Cost & Management Accounting – Test Paper 1
Time : 1 Hr Max. Marks: 200
Each correct answer carries 4 marks while 1 mark will be deducted for each incorrect answer.
- What is the effect of Increase in fixed cost in Break Even Point Analysis
(a) Reduce Profit Volume Ratio
(b) Increase in Break-even Point
(c) Increase Margin of Safety
(d) Reduces the Contribution - The Break-even Point in units is calculated by
(a) Fixed cost/Profit Volume Ratio
(b) Fixed Cost/ Contribution per Unit
(c) Variable Cost/ Contribution per Unit
(d) Sales/ Contribution per Unit - The basic difference between Marginal costing and absorption costing is the treatment of
(a) Direct Material
(b) Variable Cost
(c) Fixed Cost
(d) Sales Cost - Why cash Budget is prepared ?
(a) It helps in cash Management
(b) It helps in preparing Balance Sheet
(c) It is legally compulsory
(d) To calculate Profit & Loss - Activity based costing is method of
(a) Costing
(b) Allocation
(c) Analysis
(d) All of these - In activity based costing an activity which generate cost is a
(a) Cost Sheet
(b) Cost driver
(c) Cost Tools
(d) Cost Method - Cost drives for Inspection are
(a) Number of Machine hours
(b) Number of Inspectors
(c) Number of Inspections
(d) Number of Methods - Ram Ltd used 4538 Kg of material at a standard cost Rs. 2.50 per Kg. The material usages variance was 280 (favourable). The Standard usage of Material for the period is
(a) 4700 Kg
(b) 4650 Kg
(c) 4600 Kg
(d) 4588 Kg - During a period 17500 labour hours were worked at a standard cost of Rs. 6.50 per hour. If labour efficiency variance is 7800 (favourable). The standard Labour hours are
(a) 20,000 hours
(b) 18700 hours
(c) 19200 hours
(d) 18500 hours - The main object of cost accounting is
(a) To minimise the waste
(b) Help in Inventory Valuation
(c) To control and to reduce the cost
(d) Help in fixation of price - Conversion cost is equal to
(a) Material cost and Direct Wages
(b) Material cost and Indirect Wages
(c) Direct wages and factory overhead
(d) Material cost and factory overhead - If cost of 1000 units is Rs. 1000 and 1500 units is Rs. 1500, then Fixed cost is
(a) 2000
(b) 1000
(c) 500
(d) Zero - The most suitable cost system where the Product is different by type of Material and work performance
(a) Job Costing
(b) Operating Costing
(c) Process Costing
(d) None of these - A Budget that gives a summary of all the functional Budgets and projected profit & Loss A/c is known as
(a) Capital Budget
(b) Flexible Budget
(c) Master Budget
(d) None of these - When preparing a Production Budget, the quantity to be produced is equal to
(a) Sales + Opening Stock + Closing Stock
(b) Sales – Opening Stock + Closing Stock
(c) Sales – Opening Stock – Closing Stock
(d) Sales + Opening Stock – Closing Stock - X requires 2400 Actual labour hours to complete works, 20% is Idle time, wages Rate is Rs. 10 per hour. Calculate Labour cost.
(a) Rs. 19200
(b) Rs. 24000
(c) Rs. 28800
(d) Rs. 30000 - Which of the following is excluded from Cash Budget ?
(a) Depreciation on Fixed Assets
(b) Office Salaries
(c) Commission Paid to Agent
(d) Capital Cost of New Assets - Selling Price of X Product is Rs. 20 per unit, fixed cost Rs. 60,000. Contribution to sales ratio is 40%. Calculate Break-even Point in Units
(a) 7000 Units
(b) 7400 Units
(c) 7500 Units
(d) 8000 Units - If selling price of product is Rs. 9 per unit, variable cost Rs. 6 per unit, Fixed cost Rs. 54000 per year, when Actual sales is Rs. 1,80,000. Calculate Margin of safety in units
(a) 2000 units
(b) 4000 units
(c) 6000 units
(d) 8000 Units - Contribution Ratio is 30%, Fixed Cost Rs 75000 per month. Calculate Sales per month to get Rs. 15000 as profit per month
(a) Rs. 2,00,000
(b) Rs. 3,00,000
(c) Rs. 2,76,000
(d) Rs. 2,50,000 - If sales is Rs. 50,00,000, profit volume Ratio is 50% and Margin of safety is 40%. Calculate Profit.
(a) Rs. 25,00,000
(b) Rs. 20,00,000
(c) Rs.10,00,000
(d) None of these - An increase in selling price will effect
(a) Increase in Break-even point
(b) Decrease in Break-even point
(c) Does not affect Break-even Point
(d) None of these - If fixed cost decreases while variable cost is remained unchanged new Break Even Point in relation to old Break-even point will be
(a) Lower
(b) Higher
(c) No change
(d) None of these - Which of the following is an irrelevant cost ?
(a) Sunk cost
(b) Opportunity cost
(c) Replacement cost
(d) All of these - When margin of safety is 28% Profit Volume Ratio is 60% Profit will be
(a) 80%
(b) 33.33%
(c) 66.67%
(d) 16.8% - An export order is generally accepted at
(a) Below Marginal cost
(b) Below Fixed cost
(c) Below total cost but above marginal cost
(d) Below total cost but above fixed cost - A company has an idle plant capacity. It gets a bulk order which will not affect prices of company products in the market. Such a bulk order may be accepted at a price which is more than its
(a) Fixed cost
(b) Variable cost
(c) Variable cost plus any opportunity cost of idle capacity
(d) Total cost - Basic standard is established for
(a) Short Period
(b) Long Period
(c) Short and long period both
(d) Indefinite Period - The logical development of Budgetary control is
(a) Marginal Costing
(b) Standard Costing
(c) Differential Costing
(d) Absorption Costing - A system where manufacturer ascertain the cost after incurring expenses is known as
(a) Standard costing
(b) Marginal costing
(c) Operating costing
(d) Historical costing - The difference between standard output and Actual output Multiplied by Standard Variable overhead rate is equal to
(a) Variable overhead cost Variance
(b) Variable overhead efficiency Variance
(c) Variable overhead Budget Variance
(d) Variable overhead Volume Variance - The Difference between Actual Fixed overhead and Budgeted Fixed overhead is known as
(a) Fixed overhead cost Variance
(b) Fixed overhead Expenditure Variance
(c) Fixed overhead Volume Variance
(d) Fixed overhead capacity Variance - In contract costing Payment of cash to the contractor is made on the basis of
(a) Uncertified work
(b) Certified work
(c) Works in progress
(d) Retention Money - Retention Money is equal to
(a) Work certified less work uncertified
(b) Contract Price Less work certified
(c) Work certified Less payment received by contractor
(d) Work certified plus cash Received - Cost unit for Paper Industry is
(a) Per Rim
(b) Per Paper
(c) Per Kg
(d) Per quintal - Total Inventory Cost is :
(a) Carrying Cost
(b) Ordering Cost
(c) Carrying Cost + Ordering Cost
(d) Purchase Cost + Carrying Cost + Ordering Cost - When work certified is less than 25% of contract Price, Profit to be transferred to Profit & Loss Account
(a) Nil
(b) 100% of Notional Profit
(c) 1/3 of Notional profit
(d) 2/3 of Notional Profit - Which Accounting Standard relates with the accounting for costruction contract
(a) Accounting Standard 5
(b) Accounting Standard 6
(c) Accounting Standard 7
(d) Accounting Standard 8 - The technique of Profit Planning is :
(a) Marginal Costing
(b) Standard Costing
(c) Budgetary Control
(d) None of these - Variable Cost is :
(a) Direct Cost
(b) Direct Cost + Variable overheads
(c) Absorption Cost
(d) None of these - Contract Price Rs. 3,00,000, Estimated Profit Rs. 60,000 Retention money 20% of certified work, works certified 60% of contract Price. Calculate amount of Profit transfer to Profit & Loss a/c
(a) Rs. 60,000
(b) Rs. 28,800
(c) Rs. 32,000
(d) Rs. 48,000 - When two or more than two products are produced which have equal value known as
(a) Joint Product
(b) By Product
(c) Co Product
(d) Scrap - Work in progress in contract costing is :
(a) Value of work certified + cost of work uncertified
(b) Cost of work certified + Cost of work uncertified
(c) Value of work certified + Cost of work uncertified Profit kept as reserve
(d) None of these - Which of the following does not use Process costing
(a) Oil Refinery
(b) Chemical works
(c) Sugar works
(d) Aircraft manufacturing - Input 12000 Kg, Normal loss 10% of input. If output is 10920 Kg. What is abnormal Loss/Gain
(a) Abnormal Gain 120 Kg
(b) Abnormal Loss 120 Kg
(c) Abnormal Gain 1080 Kg
(d) Abnormal Loss 1080 Kg - Wastage of Raw material during Process is 20% of Input. What quantity of Raw material is required per Kg of output ?
(a) 0.8 Kg
(b) 1.2 Kg
(c) 1.25 Kg
(d) 1.33 Kg - Cost unit for Water supply Industry is
(a) Per 100 gallons
(b) Per 1000 gallons
(c) Per 10000 gallons
(d) Per gallon - The Expenses which are not related to operations process but related to time (period) are known as
(a) Variable Expenses
(b) Semi Variable Expenses
(c) Semi Fixed Expenses
(d) Fixed Expenses - The cost unit in operating costing is a
(a) Simple Cost unit
(b) Composite Cost unit
(c) Simple or Composite Cost unit
(d) None of these - When the detail related with cost of production presented in the form of Account is known as
(a) Trading & Profit & Loss Account
(b) Production Account
(c) Cost sheet
(d) Statement of cost