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a) An output
b) A location
c) Raw material
d) None of these
ANSWER: b
12.Cost units are of
a) Two types
b) Three types
c) Four types
d) None of these
ANSWER: a
13. Cost accounting involves
a) Cost ascertaining
b) Ccost presentation
c) Cost control
d) All of these
ANSWER: d
14. Costing meansa) Cost of an article
b) Ascertaining cost
c) Accounting for cost
d) None of these
ANSWER: b
15. The cost of an output refers to
a) An amount of expenditure
b) Material cost
c) Overheads
d) None of these
ANSWER: a
21. The labor which is related to the manufacturing of the product is classified as
a)Direct manufacturing labor costs
b) Indirect manufacturing labor costs
c) Work in process cost
d) Finished cost
ANSWER: a
22. The direct material costs are added into direct manufacturing costs to calculate
a) Discuss costs
b) Prime costs
c) Resale cost
d) Merchandise cost
ANSWER: b
23.The direct manufacturing labor costs is added to the manufacturing overhead cost to calculate
a) Transaction costs
b) Conversion costs
c) Resale costs
d) Merchandise costs
ANSWER: b
24. In cost terms, the direct manufacturing labor cost is included in
a) Manufacturing costs
b) Prime costs
c) Conversion costs
d) Both B and C
ANSWER: d
25.The two terms in manufacturing cost systems are
a)Manufacturing costs
b)Prime costs
c)Conversion costs
d) Both B and C
ANSWER: d
26. In cost accounting, the overtime is considered as
a) Indirect costs
b) Overhead costs
c)Premium costs
d) Both a and b
ANSWER:d
27 .The costs which are considered as expenses in the accounting period are classified as
a) Inventory costs
b) Period costs
c)Ttimed costs
d)Labour overheads
ANSWER: b
28.The inventory of the final goods that are not yet sold is called
a) Finished goods inventory
b) Indirect material inventory
c) Direct materials inventory
d) Work in process inventory
ANSWER: a
29. Costing methods are concerned with
a) Finding out cost per unit
b) Finding out cost of manufacture
c) Finding out works cost
d) All of these
ANSWER: a
30. The total cost of production is Rs. 1,00,000 and if 20% of the sale price is the profit to be
added what is the profit?
a) Rs.30,000
b) Rs.25,000
c) Rs.20,000
d) Rs.35,000
ANSWER: b
UNIT-II
1. In process costing, cost follows
a. Finished goods
b. Product flow
c. Price rise
d. Price decline
2. Which of the following method of costing can be used in a large oil refinery?
a. Job costing
b. Unit costing
c. Process costing
d. Operating costing
3. The type of process loss that should not affect the cost of inventories is
a. Standard loss
b. Seasonal loss
c. Normal loss
d. Abnormal loss
4. Individual product, each of a significant value, produced simultaneously form the same
raw material is known as
a. By product
b. Joint product
c. Main product
d. Co product
5. Credit is given to the process account at a predetermined value of the by product under
a. Points value method
b. Sales value method
c. Standard cost method
d. Opportunity cost method
6. A bakery producing cakes, biscuits and breads should be treated as
a. Joint product
b. Main product
c. By product
d. Co product
7. Process costing is adopted by
a. Paper mills
b. Chemical industries
c. Textile mills
d. All the above
8. Avoidable losses arising from the nature of the productive process is termed as
a. Normal loss
b. Abnormal loss
c. Net loss
d. Gross loss
9. Products that cannot be produced separately is known as
a. By products
b. Co-products
c. Joint products
d. Main product
10. The method of accounting for joint product cost that will produce the same gross profit for
all the product is
a. Reverse cost method
b. Opportunity cost method
c. Sales value method
d. Other income method
11. When raw material has to pass through two or more distinct stages to be converted into
finished product, the costing method usually employed is
a. Process costing
b. Marginal costing
c. Job costing
d. Operation costing
12. Unit cost for each process is ascertained by dividing the net cost of the process with units
ofin the process.
a. Input
b. Output
c. Profit
d. Loss
13. In process account, normal loss and its scrap value are shown on
a. Credit side
b. Debit side
c. Balance sheet
d. None of these
14. In process account, Abnormal gain or effectiveness and its cost are shown on
a. Credit side
b. Debit side
c. Balance sheet
d. None of these
15. When actual loss in a process is more than the normal loss, the excess is termed as
a. Normal loss
b. Expected loss
c. Abnormal loss
d. Deferred loss
16. Which loss is transferred to P & L A/c
a. Normal loss
b. Expected loss
c. Deferred loss
d. Abnormal loss
17. In process costing, which represents the output of a process in terms of finished units?
a. Equivalent production
b. Joint products
c. By-products
d. Inter process
18. The two methods usually adopted to calculate equivalent production, they are
a. Average and joint method
b. Average and LIFO method
c. Joint and by-products
d. Average cost and FIFIO method
19. Inter process profits create the problem of
a. Unrealised profit
b. Realised profit
c. Revised profit
d. Normal profit
20. Process costing is suitable to industries where
a. Production is carried on in two or more consecutive stages
b. Production is as per customer specifications
c. Specialised services are rendered
d. Contracts are undertaken
21. Process cost is ascertained and recorded in
a. Balance sheet
b. Profit and loss account
c. Separate statement
d. Separation account in ledger
22. Finished products of a preceding process is
a. The raw material for subsequent process
b. Cost of production of subsequent process
c. Credited to subsequent process
d. None of these.
23. Scrap value of normal loss is
a. Credited to P & L A/c
b. Show in balance sheet
c. Credited in process A/c
d. Debited to process A/c
24. Abnormal loss and gain units are valued at
a. Market value
b. Scrap value
c. Realisable value
d. Cost per unit of the process-just like good output
25. Cost of abnormal loss is shown in
a. Balance sheet
b. P & L A/c credit side
c. P & L A/c debit side
d. None of these
a)
b)
c)
d)
ANSWER:d
9. In management control, the efficiency variance is also referred as
a) Control variance
b) Uncontrolled variance
c) usage variance
d) Effective variance
ANSWER: c
10. The energy, machine maintenance and indirect materials are considered as
a) Variable overhead cost
b) Fixed overhead cost
c) Variable batch cost
ANSWER: a
11. From the following, calculate the material price variance
Standard: 1000 units at Rs.10 each Actual: 1200units at Rs. 8 each
a)Rs. 2400
b) Rs. 2200
c) Rs. 2600
d) Rs. 2000
ANSWER: a
12. Standard: 500 units at Rs.10 each Actual: 600units at Rs. 9 each calculate the material
usage variance.
a)Rs. 1500
b) Rs. 2000
c) Rs. 1000
d) Rs. 1200
ANSWER: c
13. Actual rate per hour Rs. 3.80, Standard rate per hour Rs. 4 and Actual hours worked
Rs. 10,000 calculate the labour rate variance
a)Rs. 2000
b) Rs. 2500
c) Rs. 2450
d) Rs. 1850
ANSWER: a
14. Recovered fixed overhead Rs. 60,000, actual fixed overhead Rs. 50,000 and budgeted fixed
Overhead Rs. 70,000, calculate fixed overhead
a)Rs. 18,000
b) Rs. 19,500
c) Rs. 20,000
d) Rs. 21,500
ANSWER: c
15. Budgeted quantity 10,000units, actual quantity 9,000 units and standard price Rs. 8 per unit
Calculate sales volume variance
a)Rs. 8000
b) Rs. 6000
c) Rs. 10,000
d) Rs. 9000
ANSWER: a
16. Direct labour efficiency variance =
a) Standard rate x idle time
b) Standard rate x (Standard time for actual output Actual time worked)
c) Standard rate x (Standard time for actual output Revised Standard time)
d) Standard rate x (Revised standard time Actual time worked)
ANSWER: b
17. Direct labour revised efficiency variance =
a) Standard rate x idle time
b) Standard rate x (Standard time for actual output Actual time worked)
c) Standard rate x (Standard time for actual output Revised Standard time)
d) Standard rate x (Revised standard time Actual time worked)
ANSWER: c
18. Fixed overhead cost variance =
a) Recovered fixed overhead Actual fixed overhead
b) Budgeted fixed overhead Actual fixed overhead
c) Recovered fixed overhead Budgeted fixed overhead
d) Standard fixed overhead Budgeted fixed overhead
ANSWER: a
19. Fixed overhead capacity variance =
a) Recovered fixed overhead Actual fixed overhead
b) Budgeted fixed overhead Actual fixed overhead
c) Recovered fixed overhead Budgeted fixed overhead
d) Standard fixed overhead Budgeted fixed overhead
ANSWER: d
UNIT.IV
1. Marginal costing does not include
a. Fixed cost
b. Variable cost
c. Contribution
d. Sales
2. Contribution margin is also known as
a. Marginal income
b. Gross profit
c. Net profit
d. Loss
3. Period costs are
a. Overhead costs
b. Prime cost
c. Variable cost
d. Fixed cost
4. An increase in variable cost results in
a. Increase in PV ration
b. Increase in profit
c. Decrease in contribution
d. Decrease in profit
5. A large margin of safety indicates
a. Over production
b. Over capitalization
c. Soundness of business
d. None of the above
23. If fixed costs are Rs. 5000 and 100 units are produced, then fixed cost per unit is
a. Rs.55
b. Rs. 50
c. Rs. 500
d. Rs. 550
1. In the activity based costing system the activity unit of work or task with differentiated
purpose is classified as
a) Different task
b) Purpose cost
c) Activity
d) Allocation cost
ANSWER: c
2. The cost of all the activities for individual products or services are classified as
a) Purpose level costs
b) Output unit level costs
c) Input unit level cost
d) Activity level cost
ANSWER:b
3. Activity based costing system, the description of an activity is classified as
a) Activity list
b) Activity dictionary
c) Active purpose
d) Both (a) and (b)
ANSWER: d
4. In the Activity Based Costing method implementation, the output unit level costs are
classified as
a) Indirect cost
b) b) Direct cost
c) c) Labour cost
d) d) Raw material cost
ANSWER: a
5. The costing system in which individual activities are identified as the cost object is
considered as
a) Manufactured costing
b) Activity Based Costing
c) Allocation costing
d) Base costing
ANSWER: b
6. The estimated price which is expected to be paid by customers for particular market
offering is classified as
a) Target price
b) Target cost
c) Outsource price
d) Off shore price
ANSWER: a
7. The target price is subtracted from per unit target operating income to calculate
a) Total current full cost
b) Total cost per unit
c) Target operating income per unit
d) Target cost per unit
ANSWER: d
8. Activity Based Costing system would probably provide the greatest benefits for
organizations that use
a) Job order costing
b) b) Process costing
c) c) Historical costing
d) d) Standard costing
ANSWER: a
9. The following tasks are associated with an activity based costing system, to select the
proper order of the preceding tasks
1. Calculation of cost application rates
2. Identification of cost drivers
3. Assignment of cost to products
4. Identification of cost pools
a) 1,2,3,4,
b) 2,4,1,3
c) 3,4,2,1
d) 4,2,1,3
ANSWER: d
10. Which of the following tasks is Not normally associated with an Activity Based Costing
System?
a) Identification of cost pools
b) b) Preparation of allocation materials
c) c) Identification of cost drivers
d) d) Assignment of cost of products.
ANSWER: b
11. In an Activity Based Costing system, direct materials used would be classified as
a) Unit level cost
b) Batch level cost
17. In a Pure Activity Based Costing system which of the following would not be assigned to
Products?
a) Batch level activities
b) Facility level activities
c) Process level activities
d) Unit level activities
ANSWER: b
18. Which of the following would be classified as a product level activity?
a) Plant management
b) Production Scheduling
c) Engineering changes
d) Material handling
ANSWER: c
19. Which of the following would be classified as a batch level activity?
a) Plant management
b) Production Scheduling
c) Engineering changes
d) Material handling
ANSWER: d
20. An Activity Based Costing System is one that:
a) Traces costs to activities and then to products.
b) Traces costs to resources and then to activities.
c) Traces activities to cost and then to resources.
d) Traces products to activities and them to resources.
ANSWER: a
21. Inspection of the first unit produces is what type of activity?
a) Batch level
b) Facility level
c) Process level
d) Unit level
ANSWER: a
22. Extruding plastic parts is what type of activity?
a) Batch level
b) Facility level
c) Process level
d) Unit level
ANSWER:d
23. A homogeneous cost pool is one that:
a) Does not change over time
b) Has only one type of material assigned to it
c) Can be explained with a single activity driver
d) Can be used only by the dairy industry
ANSWER: c
24. Activities that are performed each time a unit is produces are _____
a) Batch level activities
b) Process level activities
c) Product level activities
d) Unit level activities
ANSWER: d
25. Which of the following would be considered a non- value added activity
a) Machining
b) Painting
c) Packaging
d) Advertising
ANSWER: d
26. Which of the following would be considered a value added activity?
a) Repair of machine
b) Storage of inventory
c) Engineering design
d) Book Keeping
ANSWER: c
27. A cost Driver more likely to be associated with a service industry than a manufacturing
industry is
a) Number of inspections
b) Number of parts painted
c) Number f working paper pages
d) Number of machine hours
ANSWER: c
28. The listing of the activities performed within the organization is the ____________
a) Activity inventory
b) Activity drives
c) Activity attributes
d) None of these
ANSWER: a
29. In functional-based cost accountaing system, whinch of the following activity drivers is used
To assign fixed overhead costs to products?
a) Batch level activities
b) Facility level activities
c) Process level activities
d) Unit level activities
ANSWER:d
30. Which of the following statements is incorrect regarding ABC and service industries?
a) Since service organizations do not have inventories, product costing (and thus ABC)
will not be necessary.
b) Activities in a service organization tend to be more standardized than activities in a
manufacturing organization.
c) Since the output of a service organization is consumed when produced, there will be no
batch-level activities.
d) None of the above statements are correct.
ANSWER: d
ANSWERS
UNIT-1
1)A, 2)B, 3)D, 4)D, 5)D, 6)C, 7)D, 8)D, 9)A, 10)A, 11)B, 12)A, 13)D, 14)B, 15)A, 16)D, 17)C,
18)B, 19)C, 20)B, 21)A, 22)B, 23)B, 24)D, 25)D, 26)D, 27)B, 28)A, 29), 30)B
UNIT-II
1)B, 2)C, 3)D, 4)B, 5)C, 6)A, 7)D, 8)A, 9)C, 10)C, 11)A, 12)B, 13)A, 14)B, 15)C, 16)D, 17)A,
18)D, 19)A, 20)A, 21)D, 22)A, 23)C, 24)D, 25)C, 26)D, 27)A, 28)B, 29)B, 30)B
UNIT-III
1)B, 2)A, 3)B, 4)A, 5)C, 6)B, 7)D, 8)D, 9)C, 10)A, 11)A, 12)C, 13)A, 14)C, 15)A, 16)B, 17)C,
18)A, 19)D, 20)B, 21)B, 22)C, 23)B, 24)C, 25)B, 26)B, 27)A, 28)B, 29)A, 30)D
UNIT-IV
1)A, 2)A, 3)D, 4)C, 5)A, 6)D, 7)C, 8)B, 9)A, 10)A, 11)B, 12)A, 13)D, 14)C, 15)C, 16)C, 17)C,
18)D, 19)B, 20)A, 21)A, 22)A, 23)B, 24)A, 25)A, 26)C, 27)A, 28)A, 29)C, 30)C
UNIT-V
1)C, 2)B, 3)D, 4)A, 5)B, 6)A, 7)D, 8)A, 9)D, 10)B, 11)A, 12)D, 13)D, 14)D, 15)C, 16)A, 17),B
18)C, 19)D, 20)A, 21)A, 22)D, 23)C, 24)D, 25)D, 26)C, 27)C, 28)A, 29)D, 30)D