1. Opening work in process inventory can be calculated as under
a) FIFO and Average costing
b) LIFO and Average costing
c) FIFO and LIFO costing
d) None of given option.
2. Which of the following statement measures the financial position of the entity on particular time?
a) Income Statement
b) Balance Sheet
c) Cash Flow Statement
d) Statement of Retained Earning
3. Which of the following is a characteristic of process cost accounting system?
a) Material, Labor and Overheads are accumulated by orders
b) Companies use this system if they process custom orders
c) Opening and Closing stock of work in process are related in terms of completed units
d) Only Closing stock of work in process is restated in terms of completed units
4. 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.
5. Cost of production report is a ______________
a) Financial statement
b) Production Process report
c) Order Sheet
d) None of above
6. The difference between total revenues and total variable costs is known as ______________
a) Contribution margin
b) Gross margin
c) Operating income
d) Fixed costs
7. 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
8. 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
9. Jan 1; finished goods inventory of Manuel Company was Rs.3, 00,000. During the year Manuel’s cost
of goods sold was Rs. 19, 00,000, sales were Rs. 2, 000,000 with a 20% gross profit. Calculate cost
assigned to the December 31; finished goods inventory.
a) Rs. 4,00,000
b) Rs. 6,00,000
c) Rs. 16,00,000
d) None of the given options
10. The Process of cost apportionment is carried out so that ______________
a) Cost may be controlled
b) Cost unit gather overheads as they pass through cost centers
c) Whole items of cost can be charged to cost centers
d) Common costs are shared among cost centers
11. The The components of the prime cost are
a) Direct Material + Direct Labor + Other Direct Cost
b) Direct Labor + Other Direct Cost + FOH
c) Direct Labor + FOH
d) None of the given options
12. 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
13. 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
14. Inventory control aims at ______________
a) Achieving optimization
b) Ensuring against market fluctuations
c) Acceptable customer service at low capital investment
d) Discounts allowed in bulk purchase
15. 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
16. Wh When prices are rising over time, which of the following inventory costing methods will result in
the lowest gross margin/profits?
a) FIFO
b) LIFO
c) Weighted Average
d) Cannot be determined
17. Cost accounting concepts include all of the following EXCEPT ______________
a) Planning
b) Controlling
c) Sharing
d) Delegating.
18. Prime cost + Factory overhead cost is ______________
a) Conversion cost.
b) Production cost.
c) Total cost.
d) None of given option.
19. 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 mind while solving)
a) Rs.2,000
b) Rs. 5,000
c) Rs. 7,000
d) None of the given options
20. In the case of plant, the limiting factor may be:
a) Insufficient capacity
b) shortage of experienced salesmen
c) general shortage of power
d) shortage of materials
21. The following information is available for the W hotel for the latest thirty day period.
Number of rooms available per night 40
Percentage occupancy achieved 65%
Room servicing cost incurred Rs. 3900
The room servicing cost per occupied room-night last period, to the nearest Rs, was:
a) Rs 3.25
b) Rs 5.00
c) Rs 97.50
d) Rs 150.00
22. 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
a) 22,000 units
b) 20,000 units
c) 21,000 units
d) None of the above.
23. Statutory cost audit are applicable only to:
a) Firm
b) Company
c) Individual
d) Society
24. The summarized balance sheet of Autolight Limited shows the balances of previous and current year
of retained earnings Rs. 25,000 and Rs. 35,000. If dividend paid during the current year amounted to Rs.
5,000 then profit earned during the year will be:
a) Rs. 5,000
b) Rs. 55,000
c) Rs. 15,000
d) Rs. 65,000
25. When the sales increase from Rs. 40,000 to Rs. 60,000 and profit increases by Rs. 5,000, the P/V ratio
is ______________
a) 20%
b) 30%
c) 25%
d) 40%.
26. A profit centre is a centre
a) Where the manager has the responsibility of generating and maximising profits
b) Which is concerned with earning an adequate Return on Investment
c) Both of the above
d) Which manages cost
27. Sunk costs are:
a) relevant for decision making
b) Not relevant for decision making
c) cost to be incurred in future
d) future costs
28. Calculate value of closing stock from the following:
Opening stock of finished goods (500 units) : Rs. 2,000
Cost of production (10000 units) : Rs. 50,000 Closing stock (1000 units):?
a) Rs. 4,000
b) Rs. 4,500
c) Rs. 5,000
d) Rs. 6,000
29. Economic order quantity is that quantity at which cost of holding and carrying inventory is:
a) Maximum and equal
b) Minimum and equal
c) It can be maximum or minimum depending upon case to case.
d) Minimum and unequal
30. Calculate Re-order level from the following:
Consumption per week: 100-200 units
Delivery period: 14-28 days
a) 5600 units
b) 800 units
c) 1400 units
d) 200 units
31. ____________ is a detailed budget of cash receipts and cash expenditure incorporating both
revenue and capital items.
a) Cash Budget
b) Capital Expenditure Budget
c) Sales Budget
d) Overhead Budget
32. If credit sales for the year is Rs. 5,40,000 and Debtors at the end of year is Rs. 90,000 the Average
Collection Period will be
a) 30 days
b) 61 days
c) 90 days
d) 120 days
33. 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:-
a) Rs. 2,500
b) Rs. 2,000
c) Rs. 4,000
d) Rs. 3,500
34. Responsibility Centre can be categorised into:
a) Cost Centres only
b) Profit Centres only
c) Investment Centres only
d) Cost Centres, Profit Centres and Investment Centres
35. 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
a) Rs. 1,80,000
b) Rs. 2,00,000
c) Rs. 1,70,000
d) Rs. 2,10,000
36. Bin Card is a
a) Quantitative as well as value wise records of material received, issued and balance;
b) Quantitative record of material received, issued and balance
c) Value wise records of material received, issued and balance
d) a record of labour attendance
37. 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%
a) 310
b) 400
c) 290
d) 300
38. Calculate the value of closing stock from the following according to Weighted Average method:
1st January, 2014: Opening balance: 50 units @ Rs. 4
Receipts:
5th January, 2014: 100 units @ Rs. 5
12th January, 2014: 200 units @ Rs. 4.50
Issues:
2nd January, 2014: 30 units
18th January, 2014: 150 units
a) Rs. 765
b) Rs. 805
c) Rs. 786
d) Rs. 700
39. Labour turnover means:
a) Turnover generated by labour
b) Rate of change in composition of labour force during a specified period
c) Either of the above
d) Both of the above
40. Overhead refers to:
a) Direct or Prime Cost
b) All Indirect costs
c) only Factory indirect costs
d) Only indirect expenses
41. 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.
a) 1000 units
b) 6000 units
c) 3000 units
d) 7000 units
42. Which of the following is not an avoidable cause of labour turnover:
a) Dissatisfaction with Job
b) Lack of training facilities
c) Low wages and allowances
d) Disability, making a worker unfit for work
43. 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.
a) 4.55%
b) 1.82%
c) 6%
d) 3%
44. Most suitable basis for apportioning insurance of machine would be:
a) Floor Area
b) Value of Machines
c) No. of Workers
d) No. of Machines
45. Which of the following is not a reason for an idle time variance?
a) Wage rate increase
b) Machine breakdown
c) Illness or injury to worker
d) Non- availability of material
46. The actual output of 162,500 units and actual fixed costs of Rs. 87000 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?
a) Rs 1.20
b) Rs 1.31
c) Rs1.42
d) Rs 1.50
47. 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?
a) 10.1% decrease
b) 11.2% decrease
c) 13.3% decrease
d) 16.0% decrease
48. 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 Rs1690 and incurred overheads of Rs 694.
What was the prime cost of the job?
a) Rs 489
b) Rs 606
c) Rs 996
d) Rs 1300
49. 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:
a) 2,000 units
b) 3,000 units
c) 4,000 units
d) 6,000 units
50. 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
a) Rs. 145
b) Rs. 150
c) Rs. 152
d) Rs. 140
51. Blanket overhead rate is:
a) One single overhead absorption rate for the whole factory
b) Rate which is blank or nil rate
c) rate in which multiple overhead rates are calculated for each production department, service
department etc
d) Always a machine hour rate
52. 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:
a) 12,960
b) 14,400
c) 15,840
d) 16,000
53. In process costing, a joint product is
a) a product which is later divided into many parts
b) a product which is produced simultaneously with other products and is of similar value to at least one of
the other products.
c) A product which is produced simultaneously with other products but which is of a greater value than
any of the other products.
d) a product produced jointly with another organization
54. Which of the following organisations should not be advised to use service costing?
a) Distribution service
b) Hospital
c) Maintenance division of a manufacturing company
d) A light engineering company
55. 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:
a) 20%
b) 25%
c) 73%
d) 125%
56. In 'make or buy' decision, it is profitable to buy from outside only when the supplier's price is below
the firm's own ______________.
a) Fixed Cost
b) Variable Cost
c) Total Cost
d) Prime Cost
57. For the financial year ended as on March 31, 2013 the figures extracted from the balance sheet of
Xerox Limited as under:
Opening Stock Rs. 29,000; Purchases Rs. 2,42,000; Sales Rs. 3,20,000; Gross Profit 25% of Sales. Stock
Turnover Ratio will be :-
a) 8 times
b) 6 times
c) 9 times
d) 10 times
58. In element-wise classification of overheads, which one of the following is not included -
a) Fixed overheads
b) Indirect labour
c) Indirect materials
d) Indirect expenditure.
59. Cost Unit is defined as:
a) Unit of quantity of product, service or time in relation to which costs may be ascertained or expressed
b) A location, person or an item of equipment or a group of these for which costs are ascertained and used
for cost control.
c) Centres having the responsibility of generating and maximising profits
d) Centres concerned with earning an adequate return on investment
60. Fixed cost is a cost:
a) Which changes in total in proportion to changes in output
b) which is partly fixed and partly variable in relation to output
c) Which do not change in total during a given period despise changes in output
d) which remains same for each unit of output
61. Abnormal cost is the cost:
a) Cost normally incurred at a given level of output
b) Cost not normally incurred at a given level of output
c) Cost which is charged to customer
d) Cost which is included in the cost of the product
62. Describe the method of costing to be applied in case of Nursing Home:
a) Operating Costing
b) Process Costing
c) Contract Costing
d) Job Costing
63. Total cost of a product: Rs. 10,000
Profit: 25% on Selling Price
Profit is:
a) Rs. 2,500
b) Rs. 3,000
c) Rs. 3,333
d) Rs. 2,000
64. Out of the following, what is not the work of purchase department:
a) Receiving purchase requisition
b) Exploring the sources of material supply
c) Preparation and execution of purchase orders
d) Accounting for material received
65. Which of the following is an abnormal cause of Idle time:
a) Time taken by workers to travel the distance between the main gate of factory and place of their work
b) Time lost between the finish of one job and starting of next job
c) Time spent to meet their personal needs like taking lunch, tea etc.
d) Machine break downs
66. 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.
a) 4.55%
b) 1.82%
c) 6%
d) 3%
67. 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?
a) 1,200
b) 16,300
c) 17,500
d) 18,700
68. In process costing, if an abnormal loss arises, the process account is generally
a) Debited with the scrap value of the abnormal loss units
b) Debited with the full production cost of the abnormal loss units
c) Credited with the scrap value of the abnormal loss units
d) Credited with the full production cost of the abnormal loss units
69. . 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
a) Rs. 1,20,000
b) Rs. 60,000
c) Rs. 1,80,000
d) None of the these
70. Re-order level is calculated as:
a) Maximum consumption x Maximum re-order period
b) Minimum consumption x Minimum re-order period
c) 1/2 of (Minimum + Maximum consumption)
d) Maximum level - Minimum level
71. Costing and cost accounting are ______________
a) Not the same
b) one and the same
c) not related at all
d) none of these
72. ______________ is one which can be conveniently identified with and charged to a particular unit
of cost.
a) Direct cost
b) Indirect cost
c) Overhead
d) none of these
73. The primary emphasis of ______________ cost is on the planning function of management.
a) Budgeted
b) standard
c) period
d) none of these
74. An opportunity cost is ______________
a) the advantage foregone
b) the cost
c) the income
d) none of the above.
75. Depreciation is ______________ expenditure.
a) fixed
b) variable
c) adjustable
d) Semi-variable
76. Stores Ledger is maintained in the ______________
a) Store
b) finance department
c) cost accounting department
d) Both a & b
77. Material abstract is also known as ______________
a) Material issue analysis sheet
b) bill of materials
c) stores ledger
d) none of the above
78. Specific price method of valuing material issue is used when ______________
a) Materials are purchased for specific job or work order
b) materials are subject to natural wastage
c) prices fluctuate
d) none of these
79. The principle types of inventories are raw materials and , ______________ and finished goods
a) Processed materials
b) Goods-in-progress
c) stored goods
d) goods for dispatch
80. ______________ is a technique of stock control which leads to saving of time of the management
because attention is required to be paid only to some of the items rather than on all the items.
a) ABC Analysis
b) JIT Inventory System
c) VED Analysis
d) Perpetual Inventory System
81. ______________ forms part of cost of production
a) Abnormal waste
b) normal waste
c) both a & b
d) none of these
82. ______________ is a method of evaluating the job in terms of its money value.
a) Job analysis
b) Job evaluation
c) work measurement
d) Motion study
83. ______________ is the assessment of the relative worth of jobs within a company whereas
______________ is the assessment of the relative worth of man behind the job.
a) Job evaluation , merit rating
b) job analysis, job evaluation
c) job analysis, merit rating
d) none of these
84. Taylors differential piece rate system provides for higher rate to ______________ workers.
a) Inefficient
b) efficient
c) both a & b
d) lazy
85. Under Merrick's multiple piece rate system, 120% of the ordinary piece rate is given to workers
whose level of performance is between ______________ of the standard output.
a) 83% and 100%
b) 100% and 120%
c) 0% and 83%
d) none of these
86. Basis of apportionment of stores service expenses is ______________
a) Value of materials consumed
b) units of material consumed
c) products produced
d) none of these
87. Machine hour rate is obtained by dividing the total running expenses of a machine during a
particular period by the ______________
a) Number of hours
b) number of products produced
c) number of workers
d) wages
88. Expenses incurred during production other than direct materials and direct labour are called
______________ factory expenses; those charged to production on estimated basis are called
______________
a) Actual, applied
b) applied, actual
c) indirect, direct
d) none of these
89. Salary paid to general manager is an item of ______________ expenses
a) Fixed
b) Variable
c) semi-variable
d) estimated
90. Warehousing cost is an item of
a) Office overhead
b) distribution overhead
c) material cost
d) works overhead
91. An automobile service unit uses ______________ costing.
a) specific order
b) batch
c) job
d) contract
92. Economic Batch Quantity depends on ______________ and ______________ costs.
a) Material, labour
b) set-up costs, carrying
c) transportation, carrying
d) warehousing, labour
93. When the completion stage of a contract is less than %, the total expenditure on the contract is
transferred to ______________ account.
a) Work-in-Progress
b) Profit and loss account
c) miscellaneous account
d) none of these
94. Room/day is the cost unit used in ______________
a) Hotels
b) hospital
c) schools
d) none of these
95. In transportation costing a composite unit such as ______________ is used.
a) passenger mile/km or Ten kilometer
b) per km
c) per passenger
d) per stop
96. A bus carries 25 passengers daily for 25 days and its mileage per month is 1000 kms. Its passenger
miles are ______________
a) 30,000
b) 12,500
c) 20,000
d) 25,000
97. Where raw material is to pass certain stages, before it is converted into finished goods, the method
of costing used is ______________
a) Job costing
b) Operating costing
c) Process Costing
d) both b and c
98. When actual loss is ______________ than the estimated loss, the difference between the two is
considered to be abnormal gain
a) More
b) less
c) higher
d) none of these
99. The cost of ______________ process loss is absorbed in the cost of production of good units.
a) Abnormal
b) normal
c) both a & b
d) none of these
100. ______________ arises where the actual process loss is less than the normal predetermined
process loss.
a) Normal loss
b) abnormal loss
c) abnormal gain
d) none of these