for:

Transport Sector Chemical Industries Dam Construction Furniture-making

16. Distinction between Direct Cost and Indirect Cost is an example of _______ classification.

By element By Function By controllability By Variability

17. The advantage of using IT in Cost Accounting does not include:

Single point data entry Stock needs to be reconciled with goods received note Reduction in multiplicity of documents Integration of various functions

18. A taxi provider charges minimum Rs.80 thereafter Rs. 12 per kilometer of distance travelled, the behaviour of conveyance Cost is:

Fixed cost Semi-variable Variable Administrative cost

19. A Ltd. Has three Production Departments, and each department has machines, which of the following cannot be treated as Cost Centre for cost allocation:

Machines under the production Production Department Production Departments Both Production Department and Machines A Ltd.

20. Which of the following is an example of functional classification of cost?

Semi-variable costs Fixed Cost Administrative overhead Indirect Overheads

21. Cost which are ascertained after they have been incurred are known as:

Sunk costs Imputed Costs Historical Costs Opportunity Costs

22. Generally, for the purpose of Cost sheet preparation, costs are classified on the basis of:

Functions Variability Relevance Nature

23. Which of the following items is not excluded while preparing a cost sheet?

Goodwill written off Provision for taxation Property tax on factory building Transfer to reserves

24. What is prime cost?

Total direct cost only Total Indirect Costs only Total Non-Production Costs Total Production Costs

25. Which of the following does not form part of prime cost?

Cost of Packing Cost of transportation paid to bring materials to factory GST paid on Raw materials (where input credit cannot be claimed) Overtime premium paid to workers

26. Which of these is not an objective of Cost Accounting?

Ascertainment of Cost Determination of Selling Price Cost Control and Cost reduction Assisting Shareholders in decision making

27. Which of the following are direct expenses? (1) Cost of Special Designs, drawings or layout, (2) Hire of Tools or Equipment for a particular job, (3) Salesman's wages, (4) Rent, rates and Insurance of a factory

(1) and (2) (1) and (3) (2) and (3) (3) and (4)

28. Salary paid to plant Supervisor is a part of:

Direct expenses Factory Overheads Quality Control Cost Administrative cost

29. Depreciation of Director's Laptop is treated as a part of:

Administration Overheads Factory Overheads IT infrastructure Cost Research & Development Cost

30. A manufacturing Company has set-up a lab for testing of products for compliance with standards. Salary of this Lab Staff are part of:

Works Overheads Quality Control Cost Direct Expenses Research & Development Cost

31. Audit fees paid to external Statutory Auditors is part of:

Administration Cost Production Cost Selling & distribution Costs Quality Control Cost

32. Salary paid to factory stores is a part of:

Factory Overheads Production Cost Direct Employee Cost Direct Material Cost

33. Canteen Expenses for factory workers are part of:

Factory Overheads Admin cost Marketing cost Direct Expenses

34. A company pays Royalty to State Government on the basis of production, it is treated as:

Direct material cost Quality Control Cost Direct Expenses Administrative Overhead

35. Which of the following is not an element of Works Overhead?

Store Keeper's Salary Plant Manager's salary Sales Manager's Salary Product Inspector's Salary

36. A profit centre is a centre where the manager has the responsibility of generating and maximising profits. Which is concerned with earning an adequate Return on Investment?

Both of the above Which manages cost Where the manager has no responsibility None of the above

37. Responsibility Centre can be categorised into:

Cost Centres only Profit Centres only Investment Centres only Cost Centres, Profit Centres and Investment Centres

38. Cost Unit is defined as:

Unit of quantity of product, service or time in relation to which costs may be ascertained or expressed A location, person or an item of equipment or a group of these for which costs are ascertained and used for cost control Centres having the responsibility of generating and maximising profits Centres concerned with earning an adequate return on investment

39. Fixed cost is a cost:

Which changes in total in proportion to changes in output Which is partly fixed and partly variable in relation to output Which do not change in total during a given period despite changes in output Which remains same for each unit of output

40. Uncontrollable costs are the costs which:

can be influenced by the action of a specified member of an undertaking cannot be influenced by the action of a specified member of an undertaking may or may not be influenced by the action of a specified member of an undertaking must be influenced by the action of a specified member of an undertaking

41. Element/s of Cost of a product are:

Material only Labour only Expenses only Material, Labour and expenses

42. Abnormal cost is the cost:

normally incurred at a given level of output not normally incurred at a given level of output which is charged to customer which is included in the cost of the product

43. Conversion cost includes cost of converting……….into……..

Raw material, WIP Raw material, Finished goods WIP, Finished goods Finished goods, Saleable goods

44. Sunk costs are:

relevant for decision making not relevant for decision making costs to be incurred in future future costs

45. 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

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

46. Total cost of a product: Rs. 10,000

Profit: 25% on Selling Price. Profit is:

Rs. 2,500 Rs. 3,000 Rs. 3,333 Rs. 2,000

47. Calculate cost of sales from the following: Net Works cost: Rs. 2,00,000, Office & Administration Overheads: Rs. 1,00,000, Opening stock of WIP: Rs. 10,000, Closing Stock of WIP: Rs. 20,000, Closing stock of finished goods: Rs. 30,000. There was no opening stock of finished goods. Selling overheads: Rs. 10,000

Rs. 2,70,000 Rs. 2,80,000 Rs. 3,00,000 Rs. 3,20,000

48. Which of the following is considered as normal loss of material?

Pilferage Loss due to accident Loss due to careless handling of material None of these

49. The most important element of cost is:

Material Labour Overheads All of these

50. Direct material is a:

Administration Cost Selling and Distribution cost All of these None of these

51. Which of the following is considered as accounting record?

Bin Card Bill of material Store Ledger None of these

52. Direct material can be classified as:

Fixed cost Semi-Variable cost Variable Cost Prime cost

53. In which of the following methods of pricing, costs lag behind the current economic values?

Replacement price method Last in first out price method First in first out price method Weighted average price method

54. In which of the following methods, issues of materials are priced at pre-determined rate?

Replacement price method Inflated price method Specific price method Standard price method

55. Which of the following methods smoothes out the effect of fluctuations when material prices fluctuate widely?

FIFO Simple Average LIFO Weighted average

56. In which of the following incentive plan of payment, wages on time basis are not Guaranteed?

Halsey plan Rowan plan Taylor’s differential piece rate system Gantt’s task and bonus system

57. Cost of idle time arising due to non-availability of raw material is:

Charged to costing profit and loss A/c Charged to factory overheads Recovered by inflating the wage rate Ignored

58. When overtime is required for meeting urgent orders, overtime premium should be:

Charged to costing profit and loss A/c Charged to overhead costs Charged to respective jobs Ignored

59. Labour turnover is measured by:

Number of workers replaced Average number of workers Number of workers left / number in the beginning plus number at the end Number of workers joining / number in the beginning of the period

60. Idle time is:

Time spent by workers in factory Time spent by workers in office Time spent by workers off their work Time spent by workers on their job

61. Over time is:

Actual hours being more than normal time Actual hours being more than standard time Standard hours being more than actual hours Actual hours being less than standard time

62. Labour productivity is measured by comparing:

Total output with total man-hours Added value for the product with total wage cost Actual time and standard time All of the above

63. If the time saved is less than 50% of the standard time, then the wages under Rowan and Halsey premium plan on comparison gives:

Equal wages under two plans More wages to workers under Halsey Plan than Rowan Plan More wages to workers under Rowan Plan than Halsey Plan None of the above

64. Under Taylor’s differential piece rate scheme, if a worker fails to complete the task within the standard time, then he is paid:

83% of the piece work rate 175% of the piece work rate 67% of the piece work rate 125% of the piece work rate

65. Direct Expenses ________ includes imputed cost.

Shall Shall not Shall be None of these

66. Direct Expenses that does not meet the test of materiality can be ———— part of overhead.

Treated Not treated All of these None of these

67. Example of Direct Expenses.

Rent Royalty charged on production Bonus to employee None of these

68. The allotment of whole items of cost centres or cost unit is called:

Cost allocation Cost apportionment Overhead absorption None of the above

69. Directors remuneration and expenses form a part of:

Production overhead Administration overhead Selling overhead Distribution overhead

70. Charging to a cost center those overheads that result solely for the existence of that cost Center is known as:

Allocation Apportionment Absorption Allotment

71. Absorption means:

Charging of overheads to cost centres Charging of overhead to cost units Charging of overheads to cost centres or cost units None of the above

72. When the amount of under or over absorption is significant, it should be disposed of by:

Transferring to costing profit and loss account The use of supplementary rates Carrying over as a deferred charge to the next accounting year None of the above

73. Selling and distribution overheads are absorbed on the basis of:

Rate per unit Percentage on works cost Percentage on selling price of each unit Any of the above

74. Primary packing cost is a part of:

Direct material cost Distribution overhead Selling overhead Production cost

75. Normal capacity of a plant refers to the difference between:

Maximum capacity and practical capacity Maximum capacity and actual capacity Practical capacity and estimated idle capacity as revealed by long term sales trend Practical capacity and normal capacity

76. When the amount of overhead absorbed is less than the amount of overhead incurred, it is called:

Under absorption of overhead Over absorption of overhead Proper absorption of overhead None of the above

77. _____________ is a scientific and accurate method of factory overhead absorption.

Percentage of prime cost method Machine hour rate method Percentage of direct material cost method Percentage of direct labour cost method

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

ABC Analysis Fixation of raw material levels Maintaining stores ledger Control over slow moving and non moving items

79. Out of the following, what is not the work of purchase department:

Receiving purchase requisition Exploring the sources of material supply Preparation and execution of purchase orders Accounting for material received

80. Bin Card is a:

Quantitative as well as value wise records of material received, issued and balance Quantitative record of material received, issued and balance Value wise records of material received, issued and balance A record of labour attendance

81. Stores Ledger is a:

Quantitative as well as value wise records of material received, issued and balance Quantitative record of material received, issued and balance Value wise records of material received, issued and balance A record of labour attendance

82. Re-order level is calculated as:

Maximum consumption x Maximum re-order period Minimum consumption x Minimum re-order period 1/2 of (Minimum + Maximum consumption) Maximum level - Minimum level

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

Maximum and equal Minimum and equal It can be maximum or minimum depending upon case to case Minimum and unequal

84. ABC analysis is an inventory control technique in which:

Inventory levels are maintained Inventory is classified into A, B and C category with A being the highest quantity, lowest value Inventory is classified into A, B and C Category with A being the lowest quantity, highest value Either B or C

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

FIFO LIFO Weighted Average EOQ

86. In case of rising prices (inflation), FIFO method will:

Provide lowest value of closing stock and profit Provide highest value of closing stock and profit Provide highest value of closing stock but lowest value of profit Provide highest value of profit but lowest value of closing stock

87. In case of rising prices (inflation), LIFO will:

Provide lowest value of closing stock and profit Provide highest value of closing stock and profit Provide highest value of closing stock but lowest value of profit Provide highest value of profit but lowest value of closing stock

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

5600 units 800 units 1400 units 200 units

89. 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%

310 400 290 300

90. Calculate the value of closing stock from the following according to FIFO method: 1st January, 2024: Opening balance: 50 units @ Rs. 4, Receipts: 5th January, 2024: 100 units @ Rs. 5, 12th January, 2024: 200 units @ Rs. 4.50, Issues: 2nd January, 2024: 30 units, 18th January, 2024: 150 units

Rs. 765 Rs. 805 Rs. 786 Rs. 700

91. Calculate the value of closing stock from the following according to LIFO method: 1st January, 2024: Opening balance: 50 units @ Rs. 4, Receipts: 5th January, 2024: 100 units @ Rs. 5, 12th January, 2024: 200 units @ Rs. 4.50, Issues: 2nd January, 2024: 30 units, 18th January, 2024: 150 units

Rs. 765 Rs. 805 Rs. 786 Rs. 700

92. Calculate the value of closing stock from the following according to Weighted Average method: 1st January, 2024: Opening balance: 50 units @ Rs. 4, Receipts: 5th January, 2024: 100 units @ Rs. 5, 12th January, 2024: 200 units @ Rs. 4.50, Issues: 2nd January, 2024: 30 units, 18th January, 2024: 150 units

Rs. 765 Rs. 805 Rs. 786 Rs. 700

93. Cost of abnormal wastage is:

Charged to the product cost Charged to the profit & loss account Charged partly to the product and partly profit & loss account Not charged at all

94. 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.

1000 units 6000 units 3000 units 7000 units

95. From the following information, calculate the extra cost of material by following EOQ: Annual consumption: 45000 units, Ordering cost per order: Rs. 10, Carrying cost per unit per annum: Rs. 10, Purchase price per unit: Rs. 50, Re-order quantity at present: 45000 units. There is a discount of 10% per unit in case of purchase of 45000 units in bulk.

No saving Rs. 2,00,000 Rs. 2,22,010 Rs. 2,990

96. Which of the following is an abnormal cause of Idle time:

Time taken by workers to travel the distance between the main gate of factory and place of their work Time lost between the finish of one job and starting of next job Time spent to meet their personal needs like taking lunch, tea etc Machine break downs

97. If overtime is resorted to at the desire of the customer, then the overtime premium:

should be charged to costing profit and loss account should not be charged at all should be charged to the job directly should be charged to the highest profit making department

98. Labour turnover means:

Turnover generated by labour Rate of change in composition of labour force during a specified period Either of the above Both of the above

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

Dissatisfaction with Job Lack of training facilities Low wages and allowances Disability, making a worker unfit for work

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

Preventive Costs only Replacement costs only Both of the above Machine costs

101. Calculate workers left and discharged from the following: Labour turnover rates are 20%, 10% and 6% respectively under Flux method, Replacement method and Separation method. No. of workers replaced during the quarter is 80.

112 80 48 64

102. Calculate workers recruited and joined from the following: Labour turnover rates are 20%, 10% and 6% respectively under Flux method, Replacement method and Separation method. No. of workers replaced during the quarter is 80.

112 80 48 64

103. Calculate the labour turnover rate according to replacement 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.

4.55% 1.82% 6% 3%

104. 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.

4.55% 1.82% 6% 3%

105. 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?

Rs. 720 Rs. 540 Rs. 600 Rs. 900

106. Overhead refers to:

Direct or Prime Cost All Indirect costs only Only Factory indirect costs Only indirect expenses

107. Allotment of whole item of cost to a cost centre or cost unit is known as:

Cost Apportionment Cost Allocation Cost Absorption Machine hour rate

108. Which of the following is not a method of cost absorption?

Percentage of direct material cost Machine hour rate Labour hour rate Repeated distribution method

109. Service departments costs should be allocated to:

Only Service departments Only Production departments Both Production and service departments None of the production and service departments

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

Floor Area Value of Machines No. of Workers No. of Machines

111. Blanket overhead rate is:

One single overhead absorption rate for the whole factory Rate which is blank or nil rate Rate in which multiple overhead rates are calculated for each production department, service department etc Always a machine hour rate

112. AT Co makes a single product and is preparing its material usage budget for next year. Each unit of product requires 2kg of material, and 5,000 units of product are to be produced next year. Opening inventory of material is budgeted to be 800 kg and AT Co budgets to increase material inventory at the end of next year by 20%. The material usage budget for next year is:

8,000 Kg 9,840 kg 10,000 Kg 10,160 Kg

113. During a period 17,500 labour hours were worked at a standard cost of Rs. 6.50 per hour. The labour efficiency variance was Rs. 7,800 favourable. How many standard hours were produced?

1200 16300 17500 18700

114. In most of the manufacturing industries, the most important element of cost is:

Material Labour Overheads None of the above

115. Which of the following is NOT considered to be Normal loss of Materials?

Loss due to accidents Pilferage Loss due to breaking the bulk Loss due to transferring of liquid materials from container to another

116. Which of following is NOT considered as Normal loss of material?

Loss due to evaporation due to prevalent weather conditions Loss due to pilferage Loss due to breaking the bulk Loss due to transferring of liquid materials from container to another

117. At the economic ordering quantity level, the following is true on an annual basis:

Ordering Cost is minimum Carrying Cost is minimum Ordering Cost is equal to the Carrying Cost Purchase Price is minimum

118. Continuous Stock Taking is a part of:

Annual Stock Taking Perpetual Inventory ABC Analysis Bin Cards

119. In which of the following methods, issues of materials are priced at pre-determined rate?

Inflated Price Method Standard price method Replacement Price Method Market Price Method

120. When Material prices fluctuate widely, the method of pricing that gives absurd results is:

Simple Average Price Weighted Average price Moving Average Price Inflated Price

121. When prices fluctuate widely, the method that will smooth out the effect of fluctuations is:

Simple Average Price Weighted Average price FIFO LIFO

122. Under the FSN system of Inventory Control, Inventory is Classified on the basis of:

Volume of material consumption Frequency of usage of items of inventory Criticality of the item of inventory of production Value of Items of Inventory

123. Form used for making a formal request to the Purchasing Department to purchase materials is a:

Material transfer note Purchase Requisition Note Bill of materials Material requisition note

124. Classification of Materials on the basis of their Importance in Value is called:

EOQ Analysis Stock level analysis ABC Analysis Value analysis

125. For Return of Excess Materials from Production Department to stores, the document used is:

Material return note Stores debit note Shop Credit Note All the above (same)

126. Which of the following is NOT related to a standard list of materials and components?

Consumption Statement Bill of materials Material specification list Material list

127. Which of the following is NOT recorded on a Bin card?

Material received from supplier Material issued to production depts Inter department transfers Loss of materials

128. What is the formula for Re-order level?

Minimum Usage x minimum lead time Minimum Usage x maximum lead time Maximum Usage x minimum lead time Maximum Usage x maximum lead time

129. (ROL+ROQ (-) minimum usage x minimum lead time) is the computation formula for….

Maximum level Minimum level Average level Danger level

130. Inventory turnover ratio is expressed in:

Rupees Percentage Times Any of the above

131. Generally, a ______ T/o and ______ days Average Inventory held is preferable:

High, less Low, high Low, low High, high

132. Pricing of Materials in the order in which they are purchased is called _______ method:

Specific Identification FIFO LIFO Orderly

133. Landed cost of materials does not include…..:

Cost of Containers Carriage Inwards Stock Insurance Unloading Charges

134. Cost of abnormal loss of materials is:

Debited to costing P & L Credited to Costing P&L Included in Landed Cost Included in OH

135. Idle time is the time under which:

Full wages are paid to workers No output is produced by the workers Both (a) and (b) None of the above

136. When a direct Worker is paid on a monthly fixed salary basis, the following is true:

There is no idle time lost There is no idle time cost Idle time cost is separated and treated as overhead Salary is fully treated as factory overhead cost

137. Time and Motion study is conducted by:

Time Keeping Department Personnel Department Payroll Department Engineering Department

138. Wages sheet is generally prepared by:

Time Keeping Department Personnel Department Payroll Department Engineering Department

139. For reducing the labour cost per unit, which of the following factors is most important?

Low wage rate Longer hours of work Higher Productivity or Efficiency Strict control and supervision

140. Time Booking refers to a method wherein __________ of an employee is recorded:

Attendance Bookkeeping details Health Status Time spent on a particular job

141. Employee Cost includes:

Wages and salaries Allowances and incentives Payment for Overtime All of the above

142. Standard Time of a job is 60 hours and guaranteed time rate is Rs. 90 per hour. What is the amount of wages under Rowan plan if job is completed in 48 hours?

Rs. 1620 Rs. 1728 Rs. 1800 Rs. 1440

143. Standard Time of a job is 60 hours and guaranteed time rate is Rs. 90 per hour. What is the amount of wages under Halsey plan if job is completed in 48 hours?

Rs. 1620 Rs. 1440 Rs. 180 Rs. 1728

144. If Overtime is required for meeting urgent orders, the Overtime premium should be charged as:

Respective job Overhead Cost Costing P&L a/c None of above

145. Keeping a record of total time spent by the worker inside the factory is called:

Time keeping Time Booking Time Managing Time Recording

146. Wages attributable to Normal idle Time is treated as:

Direct Wages Production OH Either of the above None of the above

147. In the context of Labour Turnover, Number of Workers left and discharged is called:

Accession Replacement New replacement Separation

148. (Hours worked X Rate per hour) is the computation of wages under:

Incentive System Piece rate System Attendance System Time rate System

149. Under Halsey System, generally Bonus is computed as_________ x (Time Saved x Rate per hour):

30% 50% 70% Actual Hrs/Std. Hrs

150. A worker will earn wages under Halsey and Rowan System, if time Saved equals:

50% of Std Time 50% of Actual Time 1/2 of Total Time 1/2 of Lost time

151. Labour Efficiency (based on time) is given by the Formula:

Std Time /Actual Time Actual time /std time Idle Time/Std time Idle Time /Actual Time

152. If wages per day of 8 hours is Rs 500, std output is 100 units, Actual Output is 120, piece rate wages:

Rs. 500 Rs. 600 Rs. 62.5 Rs. 5

153. If Std Time is 8 hours, Actual time is 6 hours, rate per hour is Rs. 100, Rowan Wages =

Rs. 600 Rs. 150 Rs. 750 Rs. 700

154. If Actual Output in 8 hours is 700 units, Standard Output is 90 units per hour, Efficiency Ratio is:

97.22% 102.86% 100% 77.78%

155. Fixed over costs are not affected in monetary terms during a given period by a change in Output. But this statement is valid provided:

Increase in Output is not Substantial Increase in Output is substantial Both (a) and (b) None of the above

156. _________ Capacity is defined as actually utilised capacity of a plant.

Theoretical Installed Practical Idle

157. Maximum Possible Productive Capacity of a plant when no operating time is lost is its

Normal Capacity Practical Capacity Theoretical Capacity Capacity based on Sales Expectancy

158. Charging of common Overheads cost to various cost centres, using appropriate bases is known as:

Allocation Apportionment Absorption Re-Apportionment

159. Distribution of service Department Overheads Cost to production Departments using different assumptions and methods is known as:

Allocation Apportionment Absorption Re-Apportionment

160. Packing Cost is part of:

Production cost Selling Cost Distribution Cost It may be any of the above

161. Which of the following is not treated as a Manufacturing Overhead?

Lubricants Cotton Waste Apportioned administration overheads Night Shift allowance paid to a factory Worker due to general work pressure

162. The difference between Actual Factory Overhead and Absorbed Factory Overhead will be usually at the minimum level, provided pre-determined overhead rate is based on:

Maximum capacity Direct Labour Hours Machine Hours Normal Capacity

163. When Absorbed Overhead is Higher than the amount of Overhead incurred, it is called:

Under absorption of overhead Over absorption of overhead Proper absorption of overhead Re-absorption of overhead

164. Which of the following overhead cost may not be apportioned on the basis of Direct Wages?

Worker's Holiday pay Perquisites to workers ESI Contribution Managerial Salaries

165. The following is an example of direct expenses as per CAS-10:

Special raw material which is a substantial part of the prime cost Travelling expenses to site. Overtime charges paid to direct worker to complete work before time. Catalogue of prices of finished products.

166. CAS 21 stands for:

Capacity Determination Joint Cost Direct Expenses None of these

167. Standard deals with the cost of service cost center is:

CAS-9 CAS-13 CAS-16 CAS-22

168. Which standards deals with the principles and methods of determining depreciation and amortization cost?

CAS 9 CAS 12 CAS 15 CAS 16

169. Which standards deals with determination of averages/ equalized transportation cost?

CAS 5 CAS 6 CAS 9 CAS 22

170. Which standard deals with the principles and methods of determining the manufacturing Cost of excisable goods?

CAS 2 CAS 12 CAS 15 CAS 22

171. _____ deals with the principles and methods of determining the production or operation overheads.

CAS-3 CAS-5 CAS-9 CAS-16

172. CAS 13 stands for:

Joint Cost Interest and financing charges Employee Cost Cost of Service cost centre

173. Which of the following items is not included in preparation of cost sheet?

Carriage inward Purchase returns Sales Commission Interest paid

174. Which of the following items is not excluded while preparing a cost sheet?

Goodwill written off Provision for taxation Property tax on Factory building Transfer to reserves

175. Which of the following are direct expenses? (1) The cost of special designs, drawings or layouts, (2) The hire of tools or equipment for a particular job, (3) Salesman’s wages, (4) Rent, rates and insurance of a factory

(1) and (2) (1) and (3) (1) and (4) (3) and (4)

176. What is prime cost?

Total direct cost only Total Indirect Costs only Total Non-Production Costs Total Production Costs

177. Which of the following is not an element of works overhead?

Sales manager’s salary Plant manager’s salary Factory repairman’s wages Product inspector’s salary

178. For the purpose of Cost Sheet preparation, costs are classified based on:

Functions Relevance Variability Nature

179. Salary paid to an office supervisor is a part of:

Direct expenses Administration cost Quality control cost Factory overheads

180. Audit fees paid to cost auditors is part of:

Selling and distribution cost Production cost Administration cost Not recorded in the cost sheet

181. A company has set up a laboratory for testing of products for compliance with standards. Salary of this laboratory staff are part of:

Direct expenses Quality control cost Works overheads Research and development cost

182. Canteen expenses for factory workers are part of:

Administration cost Factory overhead Marketing cost None of the above

183. Which of the following does not form part of prime cost?

GST paid on raw materials (input credit can be claimed) Cost of transportation paid to bring materials to factory Cost of packing Overtime premium paid to workers

184. A company pays royalty to State Government on the basis of production, it is treated as:

Direct expenses Factory overheads Direct Material Cost Administration Cost

185. In Reconciliation Statements, expenses shown only in financial accounts are:

Added to financial profit Deducted from financial profit Ignored Added to costing profit

186. In Reconciliation Statement, expenses shown only in cost accounts are:

Added to financial profit Deducted from financial profit Ignored Deducted from costing profit

187. In Reconciliation Statement, transfers to reserves are:

Added to financial profit Deducted from financial profit Ignored Added to costing profit

188. In Reconciliation Statement, incomes shown only in financial accounts are:

Added to financial profit Deducted from financial profit Ignored Deducted from costing profit

189. In Reconciliation Statement, Closing Stock undervalued in Financial Accounts is:

Added to financial profit Deducted from financial profit Ignored Added to costing profit

190. Under non-integrated accounting system:

Separate ledgers are maintained for cost and financial accounts Same ledger is maintained for cost and financial accounts by accountants (A) and (B) both None of the above

191. Under non-integrated system of accounting, purchase of raw material is debited to:

Purchase account Material control account / stores ledger control account General ledger adjustment account None of the above

192. When costing loss is Rs. 5,600, administrative overhead under-absorbed being Rs. 600, the loss as per financial accounts should be _______.

Rs. 5000 Rs. 5600 Rs. 6200 None of the above

193. Which of the following items should be added to costing profit to arrive at financial profit?

Income tax paid Over absorption of works overhead Interest paid on debentures All of the above

194. Integral accounts eliminate the necessity of operating:

Cost Ledger control account Store Ledger control account Overhead adjustment account None of the above

195. Under Non-integrated accounting system, the amount made to complete double entry is:

Finished goods control account Work in progress control account Stores ledger control accounts General ledger adjustment account

196. Under the Non-Integrated Accounting System:

Separate ledgers are maintained for Cost and Financial Accounts Same ledger is maintained for Cost and Financial Accounts by Accountants (A) and (B) both None of the above

197. Notional Costs -

May be included in Integrated Accounts May be Included in Non-Integrated accounts Cannot Be included in Non-integrated Accounts Are not accounted at all in Integrated or Non-integrated Accounts

198. Which account is to be debited if materials worth Rs 500 are returned to vendor under Non-Integrated Accounts?

Cost Ledger control account Finished goods control Account WIP Control Account General ledger adjustment account

199. What is the journal Entry under Integrated System for recording Sales made?

No entry Dr sales, Cr General Ledger Adjustment Dr. cash or bank Cr. Sales Dr. General Ledger Adjustment, Cr. sales

200. Which of the following items is most likely to be included in Cost Accounts?

Notional Rent Donations Transfer to General Reserve Rent Receivable

201. Job costing is used in:

Furniture making Repair shops Printing press All of the above

202. In a job cost system, costs are accumulated ___________.

On a monthly basis By specific job By department or process By kind of material used

203. The most suitable cost system where the products differ in type of material and work performed is:

Operating Costing Job costing Process costing All of these

204. Cost Price is not fixed in case of:

Cost plus contracts Escalation clause De escalation clause All of the above

205. Most of the expenses are direct in:

Job costing Batch costing Contract costing None of the above

206. Cost plus contract is usually entered into those cases where ________.

Cost can be easily estimated Cost of certified and uncertified work Cost of certified work, cost of uncertified work and amount of profit transferred to Profit and Loss Account Determination of contract cost with reasonable accuracy is not possible

207. In order to determine cost of the products or services, different business firms follow:

Different techniques of costing Uniform costing Different methods of costing None of the above

208. In case product produced or jobs undertaken are of diverse system, the system of costing to be used should be:

Operating Costing Process Costing Job Costing None of the above

209. Job Costing is:

Suitable where similar products are produced on mass scale Methods of costing used for non-standard and non-repetitive products Technique of costing applicable to all industries regardless of the products or services provided None of the above

210. Batch costing is a type of:

Direct Costing Process Costing Job Costing Differential Costing

211. Batch costing is similar to that under job costing except with the difference that:

Process becomes a cost unit Job becomes a cost unit Batch become the cost unit instead of a job None of the above

212. Economic batch quantity is that size of the batch of production where:

Carrying cost is minimum Set-up cost of machine is minimum Average cost is minimum Both A. and B

213. Which of the following documents are used in job costing to record the issue of direct materials to a job?

Purchase order Purchase requisition Goods received note Material requisition

214. Which of the following statements is true?

Batch costing is a variant of jobs costing Job cost sheet may be used for estimating profit of jobs Job costing cannot be used in conjunction with marginal costing In cost plus contracts, the contractor runs a risk of incurring a loss

215. Which of the statement is true?

Job costing can be suitably used for concerns producing any specific product uniformly Job costing cannot be used in companies applying standard costing Job cost sheet may be prepared to facilitate routing and scheduling of the job Neither A, nor B, nor C

216. The type of process loss that should not be allowed to affect the cost of good units is called:

Standard Loss Normal Loss Abnormal Loss Seasonal Loss

217. Spoilage that occurs under inefficient operating conditions and is generally controllable is called _______.

Normal defectives Abnormal spoilage Normal spoilage None of the above

218. In which of the following situations an abnormal gain in a process occurs:

When normal loss is equal to actual loss When the actual output is greater than the planned output When actual loss is more than the expected When actual loss is less than the expected loss

219. The value of abnormal loss is equal to:

Total cost of materials Total process cost less cost of scrap Total process cost less realisable value of normal loss less value of transferred out goods Total process cost less realisable value of normal loss

220. A process account is debited by abnormal gain, the value is determined as:

Equal to the value of good units less closing stock Equal to the value of normal loss Cost of good units less realisable value of normal loss Cost of good unit less realisable value of actual loss

221. In sugar manufacturing industry molasses is also produced along with sugar. Molasses may be of small value as compared with the value of sugar and is known as:

Joint product Common product By-product None of them

222. Method of apportioning joint costs on the basis of output of each joint product at the point of split off is known as:

Physical unit method Sales value method Average cost method Marginal cost and contribution method

223. The main purposes of accounting of joint products and by-products is to:

Determine the replacement cost Determine the opportunity cost Determine profit or loss on each product line None of the above

224. Under net realizable value method of apportioning joint costs to joint products, the selling & distribution cost is:

Ignored Deducted from sales value Deducted from further processing cost Added to joint cost

225. Which of the following is an example of by-product:

Mustard seeds and mustard oil Diesel and Petrol in an oil refinery Edible oils and oil cakes Curd and butter in a dairy

226. Which of following methods can be used when the joint products are of unequal quantity and used for captive consumption:

Physical units method Net realizable value method Technical estimates, using market value of similar goods Market value at split-off method

227. Cost of a particular service under operating costing is ascertained by preparing:

Cost sheet Process account Job cost sheet Production account

228. Operating costing is applicable to:

Hospitals Cinemas Transport undertaking All of the above

229. Composite cost unit for a hospital is:

Per day Per bed Per patient day Per patient

230. Cost units used in power sector is called:

Number of hours Number of electric points Kilowatt-hour (KWH) Kilometer (K.M.)

231. Absolute Tonne-Km is an example of:

Composite unit for bus operation Composite unit of transport sector Composite unit for oil and natural gas Composite unit in power sector

232. In process costing, a joint product is:

A product which is later divided into many parts A product which is produced simultaneously with other products and is of similar value to at least one of the other products. A product which is produced simultaneously with other products but which is of a greater value than any of the other products. A product produced jointly with another organization

233. Process B had no opening inventory. 13,500 units of raw material were transferred in at Rs. 4.50 per unit. Additional material at Rs. 1.25 per unit was added in process. Labour and overheads were Rs. 6.25 per completed unit and Rs. 2.50 per unit incomplete. If 11,750 completed units were transferred out, what was the closing inventory in Process B?

Rs. 6562.50 Rs. 12,250.00 Rs. 14,437.50 Rs. 25,375.00

234. A process costing system for J Co used an input of 3,500Kg of materials at Rs. 20 per Kg and labour hours of 2,750 at Rs. 25 per hour. Normal loss is 20% and losses can be sold at a scrap value of Rs. 5 per Kg. Output was 2,950 Kg. What is the value of the output?

Rs. 142,485 Rs. 146,183 Rs. 149,746 Rs. 152,986

235. In process costing, if an abnormal loss arises, the process account is generally:

Debited with the scrap value of the abnormal loss units Debited with the full production cost of the abnormal loss units Credited with the scrap value of the abnormal loss units Credited with the full production cost of the abnormal loss units

236. Which of the following statements is/are correct?

1. A materials requisition note is used to record the issue of direct material to a specific job. 2. A typical job cost will contain actual costs for material, labour and production overheads, and non –production overheads are often added as a percentage of total production cost. 3. The job costing method can be applied in costing batches. (1) and (2) only

237. A job is budgeted to require 3,300 productive hours after incurring 25% idle time. If the total labour cost budgeted for the job is Rs. 36,300. What is the labour cost per hour (to the nearest cent)?

Rs. 8.25 Rs. 8.80 Rs. 11.00 Rs. 14.67

238. 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 Rs. 1690 and incurred overheads of Rs. 694. What was the prime cost of the job?

Rs. 489 Rs. 606 Rs. 996 Rs. 1300

239. 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) and (2) only

240. Which of the following organisations should not be advised to use service costing?

Distribution service Hospital Maintenance division of a manufacturing company A light engineering company

241. In case of joint products, the main objective of accounting of the cost is to apportion the joint costs incurred up to the split off point. For cost apportionment one company has chosen Physical Quantity Method. Three joint products ‘A’, ‘B’ and ‘C’ are produced in the same process. Up to the point of split off the total production of A, B and C is 60,000 kg, out of which ‘A’ produces 30,000 kg and joint costs are Rs. 3,60,000. Joint costs allocated to product A is:

Rs. 1,20,000 Rs. 60,000 Rs. 1,80,000 None of these

242. A transport company is running five buses between two towns, which are 50 kms apart. Seating capacity of each bus is 50 passengers. Actually passengers carried by each bus were 75% of seating capacity. All buses ran on all days of the month. Each bus made one round trip per day. Passenger kms are:

2,81,250 1,87,500 5,62,500 None of the above

243. The cost of a product under marginal costing system includes:

Prime cost plus variable overhead Prime cost plus fixed overhead Prime cost plus factory overhead Only prime cost

244. The difference between absorption costing and marginal costing is in regard to the treatment of:

Direct materials Fixed overhead Prime cost Variable overhead

245. Fixed costs are treated as:

Overhead costs Prime costs Period costs Conversion costs

246. When sales and production (in units) are the same then profits under:

Marginal costing is lower than that of absorption costing Marginal costing is higher than that of absorption costing Marginal costing is equal to that of absorption costing None of the above

247. When sales exceed production (in units) then profit under:

Marginal costing is higher than that of absorption costing Marginal costing is equal to that of absorption costing Marginal costing is lower than that of absorption costing None of the above

248. Which of the following factors is responsible for change in the break-even point?

Change in selling price Change in variable cost Change in fixed cost All of the above

249. Variable cost:

Remains fixed in total Remains fixed per unit Varies per unit Nor increase or decrease

250. Marginal Costing technique follows the following basic classification:

Element wise Function Wise Behaviour wise Identifiability wise

251. P/V ratio will increase if the:

There is a decrease in fixed cost There is an increase in fixed cost There is a decrease in selling price per unit There is a decrease in variable cost per unit

252. The technique of differential cost is adopted when:

To ascertain P/V ratio To ascertain marginal cost To ascertain cost per unit To make choice between two or more alternative courses of action

253. Which of the following would not be used to estimate standard direct material prices?

The availability of bulk purchase discounts Purchase contracts already agreed The forecast movement of prices in the market Performance standards in operation

254. What is an attainable standard?

A standard which includes no allowance for losses, waste and inefficiencies. A standard which includes some allowance for losses, waste and inefficiencies. A standard which is based on currently attainable operating conditions. A standard which is kept unchanged, to show the trend in costs.

255. Budgets are shown in terms:

Qualitative Quantitative Materialistic Both (b) and (c)

256. Which of the following is not an element of master budget?

Capital Expenditure Budget Production Schedule Operating Expenses Budget All of the above

257. Which of the following is not a potential benefit of using a budget?

Enhanced coordination of firm activities More motivated managers Improved inter-departmental communication More accurate external financial statements

258. Which of the following is a long-term budget?

Master Budget Flexible Budget Cash Budget Capital Budget

259. Materials become key factor, if:

Quota restrictions exist Insufficient advertisement prevails There is low demand There is no problem with supplies of materials

260. The difference between fixed cost and variable cost assumes significance in the preparation of the following budget:

Master Budget Flexible Budget Cash Budget Capital Budget

261. The budget that is prepared first of all is ________.

Master budget Sales budget assuming that it is the key factor Cash Budget Capital expenditure budget

262. Sales budget is a ________.

Expenditure budget Functional budget Master budget None of these

263. When a company wants to prepare a factory overhead budget in which the estimated costs are directly derived from the estimates of activity levels, which of the following budget should be prepared by the company?

Flexible budget Fixed budget Master budget R & D budget

264. Which of the following budgets facilitates classification of fixed and variable costs:

Capital expenditure budget Flexible budget Cash budget Raw materials budget

265. The entire budget organisation is controlled and headed by a senior executive known as:

General Manager Accountant Budget Controller None of the above

266. Which of the following is a long-term budget?

Master Budget Flexible Budget Cash Budget Capital Budget

267. A flexible budget requires a careful study of:

Fixed, semi-fixed and variable expenses Past and current expenses Overheads, selling and administrative expenses None of these

268. The basic difference between a fixed budget and flexible budget is that a fixed budget ____________.

Is concerned with a single level of activity, while flexible budget is prepared for different levels of activity Is concerned with fixed costs, while flexible budget is concerned with variable costs Is fixed while flexible budget changes None of these

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

Wage rate increase Machine breakdown Illness or injury to worker Non-availability of material

270. 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?

Rs. 14 Rs. 16.50 Rs. 17.50 Rs. 18

271. Which of the following would explain an adverse variable production overhead efficiency variance?

1. Employees were of a lower skill level than specified in the standard 2. Unexpected idle time resulted from a series of machine breakdown 3. Poor Quality material was difficult to process (1), (2) and (3)

272. Budgeted sales of X for March are 18000 units. At the end of the production process for X, 10% of production units are scrapped as defective. Opening inventories of X for March are budgeted to be 15000 units and closing inventories will be 11,400 units. All inventories of finished goods must have successfully passed the quality control check. The production budget for X for March, in units is:

12960 14400 15840 16000

273. CG Co manufactures a single product T. Budgeted production output of product T during June is 200 units. Each unit of product T requires 6 labour hours for completion and CG Co anticipates 20 per cent idle time. Labour is paid at a rate of Rs.7 per hour. The direct labour cost budget for March is:

Rs. 6,720 Rs. 8,400 Rs. 10,080 Rs. 10,500

274. 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?

Capital cost of a new collection vehicle Depreciation of the machinery Operatives wages Fuel for the collection Vehicles

275. The actual output of 162,500 units and actual fixed costs of Rs. 87,000 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?

Rs. 1.20 Rs. 1.31 Rs. 1.42 Rs. 1.50

276. A ltd is a manufacturing company that has no production resource limitations for the foreseeable future. The Managing Director has asked the company managers 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

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

277. 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?

10.1% decrease 11.2% decrease 13.3% decrease 16.0% decrease

278. 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:

2,000 units 3,000 units 4,000 units 6,000 units

279. A company manufactures a single product for which cost and selling price data are as follows: Selling price per unit - Rs. 12 Variable cost per unit - Rs. 8 Fixed cost for a period - Rs. 98,000 Budgeted sales for a period - 30,000 units The margin of safety, expressed as a percentage of budgeted sales, is:

20% 25% 72% 125%

280. A company's break even point is 6,000 units per annum. The selling price is Rs. 90 per unit and the variable cost is Rs. 40 per unit. What are the company's annual fixed costs?

Rs. 120 Rs. 2,40,000 Rs. 3,00,000 Rs. 5,40,000

281. 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—

22,000 units 20,000 units 21,000 units None of the above.

282. 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.

Rs. 145 Rs. 150 Rs. 152 Rs. 140

283. In ‘make or buy’ decision, it is profitable to buy from outside only when the supplier’s price is below the firm’s own:

Fixed Cost Variable Cost Total Cost Prime Cost

284. A budget which is prepared in a manner so as to give the budgeted cost for any level of activity is known as:

Master budget Zero base budget Functional budget Flexible budget

285. ___________ is a summary of all functional budgets in a capsule form.

Functional Budget Master Budget Long Period Budget Flexible Budget

286. ______ is a detailed budget of cash receipts and cash expenditure incorporating both revenue and capital items.

Cash Budget Capital Expenditure Budget Sales Budget Overhead Budget

287. Following information is available of XYZ Limited for quarter ended June, 2023: Fixed cost Rs. 5,00,000 Variable cost Rs. 10 per unit Selling price Rs. 15 per unit Output level 1,50,000 units. What will be amount of profit earned during the quarter using the marginal costing technique?

Rs. 2,50,000 Rs. 10,00,000 Rs. 5,00,000 Rs. 17,50,000

288. The P/V ratio of a company is 50% and margin of safety is 40%. If present sales is Rs. 30,00,000 then Break Even Point in Rs. will be:

Rs. 9,00,000 Rs. 18,00,000 Rs. 5,00,000 None of the above

289. 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:

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

290. In element-wise classification of overheads, which one of the following is not included?

Fixed overheads Indirect labour Indirect materials Indirect expenditure

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

20% 30% 25% 40%

292. In activity based costing, costs are accumulated by activity. Such accumulated amounts are called:

Cost drivers Cost objects Cost pools Cost Benefits Analysis

293. Steps in ABC Include:

Identification of activities and their respective costs Identification of cost driver of each activity and computation of an allocation rate per activity Allocation of Overhead Cost to products/services based on the activities involved All of the above

294. Which of the following is not a benefit of ABC?

Accurate cost allocation Improved decision making Better control on activity and costs Reduction of prime cost

295. The key elements of Activity Based Budgeting are:

Type of Activity to be performed Quantity of activity to be performed Cost of activity to be performed All of the above

Question Bank Costing