MIDTERM EXAMINATION
Spring 2009
MGT402- Cost & Management Accounting (Session - 3)
Time: 60 min
Marks: 50
Question No: 1 ( Marks: 1 ) - Please choose one
D Corporation uses process costing to calculate the cost of manufacturing Crunchies. During the month 12,500 units were completed, 1,500 units remained in work in process at 25 percent completed. How many equivalent units are produced?
► 12,500 units
► 12,875 units
► 14,250 units
► 12,125 units
Question No: 2 ( Marks: 1 ) - Please choose one
During the year 60,000 units put in to process.55, 000 units were completed. Closing WIP were 25,000 units, 40% completed. How much the equivalent units of output would be produced?
► 25,000 units
► 10,000 units
► 65,000 units (correct)
► 80,000 units
Question No: 3 ( Marks: 1 ) - Please choose one
FIFO is the abbreviation of:
► Final Interest-Free Option
► First in First out Method (correct)
► None of the given options
► Fixed income Financial Operations
Question No: 4 ( Marks: 1 ) - Please choose one
The cost that is subject to actual payment or will be paid for in future is called:
► Fixed cost
► Step cost
► Explicit cost
► Imputed cost (correct)
Question No: 5 ( Marks: 1 ) - Please choose one
A cost that has been incurred but cannot be changed by present or future decisions is called:
► Sunk cost (correct)
► Differential cost
► Opportunity cost
► Marginal cost
Question No: 6 ( Marks: 1 ) - Please choose one
In the process costing when material is issued for production to department no 1.what would be the journal entry Passed?
► W.I.P (Dept-I)
To Material a/c (correct)
► W.I.P (Dept-ii)
To Material a/c
► Material a/c
To W.I.P (Dept-ii)
► W.I.P (Dept-ii)
To FOH applied.
Question No: 7 ( Marks: 1 ) - Please choose one
Which of the following loss is not included as part of the cost of transferred or finished goods, but rather treated as a period cost?
► Operating loss
► Abnormal loss
► Normal loss
► Non-operating loss (correct)
Question No: 8 ( Marks: 1 ) - Please choose one
In the process costing when labor is charged to production department no 1. What would be the journal entry Passed?
► Payroll a/c
To W.I.P (Dept-I)
► Payroll a/c
To W.I.P (Dept-II)
► W.I.P (Dept-I)
To Payroll a/c (correct)
► W.I.P (Dept-II)
To Payroll a/c
Question No: 9 ( Marks: 1 ) - Please choose one
In a process costing system, the journal entry used to record the transfer of units from Department A, a processing department, to Department B, the next processing department, includes a debit to:
► Work in Process Department A and a credit to Work in Process Department B
► Work in Process Department B and a credit to Work in Process Department A (correct)
► Work in Process Department B and a credit to Materials
► Finished Goods and a credit to Work in Process Department B
Question No: 10 ( Marks: 1 ) - Please choose one
Which of the following is/are reported in production cost report?
► The costs charged to the department
► How the costs were assigned to the output?
► The equivalent units of production by the department
► All of the given options (correct)
Question No: 11 ( Marks: 1 ) - Please choose one
All of the following are not characteristics of Process costing EXCEPT:
► High production volume and heterogeneous products
► High production volume and homogeneous products
► Low production volume and heterogeneous products (correct)
► Low production volume and homogeneous products
Question No: 12 ( Marks: 1 ) - Please choose one
Which of the following is characteristic of a job order cost accounting system?
► It records manufacturing activities using a perpetual inventory system
► It tracks cost by job
► It is best suited for customized products
► All of the given options (correct)
Question No: 13 ( Marks: 1 ) - Please choose one
Which of the following statements is TRUE?
► Companies that produce many different products or services are more likely to use job-order costing systems than process costing systems
► Costs are traced to departments and then allocated to units of product when job-order costing is used
► Job-order costing systems are used by service firms only and process costing systems are used by manufacturing concern only
► Companies that produce many different products or services are more likely to use process costing systems than Job order costing systems
Question No: 14 ( Marks: 1 ) - Please choose one
A company applied overheads on machine hours which were budgeted at 11,250 with overhead of Rs.258, 750.Actual results were 10,980 hours with overheads of Rs.254, 692. Overhead were?
► Over applied by Rs.4, 058
► Under applied by Rs.2, 152
► Under applied by Rs.4, 058
► Over applied by Rs.2, 152
Question No: 15 ( Marks: 1 ) - Please choose one
If a company uses a predetermined rate for the application of factory overhead, the idle capacity variance is the:
► Over or under applied fixed cost element of overheads
► Over or under applied variable cost element of overheads
► Difference in budgeted costs and actual costs of fixed overheads items
► Difference in budgeted cost and actual costs of variable overheads items
Question No: 16 ( Marks: 1 ) - Please choose one
Under applied FOH costs are:
► Fixed costs not allocated to units produced
► Factory overhead costs not allocated to units costs
► Excess variable factory overhead costs
► Costs that can not be controlled
Question No: 17 ( Marks: 1 ) - Please choose one
Nelson Company has following FOH detail.
Budgeted (Rs.) Actual (Rs.)
Production Fixed overheads 36,000 39,000
Production Variable overheads 9,000 12,000
Direct labor hours 18,000 20,000
What would be the amount of under/over applied FOH
► Under applied by Rs.1,000
► Over applied by Rs.1,000
► Under applied by Rs.11,000
► Over applied by Rs.38,000
Question No: 18 ( Marks: 1 ) - Please choose one
Which of the following statement is TRUE about FOH applied rates?
► They are used to control overhead costs
► They are based on actual data for each period
► They are predetermined in advance for each period
► None of the given options
Question No: 19 ( Marks: 1 ) - Please choose one
A Blanket Rate is:
► A single rates which used throughout the organisation departments
► A double rates which used throughout the organisation departments
► A single rates which used in different departments of the organisation.
► None of the Given
Question No: 20 ( Marks: 1 ) - Please choose one
Which of the following statement is true ragarding Repeated distribution method?
► The re-allocation continues until the numbers being dealt with become very small
► The re-allocation continues until the numbers being dealt with become very Large
► The re-allocation continues until the numbers being dealt with become small
► None of the given options
Question No: 21 ( Marks: 1 ) - Please choose one
The Process of cost apportionment is carried out so that:
► Cost may be controlled
► Cost unit gather overheads as they pass through cost centers
► Whole items of cost can be charged to cost centers
► Common costs are shared among cost centers
Question No: 22 ( Marks: 1 ) - Please choose one
Where there is mass production of homogeneous units or where few products are produced in batches, which of the following cost driver would be regarded as best base for the determination of Factory overhead absorption rate?
► Number of units produced
► Labor hours
► Prime cost
► Machine hours
Question No: 23 ( Marks: 1 ) - Please choose one
The flux method of labor turnover denotes:
► Workers employed under the expansion schemes of the company
► The total change in the composition of labor force
► Workers appointed against the vacancy caused due to discharge or quitting of the organization
► Workers appointed in replacement of existing employees
Question No: 24 ( Marks: 1 ) - Please choose one
If, Basic Salary Rs.10,000
Per Piece commission Rs. 5
Unit sold 700 pieces
Amount of commission received will be:
► Rs. 3,500
► Rs. 13,500
► Rs. 10,000
► Rs. 6,500
Question No: 25 ( Marks: 1 ) - Please choose one
Payslip contains all EXCEPT:
► Gross pay
► Statutory & non- statutory deductions
► Net pay
► Tax rebates
Question No: 26 ( Marks: 1 ) - Please choose one
Payroll includes:
► Salaries & Wages of direct labor
► Salaries & Wages of Indirect labor
► Salaries & Wages of Administrative
► Salaries & Wages of direct labor, Indirect labor, and Administrative
Question No: 27 ( Marks: 1 ) - Please choose one
Which of the following document evidences the transaction of purchase of material?
► Material requisition
► Store requisition
► Purchase order
► Purchase invoice
Question No: 28 ( Marks: 1 ) - Please choose one
If EOQ = 360 units, order costs are Rs. 5 per order, and carrying costs are Rs. 0.20 per unit, what is the usage in units?
► 2,592 units
► 25,920 units
► 18,720 units
► 129,600 units
Question No: 29 ( Marks: 1 ) - Please choose one
When purchases are added to raw material opening Inventory, we get the value of:
► Material consumed.
► Material available for use.
► Material needed.
► Raw material ending inventory.
Question No: 30 ( Marks: 1 ) - Please choose one
Finished goods inventory costs represent the costs of goods that are:
► Currently being worked on
► Waiting to be worked on
► Waiting to be sold
► Already delivered to customers
Question No: 31 ( Marks: 1 ) - Please choose one
The salary of factory clerk is treated as:
► Direct labor cost
► Indirect labor cost
► Conversion cost
► Prime cost
Question No: 32 ( Marks: 1 ) - Please choose one
The cost of Telephone bill of the factory is treated as:
► Fixed cost
► Variable cost
► Step cost
► Semi variable cost
Question No: 33 ( Marks: 1 ) - Please choose one
Cost accounting concepts include all of the following EXCEPT:
► Planning
► Controlling
► Sharing
► Costing
Question No: 34 ( Marks: 1 ) - Please choose one
Reduction of labor turnover, accidents, spoilage, waste and absenteeism are the results of which of the following wage plan?
► Piece rate plan
► Time rate plan
► Differential plan
► Group bonus system
Question No: 35 ( Marks: 1 ) - Please choose one
All of the following are characteristics of Group Bonus Scheme EXCEPT:
► A standard time is set for the completion of a job
► If the time taken is greater than the time allowed, the workers in the group receive time wages
► If the time taken is less than the time allowed, the group receives a bonus on time saved
► If the time taken is greater than the time allowed, the workers in the group receive time deductions for extra hours
Question No: 36 ( Marks: 1 ) - Please choose one
Which of the following is a mechanical device to record the exact time of the workers?
► Clock Card
► Bin Card
► Token System
► Attendance Register
Question No: 37 ( Marks: 1 ) - Please choose one
Which of the following is calculated by a formula that uses net sales as denominator?
► Inventory turnover ratio
► Gross profit rate
► Return on Investment
► None of the given options
Question No: 38 ( Marks: 1 ) - Please choose one
Which of the following formula is used to calculate the Number of units manufactured?
► Sold units - Units of closing finished goods inventory + Units of opening finished goods inventory
► Sold units + Average units of finished goods inventory
► Sold units - Average units of finished goods inventory
► Sold units + Units of closing finished goods inventory - Units of opening finished goods inventory
Question No: 39 ( Marks: 1 ) - Please choose one
The net sales of the business totals Rs. 200,000 and the Cost of Goods Sold for the same period totals Rs.146,000. What is the gross margin ratio?
► 0.22
► 0.25
► 0.27
► 0.33
Question No: 40 ( Marks: 1 ) - Please choose one
Consider the following data:
Particulars Rs.
Raw material inventory beginning 14,000
Purchases of Raw materials 120,000
Raw material inventory Ending 10,000
Direct labor 200,000
Manufacturing Overhead (actual) 402,000
Manufacturing Overhead (applied) 404,000
What is the amount of under or over applied manufacturing overhead cost?
► Over applied Rs. 2,000
► Over applied Rs. 3,000
► Under applied Rs. 3,000
► Under applied Rs. 2,000
Question No: 41 ( Marks: 10 )
Corporation submits the following data for September 1998:
Direct labor cost Rs. 30,000
Cost of goods sold Rs. 111,000 (Before adjusting for over or under applied overhead)
Factory overhead is applied at the rate of 150% of direct labor cost. Over or under applied factory overhead is charged to the cost of goods sold account. Inventory accounts showed these beginning and ending balances as follows:
September 1 September 30
Finished goods Rs. 15,000 Rs. 17,500
Work in process 9,600 13,000
Materials 7,000 7,000
Other data:
Factory overhead (actual) Rs. 48,200
Marketing expense 14,100
General and Administrative expenses 22,900
Sales for the month 1,82,000
Prepare an income statement with a schedule showing the cost of goods manufactured and sold.
Wednesday, October 28, 2009
MGT402- Cost & Management Accounting_midterm
MIDTERM EXAMINATION
Spring 2009
MGT402- Cost & Management Accounting (Session - 2)
Question No: 1 ( Marks: 1 ) - Please choose one
D Corporation uses process costing to calculate the cost of manufacturing Crunchies. During the month 12,500 units were completed, 1,500 units remained in work in process at 25 percent completed. How many equivalent units are produced?
► 12,500 units
► 12,875 units
► 14,250 units
► 12,125 units
Question No: 2 ( Marks: 1 ) - Please choose one
Greenwood petroleum has the data for the year was as follow:
Opening WIP 26,000 barrels.
Introduced during the year 67,000 barrels
Closing WIP 15,000 barrels.
How many barrels were completed and transferred out of work-in-process this period?
► 67,000 barrels
► 78,000 barrels
► 82,000 barrels
► 93,000 barrels
Question No: 3 ( Marks: 1 ) - Please choose one
During the year 50,000 units put in to process.30, 000 units were completed. Closing WIP were 20,000 units, 70% completed. How much the equivalent units of output would be produced?
► 20,000 units
► 30,000 units
► 36,000 units
► 44,000 units
Question No: 4 ( Marks: 1 ) - Please choose one
What would be the effect on the cost of a department in case of normal Loss?
► Decreased
► Increased
► No effect
► Increase to the %age of loss
Question No: 5 ( Marks: 1 ) - Please choose one
When 10,000 ending units of work-in-process are 30% completed as to conversion, it means:
► 30% of the units are completed
► 70% of the units are completed
► Each unit has been completed to 70% of its final stage
► Each of the units is 30% completed
Question No: 6 ( Marks: 1 ) - Please choose one
In order to compute equivalent units of production, which of the following must be reasonably estimated?
► Units
► The percentage of completion
► Direct material cost
► Units started and completed
Question No: 7 ( Marks: 1 ) - Please choose one
In a job order cost system, the use of direct materials would be recorded as a debit to:
► Finished Goods inventory
► Manufacturing Overhead
► Raw Materials inventory
► Work in Process inventory
Question No: 8 ( Marks: 1 ) - Please choose one
If management predicts total direct labor costs of Rs. 100,000 and total overhead costs of Rs. 200,000, what is its predetermined overhead rate based on direct labor costs?
► 50%
► 100%
► 200%
► Cannot be determined
Question No: 9 ( Marks: 1 ) - Please choose one
P Ltd applied overheads on the basis of direct labor hours. The overhead applied rate for the period has been based on budgeted overhead of Rs.150, 000 and 50,000 direct labor hours. During the period overhead of Rs. 180,000 were incurred and 60,000 direct labor hours were used.
Which of the following statement is correct?
► Overhead was Rs.30,000 over applied
► Overhead was Rs.30,000 under applied
► No under or over applied occurred
► None of the given
Question No: 10 ( Marks: 1 ) - Please choose one
Raymond Corporation estimates factory overhead of Rs. 345,000 for next fiscal year. It is estimated that 60,000 units will be produced at a material cost of Rs. 575,000. Conversion will require 34,500 direct labor hours at a cost of Rs. 10 per hour, with 25,875 machine hours.
FOH rate on the bases of Prime cost would be?
► Rs. 37.5 per unit
► Rs. 56.6 per unit
► Rs. 60 per unit
► Rs.1 per unit
Question No: 11 ( Marks: 1 ) - Please choose one
Nelson Company has following FOH detail.
Budgeted (Rs.) Actual (Rs.)
Production Fixed overheads 36,000 39,000
Production Variable overheads 9,000 12,000
Direct labor hours 18,000 20,000
What would be the amount of under/over applied FOH
► Under applied by Rs.1,000
► Over applied by Rs.1,000
► Under applied by Rs.11,000
► Over applied by Rs.38,000
Question No: 12 ( Marks: 1 ) - Please choose one
Which of the following is TRUE regarding the use of blanket rate?
► The use of a single blanket rate makes the apportionment of overhead costs unnecessary
► The use of a single blanket rate makes the apportionment of overhead costs necessary
► The use of a single blanket rate makes the apportionment of overhead costs uniform
► None of the given options
Question No: 13 ( Marks: 1 ) - Please choose one
A Blanket Rate is:
► A single rates which used throughout the organisation departments
► A double rates which used throughout the organisation departments
► A single rates which used in different departments of the organisation.
► None of the Given
Question No: 14 ( Marks: 1 ) - Please choose one
It is possible for an item of overhead expenditure to be shared amongst many departments. It is also possible that this same item may relate to just one specific department.
If the item was not charged specifically to a single department this would be an example of:
► Apportionment
► Allocation
► Re-apportionment
► Absorption
Question No: 15 ( Marks: 1 ) - Please choose one
FOH absorption rate is calculated by the way of:
► Estimated FOH Cost/Direct labor hours
► Estimated FOH Cost/Direct labor cost
► Estimated FOH Cost/Machine hours
► All of the given options
Question No: 16 ( Marks: 1 ) - Please choose one
Which of the following is / are time based incentive wage plan?
► Hasley Premium Plan
► Hasley Weir Premium Plan
► Rowan Premium Plan
► All of the given options
Question No: 17 ( Marks: 1 ) - Please choose one
If, Basic Salary Rs.10,000
Per Piece commission Rs. 5
Unit sold 700 pieces
What will be the total Salary?
► Rs. 3,500
► Rs. 13,500
► Rs. 10,000
► Rs. 6,500
Question No: 18 ( Marks: 1 ) - Please choose one
Payroll includes:
► Salaries & Wages of direct labor
► Salaries & Wages of Indirect labor
► Salaries & Wages of Administrative
► Salaries & Wages of direct labor, Indirect labor, and Administrative
Question No: 19 ( Marks: 1 ) - Please choose one
Which of the following document evidences the transaction of purchase of material?
► Material requisition
► Store requisition
► Purchase order
► Purchase invoice
Question No: 20 ( Marks: 1 ) - Please choose one
Which of the following is NOT an assumption of the basic economic-order quantity model?
► Annual demand is known
► Ordering cost is known
► Carrying cost is known
► Quantity discounts are available
Question No: 21 ( Marks: 1 ) - Please choose one
A store sells five cases of soda each day. Ordering costs are Rs. 8 per order, and soda costs Rs. 3 per case. Orders arrive four days from the time they are placed. Daily holding costs are equal to 5% of the cost of the soda. What is the EOQ for soda?
► 4 cases
► 8 cases
► 10 cases
► 23 cases
Question No: 22 ( Marks: 1 ) - Please choose one
All of the following are deducted from Gross Profit to calculate Operating income EXCEPT:
► Selling expenses
► Advertising expenses
► Administrative expenses
► Financial expenses
Question No: 23 ( Marks: 1 ) - Please choose one
Which of the following is CORRECT to calculate cost of goods manufactured?
► Direct labor costs plus total manufacturing costs
► The beginning work in process inventory plus total manufacturing costs and subtract the ending work in process inventory
► Beginning raw materials inventory plus direct labor plus factory overhead
► Conversion costs and work in process inventory adjustments results in cost of goods manufactured
Question No: 24 ( Marks: 1 ) - Please choose one
Which of the following is a period cost?
► Direct materials
► Indirect materials
► Factory utilities
► Administrative expenses
Question No: 25 ( Marks: 1 ) - Please choose one
The salary of factory clerk is treated as:
► Direct labor cost
► Indirect labor cost
► Conversion cost
► Prime cost
Question No: 26 ( Marks: 1 ) - Please choose one
The components of the conversion cost are:
► Direct Material + Direct Labor + Other Direct Cost
► Direct Labor + FOH
► Prime Cost + FOH+ Other Direct Cost
► Prime Cost + FOH
Question No: 27 ( Marks: 1 ) - Please choose one
The cost of Telephone bill of the factory is treated as:
► Fixed cost
► Variable cost
► Step cost
► Semi variable cost
Question No: 28 ( Marks: 1 ) - Please choose one
Which of the following is a cost that changes in proportion to changes in volume?
► Fixed cost
► Sunk cost
► Opportunity cost
► None of the given options
Question No: 29 ( Marks: 1 ) - Please choose one
Cost accounting concepts include all of the following EXCEPT:
► Planning
► Controlling
► Sharing
► Costing
Question No: 30 ( Marks: 1 ) - Please choose one
If a predetermined FOH rate is not applied and the volume of production is reduced from the planned capacity level, the cost per unit expected to:
► Remain unchanged for fixed cost and increased for variable cost
► Increase for fixed cost and remain unchanged for variable cost
► Increase for fixed cost and decreased for variable cost
► Decrease for both fixed and variable costs
Question No: 31 ( Marks: 1 ) - Please choose one
All of the following are characteristics of Group Bonus Scheme EXCEPT:
► A standard time is set for the completion of a job
► If the time taken is greater than the time allowed, the workers in the group receive time wages
► If the time taken is less than the time allowed, the group receives a bonus on time saved
► If the time taken is greater than the time allowed, the workers in the group receive time deductions for extra hours
Question No: 32 ( Marks: 1 ) - Please choose one
Which of the following is TRUE when piece rate system is used for wage determination?
► Under this method of remuneration a worker is paid on the basis of time taken by him to perform the work
► Under this method of remuneration a worker is paid on the basis of production
► The rate is expressed in terms of certain sum of money for total production
► The rate is not expressed in terms of certain sum of money for total production
Question No: 33 ( Marks: 1 ) - Please choose one
Under Halsey premium plan, if the employee completes his job in less than the standard time fixed for the job, he is given:
► Only wages for the actual hours taken
► Wages for the actual hours taken plus bonus equal to one half of the wage of the time saved
► Wages for the actual hours taken plus bonus equal to one third of the wage of the time saved
► Only the bonus equal to one half of the time saved
Question No: 34 ( Marks: 1 ) - Please choose one
Which of the following is NOT a reason for carrying inventory?
► To maintain independence of operations
► To take advantage of economic purchase-order size
► To make the system less productive
► To meet variation in product demand
Question No: 35 ( Marks: 1 ) - Please choose one
Restocking of stores, in order to ensure efficient functioning of the stores department and steady flow of materials to the production departments, is duty of:
► Managers
► Storekeeper
► Production In charge
► Sales supervisor
Question No: 36 ( Marks: 1 ) - Please choose one
You made Rs. 10,000 loan to your cousin's company. At the end of one year, the company returned to you Rs. 10,850. The Rs. 850 is called which one of the following?
► Increases in loan
► Increases in dividends
► An 8.5% return on investment
► All of the given options
Question No: 37 ( Marks: 1 ) - Please choose one
The net sales of the business totals Rs. 200,000 and the Cost of Goods Sold for the same period totals Rs.146,000. What is the gross margin ratio?
► 0.22
► 0.25
► 0.27
► 0.33
Question No: 38 ( Marks: 1 ) - Please choose one
If, Gross profit = Rs. 40,000
GP Margin = 25% of sales
What will be the value of cost of goods sold?
► Rs. 160,000
► Rs. 120,000
► Rs. 40,000
► Can not be determined
Question No: 39 ( Marks: 1 ) - Please choose one
Cost accountants are concerned about the ratios relating to the Profits and Manufacturing costs. These ratios might include:
► Gross Mark up rate
► Inventory turnover ratio
► Cost of goods sold to sales ratio
► All of the given options
Question No: 40 ( Marks: 1 ) - Please choose one
The total cost to produce one unit is Rs. 600. Direct materials are 20% of the total cost and direct labor is 1/3 of the combined total of direct labor and direct materials. What was the cost for direct materials, direct labor, and factory overhead?
► Rs. 420, Rs. 60 and Rs. 120, respectively
► Rs. 60, Rs. 120 and Rs. 420, respectively
► Rs. 120, Rs. 60 and Rs. 420, respectively
► Rs 60, Rs. 420 and Rs. 120, respectively
Question No: 41 ( Marks: 10 )
CK Products Limited purchased materials of Rs. 550,000 and incurred direct labor of Rs. 420,000 during the year ended June 30, 2006. Factory overheads for the year were Rs.380,000. The inventory balances are as follows:
July 1, 2005 June 30, 2006
Rupees Rupees
Finished goods 90,000 105,000
Work in process 121,000 110,000
Materials 100,000 105,000
Required:
1) Cost Of Goods Manufactured Statement.
2) Cost Of Goods Sold Statement.
Spring 2009
MGT402- Cost & Management Accounting (Session - 2)
Question No: 1 ( Marks: 1 ) - Please choose one
D Corporation uses process costing to calculate the cost of manufacturing Crunchies. During the month 12,500 units were completed, 1,500 units remained in work in process at 25 percent completed. How many equivalent units are produced?
► 12,500 units
► 12,875 units
► 14,250 units
► 12,125 units
Question No: 2 ( Marks: 1 ) - Please choose one
Greenwood petroleum has the data for the year was as follow:
Opening WIP 26,000 barrels.
Introduced during the year 67,000 barrels
Closing WIP 15,000 barrels.
How many barrels were completed and transferred out of work-in-process this period?
► 67,000 barrels
► 78,000 barrels
► 82,000 barrels
► 93,000 barrels
Question No: 3 ( Marks: 1 ) - Please choose one
During the year 50,000 units put in to process.30, 000 units were completed. Closing WIP were 20,000 units, 70% completed. How much the equivalent units of output would be produced?
► 20,000 units
► 30,000 units
► 36,000 units
► 44,000 units
Question No: 4 ( Marks: 1 ) - Please choose one
What would be the effect on the cost of a department in case of normal Loss?
► Decreased
► Increased
► No effect
► Increase to the %age of loss
Question No: 5 ( Marks: 1 ) - Please choose one
When 10,000 ending units of work-in-process are 30% completed as to conversion, it means:
► 30% of the units are completed
► 70% of the units are completed
► Each unit has been completed to 70% of its final stage
► Each of the units is 30% completed
Question No: 6 ( Marks: 1 ) - Please choose one
In order to compute equivalent units of production, which of the following must be reasonably estimated?
► Units
► The percentage of completion
► Direct material cost
► Units started and completed
Question No: 7 ( Marks: 1 ) - Please choose one
In a job order cost system, the use of direct materials would be recorded as a debit to:
► Finished Goods inventory
► Manufacturing Overhead
► Raw Materials inventory
► Work in Process inventory
Question No: 8 ( Marks: 1 ) - Please choose one
If management predicts total direct labor costs of Rs. 100,000 and total overhead costs of Rs. 200,000, what is its predetermined overhead rate based on direct labor costs?
► 50%
► 100%
► 200%
► Cannot be determined
Question No: 9 ( Marks: 1 ) - Please choose one
P Ltd applied overheads on the basis of direct labor hours. The overhead applied rate for the period has been based on budgeted overhead of Rs.150, 000 and 50,000 direct labor hours. During the period overhead of Rs. 180,000 were incurred and 60,000 direct labor hours were used.
Which of the following statement is correct?
► Overhead was Rs.30,000 over applied
► Overhead was Rs.30,000 under applied
► No under or over applied occurred
► None of the given
Question No: 10 ( Marks: 1 ) - Please choose one
Raymond Corporation estimates factory overhead of Rs. 345,000 for next fiscal year. It is estimated that 60,000 units will be produced at a material cost of Rs. 575,000. Conversion will require 34,500 direct labor hours at a cost of Rs. 10 per hour, with 25,875 machine hours.
FOH rate on the bases of Prime cost would be?
► Rs. 37.5 per unit
► Rs. 56.6 per unit
► Rs. 60 per unit
► Rs.1 per unit
Question No: 11 ( Marks: 1 ) - Please choose one
Nelson Company has following FOH detail.
Budgeted (Rs.) Actual (Rs.)
Production Fixed overheads 36,000 39,000
Production Variable overheads 9,000 12,000
Direct labor hours 18,000 20,000
What would be the amount of under/over applied FOH
► Under applied by Rs.1,000
► Over applied by Rs.1,000
► Under applied by Rs.11,000
► Over applied by Rs.38,000
Question No: 12 ( Marks: 1 ) - Please choose one
Which of the following is TRUE regarding the use of blanket rate?
► The use of a single blanket rate makes the apportionment of overhead costs unnecessary
► The use of a single blanket rate makes the apportionment of overhead costs necessary
► The use of a single blanket rate makes the apportionment of overhead costs uniform
► None of the given options
Question No: 13 ( Marks: 1 ) - Please choose one
A Blanket Rate is:
► A single rates which used throughout the organisation departments
► A double rates which used throughout the organisation departments
► A single rates which used in different departments of the organisation.
► None of the Given
Question No: 14 ( Marks: 1 ) - Please choose one
It is possible for an item of overhead expenditure to be shared amongst many departments. It is also possible that this same item may relate to just one specific department.
If the item was not charged specifically to a single department this would be an example of:
► Apportionment
► Allocation
► Re-apportionment
► Absorption
Question No: 15 ( Marks: 1 ) - Please choose one
FOH absorption rate is calculated by the way of:
► Estimated FOH Cost/Direct labor hours
► Estimated FOH Cost/Direct labor cost
► Estimated FOH Cost/Machine hours
► All of the given options
Question No: 16 ( Marks: 1 ) - Please choose one
Which of the following is / are time based incentive wage plan?
► Hasley Premium Plan
► Hasley Weir Premium Plan
► Rowan Premium Plan
► All of the given options
Question No: 17 ( Marks: 1 ) - Please choose one
If, Basic Salary Rs.10,000
Per Piece commission Rs. 5
Unit sold 700 pieces
What will be the total Salary?
► Rs. 3,500
► Rs. 13,500
► Rs. 10,000
► Rs. 6,500
Question No: 18 ( Marks: 1 ) - Please choose one
Payroll includes:
► Salaries & Wages of direct labor
► Salaries & Wages of Indirect labor
► Salaries & Wages of Administrative
► Salaries & Wages of direct labor, Indirect labor, and Administrative
Question No: 19 ( Marks: 1 ) - Please choose one
Which of the following document evidences the transaction of purchase of material?
► Material requisition
► Store requisition
► Purchase order
► Purchase invoice
Question No: 20 ( Marks: 1 ) - Please choose one
Which of the following is NOT an assumption of the basic economic-order quantity model?
► Annual demand is known
► Ordering cost is known
► Carrying cost is known
► Quantity discounts are available
Question No: 21 ( Marks: 1 ) - Please choose one
A store sells five cases of soda each day. Ordering costs are Rs. 8 per order, and soda costs Rs. 3 per case. Orders arrive four days from the time they are placed. Daily holding costs are equal to 5% of the cost of the soda. What is the EOQ for soda?
► 4 cases
► 8 cases
► 10 cases
► 23 cases
Question No: 22 ( Marks: 1 ) - Please choose one
All of the following are deducted from Gross Profit to calculate Operating income EXCEPT:
► Selling expenses
► Advertising expenses
► Administrative expenses
► Financial expenses
Question No: 23 ( Marks: 1 ) - Please choose one
Which of the following is CORRECT to calculate cost of goods manufactured?
► Direct labor costs plus total manufacturing costs
► The beginning work in process inventory plus total manufacturing costs and subtract the ending work in process inventory
► Beginning raw materials inventory plus direct labor plus factory overhead
► Conversion costs and work in process inventory adjustments results in cost of goods manufactured
Question No: 24 ( Marks: 1 ) - Please choose one
Which of the following is a period cost?
► Direct materials
► Indirect materials
► Factory utilities
► Administrative expenses
Question No: 25 ( Marks: 1 ) - Please choose one
The salary of factory clerk is treated as:
► Direct labor cost
► Indirect labor cost
► Conversion cost
► Prime cost
Question No: 26 ( Marks: 1 ) - Please choose one
The components of the conversion cost are:
► Direct Material + Direct Labor + Other Direct Cost
► Direct Labor + FOH
► Prime Cost + FOH+ Other Direct Cost
► Prime Cost + FOH
Question No: 27 ( Marks: 1 ) - Please choose one
The cost of Telephone bill of the factory is treated as:
► Fixed cost
► Variable cost
► Step cost
► Semi variable cost
Question No: 28 ( Marks: 1 ) - Please choose one
Which of the following is a cost that changes in proportion to changes in volume?
► Fixed cost
► Sunk cost
► Opportunity cost
► None of the given options
Question No: 29 ( Marks: 1 ) - Please choose one
Cost accounting concepts include all of the following EXCEPT:
► Planning
► Controlling
► Sharing
► Costing
Question No: 30 ( Marks: 1 ) - Please choose one
If a predetermined FOH rate is not applied and the volume of production is reduced from the planned capacity level, the cost per unit expected to:
► Remain unchanged for fixed cost and increased for variable cost
► Increase for fixed cost and remain unchanged for variable cost
► Increase for fixed cost and decreased for variable cost
► Decrease for both fixed and variable costs
Question No: 31 ( Marks: 1 ) - Please choose one
All of the following are characteristics of Group Bonus Scheme EXCEPT:
► A standard time is set for the completion of a job
► If the time taken is greater than the time allowed, the workers in the group receive time wages
► If the time taken is less than the time allowed, the group receives a bonus on time saved
► If the time taken is greater than the time allowed, the workers in the group receive time deductions for extra hours
Question No: 32 ( Marks: 1 ) - Please choose one
Which of the following is TRUE when piece rate system is used for wage determination?
► Under this method of remuneration a worker is paid on the basis of time taken by him to perform the work
► Under this method of remuneration a worker is paid on the basis of production
► The rate is expressed in terms of certain sum of money for total production
► The rate is not expressed in terms of certain sum of money for total production
Question No: 33 ( Marks: 1 ) - Please choose one
Under Halsey premium plan, if the employee completes his job in less than the standard time fixed for the job, he is given:
► Only wages for the actual hours taken
► Wages for the actual hours taken plus bonus equal to one half of the wage of the time saved
► Wages for the actual hours taken plus bonus equal to one third of the wage of the time saved
► Only the bonus equal to one half of the time saved
Question No: 34 ( Marks: 1 ) - Please choose one
Which of the following is NOT a reason for carrying inventory?
► To maintain independence of operations
► To take advantage of economic purchase-order size
► To make the system less productive
► To meet variation in product demand
Question No: 35 ( Marks: 1 ) - Please choose one
Restocking of stores, in order to ensure efficient functioning of the stores department and steady flow of materials to the production departments, is duty of:
► Managers
► Storekeeper
► Production In charge
► Sales supervisor
Question No: 36 ( Marks: 1 ) - Please choose one
You made Rs. 10,000 loan to your cousin's company. At the end of one year, the company returned to you Rs. 10,850. The Rs. 850 is called which one of the following?
► Increases in loan
► Increases in dividends
► An 8.5% return on investment
► All of the given options
Question No: 37 ( Marks: 1 ) - Please choose one
The net sales of the business totals Rs. 200,000 and the Cost of Goods Sold for the same period totals Rs.146,000. What is the gross margin ratio?
► 0.22
► 0.25
► 0.27
► 0.33
Question No: 38 ( Marks: 1 ) - Please choose one
If, Gross profit = Rs. 40,000
GP Margin = 25% of sales
What will be the value of cost of goods sold?
► Rs. 160,000
► Rs. 120,000
► Rs. 40,000
► Can not be determined
Question No: 39 ( Marks: 1 ) - Please choose one
Cost accountants are concerned about the ratios relating to the Profits and Manufacturing costs. These ratios might include:
► Gross Mark up rate
► Inventory turnover ratio
► Cost of goods sold to sales ratio
► All of the given options
Question No: 40 ( Marks: 1 ) - Please choose one
The total cost to produce one unit is Rs. 600. Direct materials are 20% of the total cost and direct labor is 1/3 of the combined total of direct labor and direct materials. What was the cost for direct materials, direct labor, and factory overhead?
► Rs. 420, Rs. 60 and Rs. 120, respectively
► Rs. 60, Rs. 120 and Rs. 420, respectively
► Rs. 120, Rs. 60 and Rs. 420, respectively
► Rs 60, Rs. 420 and Rs. 120, respectively
Question No: 41 ( Marks: 10 )
CK Products Limited purchased materials of Rs. 550,000 and incurred direct labor of Rs. 420,000 during the year ended June 30, 2006. Factory overheads for the year were Rs.380,000. The inventory balances are as follows:
July 1, 2005 June 30, 2006
Rupees Rupees
Finished goods 90,000 105,000
Work in process 121,000 110,000
Materials 100,000 105,000
Required:
1) Cost Of Goods Manufactured Statement.
2) Cost Of Goods Sold Statement.
Cost & Management Accounting (Mgt402)
Cost & Management Accounting (Mgt402)
1. An example of an inventoriable cost would be:
a) Shipping fees
b) Advertising flyers
c) Sales commissions
d) Direct materials(correct)
2. Direct materials cost is Rs. 80,000. Direct labor cost is Rs. 60,000. Factory
overhead is Rs. 90,000. Beginning goods in process were Rs. 15,000. The cost
of goods manufactured is Rs. 245,000. What is the cost assigned to the ending
goods in process?
a) Rs. 45,000
b) Rs. 15,000
c) Rs. 30,000
d) There will be no ending Inventory(correct)
3. The FIFO inventory costing method (when using under perpetual inventory
system) assumes that the cost of the earliest units purchased is allocated in
which of the following ways?
a) First to be allocated to the ending inventory
b) Last to be allocated to the cost of goods sold
c) Last to be allocated to the ending inventory
d) First to be allocated to the cost of good sold(correct)
4. Heavenly Interiors had beginning merchandise inventory of Rs. 75,000. It made
purchases of Rs. 160,000 and recorded sales of Rs. 220,000 during November.
Its estimated gross profit on sales was 30%. On November 30, the store was
destroyed by fire. What was the value of the merchandise inventory loss?
a) Rs. 154,000
b) Rs. 160,000
c) Rs. 235,000
d) Rs. 81,000(correct)
5. 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
6. Which of the following is a factor that should be taken into account for fixing
re-order level?
a) Average consumption
b) Economic Order Quantity
c) Emergency lead time(correct)
d) Danger level
7. EOQ is a point where:
a) Ordering cost is equal to carrying cost (correct)
b) Ordering cost is higher than carrying cost
c) Ordering cost is lesser than the carrying cost
d) Total cost should be maximum
8. Grumpy & Dopey Ltd estimated that during the year 75,000 machine hours
would be used and it has been using an overhead absorption rate of Rs. 6.40
per machine hour in its machining department. During the year the overhead
expenditure amounted to Rs. 472,560 and 72,600 machine hours were used.
Which one of the following statements is correct?
a) Overhead was under-absorbed by Rs.7,440
b) Overhead was under-absorbed by Rs.7,920 (correct)
c) Overhead was over-absorbed by Rs.7,440
d) Overhead was over-absorbed by Rs.7,920
9. A business always absorbs its overheads on labor hours. In the 8th period,
18,000 hours were worked, actual overheads were Rs. 279,000 and there was
Rs. 36,000 over-absorption. The overhead absorption rate per hours was:
a) Rs. 15.50
b) Rs. 17.50 (correct)
c) Rs. 18.00
d) Rs. 13.50
10. The main purpose of cost accounting is to:
a) Maximize profits
b) Help in inventory valuation
c) Provide information to management for decision making (correct)
d) Aid in the fixation of selling price
11. In which of the following would there be a difference between financial and
managerial accounting?
a) Users of the information
b) Purpose of the information
c) Flexibility of practices
d) All of the given options (correct)
12. Which of the following is a cost that changes in proportion to changes in
volume?
a) Fixed cost
b) Sunk cost
c) Opportunity cost
d) None of the given options (correct)
13. Cost accounting information can be used for all EXCEPT:
a) Budget control and evaluation
b) Determining standard costs and variances
c) Pricing and inventory valuation decisions
d) Analyzing the data (correct)
14. Which of the following is not an element of factory overhead?
a) Depreciation on the maintenance equipment
b) Salary of the plant supervisor
c) Property taxes on the plant buildings
d) Salary of a marketing manager (correct)
15. The main difference between the profit center and investment center is:
a) Decision making (correct)
b) Revenue generation
c) Cost incurrence
d) All of the given options
16. Opportunity cost is the best example of:
a) Sunk Cost
b) Standard Cost
c) Relevant Cost (correct)
d) Irrelevant cost
17- If, Sales = Rs. 800,000, Markup = 25% of cost, what would be the value of Gross
profit?
a) Rs. 200,000
b) Rs. 160,000 (correct)
c) Rs. 480,000
d) Rs. 640,000
18- Which of the following is correct?
a) Opening finished goods units + Units produced – Closing finished goods units =
Units sold (correct)
b) Units Sold = Units produced + Closing finished goods units - Opening finished goods
units
c) Sales + Average units of finished goods inventory
d) None of the given options
19- Loss by fire is an example of:
a) Normal Loss
b) Abnormal Loss (correct)
c) Both normal loss and abnormal loss
d) Can not be determined
20- In cost Accounting, abnormal loss is charged to:
a) Factory overhead control account
b) Work in process account (correct)
c) Income Statement
d) All of the given options
1. If computational and record-keeping costs are about the same under both FIFO
and weighted average, which of the following method will generally be
preferred?
A. Weighted Average
B. FIFO (correct)
C. They offer the same degree of information
D. Cannot be determined with so little information
2. Which of the following System applies when standardized goods are produced
under a series of inter-connected operations?
A. Job Order Costing
B. Process Costing (correct)
C. Standard Costing
D. All of the given options
3. The cost of material that is not completely processed, would be found in which
of the following inventory account on the Balance Sheet?
A. Direct material inventory
B. Work-in-process inventory (correct)
C. Finished goods inventory
D. Supplies inventory
4. A complete set of Financial Statements for Nestle Company at December 31,
2008 would include each of the followings, EXCEPT:
A. Balance Sheet as of December 31, 2008
B. Statement of Projected Cash flows for 2009 (correct)
C. Income Statement for the year ended December 31, 2008
D. Notes containing additional information that is useful in interpreting the Financial
Statements
5. Total Fixed cost _______ with the increase in production.
A. Remains constant (correct)
B. Decreases
C. Increases
D. There is no relation between fixed cost and activity level
6. The following data is available for the Bricks Company:
Particulars Rs.
Freight in 20,000
Purchases return and allowances 80,000
Marketing expenses 200,000
Finished goods Inventory, ending 90,000
Cost of goods sold 700% of marketing expenses
You are required to calculate the cost of goods available for sales if Gross Profit is
50% of cost of goods sold.
A. Rs. 1,490,000 (correct)
B. Rs. 1,390,000
C. Rs. 1,500,000
D. Rs. 1,590,000
7. Consider the following:
Beginning work in process inventory Rs. 20,000
Direct material used Rs. 50,000
Direct labor used Rs. 80,000
Manufacturing overhead Rs. 120,000
Ending work in process inventory Rs. 10,000
Cost of finished goods manufactured Rs. 260,000
The total manufacturing costs would be:
A. Rs. 250,000 (correct)
B. Rs. 260,000
C. Rs. 270,000
D. Rs. 280,000
8. Job 210 was unfinished at the end of the accounting period. The total cost
assigned to the job was Rs. 12,000 of which Rs. 3,000 was direct material cost.
Factory overheads were allocated to goods in process at 150% of direct labor
cost. What was the amount of direct labor cost charged to Job 210?
A. Rs. 3,600 (correct)
B. Rs. 3,000
C. Rs. 5,400
D. Rs. 9,000
9. Job 210 was unfinished at the end of the accounting period. The total cost
assigned to the job was Rs. 12,000 of which Rs. 3,000 was direct material cost.
Factory overheads were allocated to goods in process at 150% of direct labor
cost. What was the amount of Factory over head cost charged to Job 210?
A. Rs. 3,600
B. Rs. 3,000
C. Rs. 5,400 (correct)
D. Rs. 9,000
10. The over applied balance of the Factory Overhead ledger account is Rs. 36,000,
a significant amount. The ending balances of Goods in Process Inventory,
Finished Goods Inventory and Cost of Goods Sold accounts are Rs. 12,000, Rs.
8,000, and Rs. 60,000, respectively. On the basis of ending balances, how much
of the over applied balance of overhead should be allocated to each of these
accounts?
A. Rs.5, 400, Rs.27, 600, Rs.3, 000
B. Rs.27,400, Rs. 3,600, Rs. 5,000
C. Rs. 5,400, Rs. 3,600, Rs. 27,000 (correct)
D. None of the given options
11. PEL Limited has been using an overhead rate of Rs. 5.60 per machine hour.
During the year, overheads of Rs. 275,000 were incurred and 48,000 machine
hours worked. Therefore, overheads were:
A. Under-applied by Rs.7,600
B. Over-applied by Rs. 6,200
C. Under-applied by Rs. 6,200 (correct)
D. Over-applied by Rs. 7,600
12. Factory overhead should be allocated on the basis of:
A. Direct labor hours
B. Direct labor costs
C. An activity basis which relates to cost incurrence (correct)
D. Machine hours
13. If a company uses a predetermined rate for the application of factory overhead,
the idle capacity variance is the:
A. Over or under applied variable cost element of overheads
B. Difference in budgeted costs and actual costs of fixed overheads items
C. Difference in budgeted cost and actual costs of variable overheads items
D. Over or under applied fixed cost element of overheads (correct)
14. Which of the following manufacturing operations, which is best, suited to the
utilization of a job order system?
A. Soft drink bottling operation
B. Crude oil refining
C. Plastic molding operation
D. Helicopter manufacturing (correct)
15. 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. Only Closing stock of work in process is restated in terms of completed units
D. Opening and Closing stock of work in process are related in terms of completed (correct)
units
16. Which cost accumulation procedure is best suited to a continuous mass
production process of similar units?
A. Job order costing
B. Standard costing
C. Actual costing
D. Process costing (correct)
17. Which of the following is an objective of cost accounting?
A. Provide information to management for decision making
B. Computation of cost per unit (correct)
C. Preparation of Financial Statement
D. Computation of relevant costs
18. Which of the following would be considered an external user of the firm's
accounting information?
A. President
B. Stockholder (correct)
C. Sales manager
D. Controller
19. Cost accounting concepts include all of the following EXCEPT:
A. Planning
B. Controlling
C. Sharing (correct)
D. Costing
20. The chief financial officer is also known as the:
A. Controller
B. Staff accountant
C. Auditor
D. Finance director (correct)
1. An example of an inventoriable cost would be:
a) Shipping fees
b) Advertising flyers
c) Sales commissions
d) Direct materials(correct)
2. Direct materials cost is Rs. 80,000. Direct labor cost is Rs. 60,000. Factory
overhead is Rs. 90,000. Beginning goods in process were Rs. 15,000. The cost
of goods manufactured is Rs. 245,000. What is the cost assigned to the ending
goods in process?
a) Rs. 45,000
b) Rs. 15,000
c) Rs. 30,000
d) There will be no ending Inventory(correct)
3. The FIFO inventory costing method (when using under perpetual inventory
system) assumes that the cost of the earliest units purchased is allocated in
which of the following ways?
a) First to be allocated to the ending inventory
b) Last to be allocated to the cost of goods sold
c) Last to be allocated to the ending inventory
d) First to be allocated to the cost of good sold(correct)
4. Heavenly Interiors had beginning merchandise inventory of Rs. 75,000. It made
purchases of Rs. 160,000 and recorded sales of Rs. 220,000 during November.
Its estimated gross profit on sales was 30%. On November 30, the store was
destroyed by fire. What was the value of the merchandise inventory loss?
a) Rs. 154,000
b) Rs. 160,000
c) Rs. 235,000
d) Rs. 81,000(correct)
5. 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
6. Which of the following is a factor that should be taken into account for fixing
re-order level?
a) Average consumption
b) Economic Order Quantity
c) Emergency lead time(correct)
d) Danger level
7. EOQ is a point where:
a) Ordering cost is equal to carrying cost (correct)
b) Ordering cost is higher than carrying cost
c) Ordering cost is lesser than the carrying cost
d) Total cost should be maximum
8. Grumpy & Dopey Ltd estimated that during the year 75,000 machine hours
would be used and it has been using an overhead absorption rate of Rs. 6.40
per machine hour in its machining department. During the year the overhead
expenditure amounted to Rs. 472,560 and 72,600 machine hours were used.
Which one of the following statements is correct?
a) Overhead was under-absorbed by Rs.7,440
b) Overhead was under-absorbed by Rs.7,920 (correct)
c) Overhead was over-absorbed by Rs.7,440
d) Overhead was over-absorbed by Rs.7,920
9. A business always absorbs its overheads on labor hours. In the 8th period,
18,000 hours were worked, actual overheads were Rs. 279,000 and there was
Rs. 36,000 over-absorption. The overhead absorption rate per hours was:
a) Rs. 15.50
b) Rs. 17.50 (correct)
c) Rs. 18.00
d) Rs. 13.50
10. The main purpose of cost accounting is to:
a) Maximize profits
b) Help in inventory valuation
c) Provide information to management for decision making (correct)
d) Aid in the fixation of selling price
11. In which of the following would there be a difference between financial and
managerial accounting?
a) Users of the information
b) Purpose of the information
c) Flexibility of practices
d) All of the given options (correct)
12. Which of the following is a cost that changes in proportion to changes in
volume?
a) Fixed cost
b) Sunk cost
c) Opportunity cost
d) None of the given options (correct)
13. Cost accounting information can be used for all EXCEPT:
a) Budget control and evaluation
b) Determining standard costs and variances
c) Pricing and inventory valuation decisions
d) Analyzing the data (correct)
14. Which of the following is not an element of factory overhead?
a) Depreciation on the maintenance equipment
b) Salary of the plant supervisor
c) Property taxes on the plant buildings
d) Salary of a marketing manager (correct)
15. The main difference between the profit center and investment center is:
a) Decision making (correct)
b) Revenue generation
c) Cost incurrence
d) All of the given options
16. Opportunity cost is the best example of:
a) Sunk Cost
b) Standard Cost
c) Relevant Cost (correct)
d) Irrelevant cost
17- If, Sales = Rs. 800,000, Markup = 25% of cost, what would be the value of Gross
profit?
a) Rs. 200,000
b) Rs. 160,000 (correct)
c) Rs. 480,000
d) Rs. 640,000
18- Which of the following is correct?
a) Opening finished goods units + Units produced – Closing finished goods units =
Units sold (correct)
b) Units Sold = Units produced + Closing finished goods units - Opening finished goods
units
c) Sales + Average units of finished goods inventory
d) None of the given options
19- Loss by fire is an example of:
a) Normal Loss
b) Abnormal Loss (correct)
c) Both normal loss and abnormal loss
d) Can not be determined
20- In cost Accounting, abnormal loss is charged to:
a) Factory overhead control account
b) Work in process account (correct)
c) Income Statement
d) All of the given options
1. If computational and record-keeping costs are about the same under both FIFO
and weighted average, which of the following method will generally be
preferred?
A. Weighted Average
B. FIFO (correct)
C. They offer the same degree of information
D. Cannot be determined with so little information
2. Which of the following System applies when standardized goods are produced
under a series of inter-connected operations?
A. Job Order Costing
B. Process Costing (correct)
C. Standard Costing
D. All of the given options
3. The cost of material that is not completely processed, would be found in which
of the following inventory account on the Balance Sheet?
A. Direct material inventory
B. Work-in-process inventory (correct)
C. Finished goods inventory
D. Supplies inventory
4. A complete set of Financial Statements for Nestle Company at December 31,
2008 would include each of the followings, EXCEPT:
A. Balance Sheet as of December 31, 2008
B. Statement of Projected Cash flows for 2009 (correct)
C. Income Statement for the year ended December 31, 2008
D. Notes containing additional information that is useful in interpreting the Financial
Statements
5. Total Fixed cost _______ with the increase in production.
A. Remains constant (correct)
B. Decreases
C. Increases
D. There is no relation between fixed cost and activity level
6. The following data is available for the Bricks Company:
Particulars Rs.
Freight in 20,000
Purchases return and allowances 80,000
Marketing expenses 200,000
Finished goods Inventory, ending 90,000
Cost of goods sold 700% of marketing expenses
You are required to calculate the cost of goods available for sales if Gross Profit is
50% of cost of goods sold.
A. Rs. 1,490,000 (correct)
B. Rs. 1,390,000
C. Rs. 1,500,000
D. Rs. 1,590,000
7. Consider the following:
Beginning work in process inventory Rs. 20,000
Direct material used Rs. 50,000
Direct labor used Rs. 80,000
Manufacturing overhead Rs. 120,000
Ending work in process inventory Rs. 10,000
Cost of finished goods manufactured Rs. 260,000
The total manufacturing costs would be:
A. Rs. 250,000 (correct)
B. Rs. 260,000
C. Rs. 270,000
D. Rs. 280,000
8. Job 210 was unfinished at the end of the accounting period. The total cost
assigned to the job was Rs. 12,000 of which Rs. 3,000 was direct material cost.
Factory overheads were allocated to goods in process at 150% of direct labor
cost. What was the amount of direct labor cost charged to Job 210?
A. Rs. 3,600 (correct)
B. Rs. 3,000
C. Rs. 5,400
D. Rs. 9,000
9. Job 210 was unfinished at the end of the accounting period. The total cost
assigned to the job was Rs. 12,000 of which Rs. 3,000 was direct material cost.
Factory overheads were allocated to goods in process at 150% of direct labor
cost. What was the amount of Factory over head cost charged to Job 210?
A. Rs. 3,600
B. Rs. 3,000
C. Rs. 5,400 (correct)
D. Rs. 9,000
10. The over applied balance of the Factory Overhead ledger account is Rs. 36,000,
a significant amount. The ending balances of Goods in Process Inventory,
Finished Goods Inventory and Cost of Goods Sold accounts are Rs. 12,000, Rs.
8,000, and Rs. 60,000, respectively. On the basis of ending balances, how much
of the over applied balance of overhead should be allocated to each of these
accounts?
A. Rs.5, 400, Rs.27, 600, Rs.3, 000
B. Rs.27,400, Rs. 3,600, Rs. 5,000
C. Rs. 5,400, Rs. 3,600, Rs. 27,000 (correct)
D. None of the given options
11. PEL Limited has been using an overhead rate of Rs. 5.60 per machine hour.
During the year, overheads of Rs. 275,000 were incurred and 48,000 machine
hours worked. Therefore, overheads were:
A. Under-applied by Rs.7,600
B. Over-applied by Rs. 6,200
C. Under-applied by Rs. 6,200 (correct)
D. Over-applied by Rs. 7,600
12. Factory overhead should be allocated on the basis of:
A. Direct labor hours
B. Direct labor costs
C. An activity basis which relates to cost incurrence (correct)
D. Machine hours
13. If a company uses a predetermined rate for the application of factory overhead,
the idle capacity variance is the:
A. Over or under applied variable cost element of overheads
B. Difference in budgeted costs and actual costs of fixed overheads items
C. Difference in budgeted cost and actual costs of variable overheads items
D. Over or under applied fixed cost element of overheads (correct)
14. Which of the following manufacturing operations, which is best, suited to the
utilization of a job order system?
A. Soft drink bottling operation
B. Crude oil refining
C. Plastic molding operation
D. Helicopter manufacturing (correct)
15. 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. Only Closing stock of work in process is restated in terms of completed units
D. Opening and Closing stock of work in process are related in terms of completed (correct)
units
16. Which cost accumulation procedure is best suited to a continuous mass
production process of similar units?
A. Job order costing
B. Standard costing
C. Actual costing
D. Process costing (correct)
17. Which of the following is an objective of cost accounting?
A. Provide information to management for decision making
B. Computation of cost per unit (correct)
C. Preparation of Financial Statement
D. Computation of relevant costs
18. Which of the following would be considered an external user of the firm's
accounting information?
A. President
B. Stockholder (correct)
C. Sales manager
D. Controller
19. Cost accounting concepts include all of the following EXCEPT:
A. Planning
B. Controlling
C. Sharing (correct)
D. Costing
20. The chief financial officer is also known as the:
A. Controller
B. Staff accountant
C. Auditor
D. Finance director (correct)
solved MCQs of economics (eco401)
Chapter 8 Profit Maximization and Competitive Supply
1. Which of following is a key assumption of a perfectly competitive market?
a. Firms can influence market price
b. Commodities have few sellers
c. It is difficult for new sellers to enter the market.
d. Each seller has a very small share of the market. (correct)
2. Owners and managers
a.must be the same people.
b.may be different people with different goals, and in the long run firms that do best are those in which the managers are allowed to pursue their own independent goals.
c. may be different people with different goals, but in the long run firms that do best are those in which the managers pursue the goals of the owners. (correct)
d. may be different people with different but exactly complementary goals.
3. The "perfect information" assumption of perfect competition includes all of the following except one. Which one?
a. Consumers know their preferences.
b.Consumers know their income levels.
c.Consumers know the prices available.
d.Consumers can anticipate price changes.(correct)
e.Firms know their costs, prices and technology.
4. Revenue is equal to
a.price times quantity. (correct)
b.price times quantity minus total cost.
c.price times quantity minus average cost.
d.price times quantity minus marginal cost.
5. If current output is less than the profit-maximizing output, then the next unit produced
a.will decrease profit.
b.will increase cost more than it increases revenue.
c.will increase revenue more than it increases cost. (correct)
d.will increase revenue without increasing cost.
e.may or may not increase profit.
6. If current output is less than the profit-maximizing output, which must be true?
a.Total revenue is less than total cost.
b.Average revenue is less than average cost.
c.Average revenue is greater than average cost.
d.Marginal revenue is less than marginal cost.
e.Marginal revenue is greater than marginal cost. (correct)
7. Marginal profit is equal to
a.marginal revenue minus marginal cost.(correct)
b.marginal revenue plus marginal cost.
c.marginal cost minus marginal revenue.
d.marginal revenue times marginal cost.
8. At the profit-maximizing level of output, marginal profit
a.is also maximized.
b.is zero. (correct)
c.is positive.
d.is increasing.
9. The demand curve facing a perfectly competitive firm is
a.the same as the market demand curve.
b.downward-sloping and less flat than the market demand curve.
c.downward-sloping and more flat than the market demand curve.
d.perfectly horizontal.(correct)
10. Because of the relationship between a perfectly competitive firm's demand curve and its marginal revenue curve,
the profit maximization condition for the firm can be written as
a.P = MR.
b.P = AVC.
c.P = AC.
d.P = MC. (correct)
11. If the market price for a competitive firm's output doubles then
a.the profit maximizing output will double
b.the marginal revenue doubles (correct)
c.at the new profit maximizing output, price has increased more than marginal cost
d.at the new profit maximizing output, price has risen more than marginal revenue
12. If price is between AVC and ATC, the best and most practical thing for a perfectly competitive firm to do is
a.raise prices.
b.lower prices to gain revenue from extra volume.
c.shut down immediately, but not liquidate the business.
d.continue operating, but plan to go out of business.(correct)
13. An improvement in technology would result in
a.upward shifts of MC and reductions in output.
b.upward shifts of MC and increases in output.
c.downward shifts of MC and reductions in output.
d.downward shifts of MC and increases in output. (correct)
14. If a competitive firm's marginal cost curve is U-shaped then
a.its short run supply curve is the downward-sloping portion of the marginal cost curve
b.its short run supply curve is the upward-sloping portion of the marginal cost curve
c.its short run supply curve is the upward-sloping portion of the marginal cost curve that lies above the short run average variable cost curve (correct)
d.its short run supply curve is the upward-sloping portion of the marginal cost curve that lies
above the short run average total cost curve
15. A firm never operates
a.at the minimum of its ATC curve.
b.at the minimum of its AVC curve.
c.on the downward-sloping portion of its ATC curve.
d.on the downward-sloping portion of its AVC curve. (correct)
16. The supply curve for a competitive firm is
a.its entire MC curve.
b.the upward-sloping portion of its MC curve.
c.its MC curve above the minimum point of the AVC curve. (correct)
d.its MC curve above the minimum point of the ATC curve.
e.its MR curve.
17. The shutdown decision can be restated in terms of producer surplus by saying that a firm should produce in the
short run as long as
a.revenue exceeds producer surplus.
b.producer surplus is positive. (correct)
c.producer surplus exceeds fixed cost.
d.producer surplus exceeds variable cost.
e.profit and producer surplus are equal.
18. A firm's producer surplus equals its economic profit when
a.average variable costs are minimized.
b.average fixed costs are minimized.
c.marginal costs equal marginal revenue.
d.fixed costs are zero. (correct)
19. Imposition of an output tax on all firms in a competitive industry will result in
a.a downward shift in each firm's marginal cost curve.
b.a downward shift in each firm's average cost curve.
c.a leftward shift in the market supply curve. (correct)
d.the entry of new firms into the industry.
20. In long-run competitive equilibrium, a firm that owns factors of production will have an
a.economic profit = $0 and accounting profit > $0.(correct)
b.economic profit > $0 and accounting profit = $0.
c.economic and accounting profit = $0.
d.economic and accounting profit > $0.
21. In an increasing-cost industry, expansion of output
a.causes input prices to rise as demand for them grows.(correct)
b.leaves input prices constant as input demand grows.
c.causes diseconomies of scale to occur.
d.occurs under conditions of increasing returns to scale.
e.occurs without diminishing marginal product.
22. The long run supply curve in a constant-cost industry is linear and
a.upward-sloping.
b.downward-sloping.
c.horizontal. (correct)
d.vertical.
e.could have any constant slope.
23. An increasing-cost industry is so named because of the positive slope of which curve?
a.Each firm's short-run average cost curve
b.Each firm's short-run marginal cost curve
c.Each firm's long-run marginal cost curve
d.The industry's long-run supply curve (correct)
24. A decreasing-cost industry has a downward-sloping
a.long-run average cost curve.
b.long-run marginal cost curve.
c.short-run average cost curve.
d.short-run marginal cost curve.
--
K@sh
1. Which of following is a key assumption of a perfectly competitive market?
a. Firms can influence market price
b. Commodities have few sellers
c. It is difficult for new sellers to enter the market.
d. Each seller has a very small share of the market. (correct)
2. Owners and managers
a.must be the same people.
b.may be different people with different goals, and in the long run firms that do best are those in which the managers are allowed to pursue their own independent goals.
c. may be different people with different goals, but in the long run firms that do best are those in which the managers pursue the goals of the owners. (correct)
d. may be different people with different but exactly complementary goals.
3. The "perfect information" assumption of perfect competition includes all of the following except one. Which one?
a. Consumers know their preferences.
b.Consumers know their income levels.
c.Consumers know the prices available.
d.Consumers can anticipate price changes.(correct)
e.Firms know their costs, prices and technology.
4. Revenue is equal to
a.price times quantity. (correct)
b.price times quantity minus total cost.
c.price times quantity minus average cost.
d.price times quantity minus marginal cost.
5. If current output is less than the profit-maximizing output, then the next unit produced
a.will decrease profit.
b.will increase cost more than it increases revenue.
c.will increase revenue more than it increases cost. (correct)
d.will increase revenue without increasing cost.
e.may or may not increase profit.
6. If current output is less than the profit-maximizing output, which must be true?
a.Total revenue is less than total cost.
b.Average revenue is less than average cost.
c.Average revenue is greater than average cost.
d.Marginal revenue is less than marginal cost.
e.Marginal revenue is greater than marginal cost. (correct)
7. Marginal profit is equal to
a.marginal revenue minus marginal cost.(correct)
b.marginal revenue plus marginal cost.
c.marginal cost minus marginal revenue.
d.marginal revenue times marginal cost.
8. At the profit-maximizing level of output, marginal profit
a.is also maximized.
b.is zero. (correct)
c.is positive.
d.is increasing.
9. The demand curve facing a perfectly competitive firm is
a.the same as the market demand curve.
b.downward-sloping and less flat than the market demand curve.
c.downward-sloping and more flat than the market demand curve.
d.perfectly horizontal.(correct)
10. Because of the relationship between a perfectly competitive firm's demand curve and its marginal revenue curve,
the profit maximization condition for the firm can be written as
a.P = MR.
b.P = AVC.
c.P = AC.
d.P = MC. (correct)
11. If the market price for a competitive firm's output doubles then
a.the profit maximizing output will double
b.the marginal revenue doubles (correct)
c.at the new profit maximizing output, price has increased more than marginal cost
d.at the new profit maximizing output, price has risen more than marginal revenue
12. If price is between AVC and ATC, the best and most practical thing for a perfectly competitive firm to do is
a.raise prices.
b.lower prices to gain revenue from extra volume.
c.shut down immediately, but not liquidate the business.
d.continue operating, but plan to go out of business.(correct)
13. An improvement in technology would result in
a.upward shifts of MC and reductions in output.
b.upward shifts of MC and increases in output.
c.downward shifts of MC and reductions in output.
d.downward shifts of MC and increases in output. (correct)
14. If a competitive firm's marginal cost curve is U-shaped then
a.its short run supply curve is the downward-sloping portion of the marginal cost curve
b.its short run supply curve is the upward-sloping portion of the marginal cost curve
c.its short run supply curve is the upward-sloping portion of the marginal cost curve that lies above the short run average variable cost curve (correct)
d.its short run supply curve is the upward-sloping portion of the marginal cost curve that lies
above the short run average total cost curve
15. A firm never operates
a.at the minimum of its ATC curve.
b.at the minimum of its AVC curve.
c.on the downward-sloping portion of its ATC curve.
d.on the downward-sloping portion of its AVC curve. (correct)
16. The supply curve for a competitive firm is
a.its entire MC curve.
b.the upward-sloping portion of its MC curve.
c.its MC curve above the minimum point of the AVC curve. (correct)
d.its MC curve above the minimum point of the ATC curve.
e.its MR curve.
17. The shutdown decision can be restated in terms of producer surplus by saying that a firm should produce in the
short run as long as
a.revenue exceeds producer surplus.
b.producer surplus is positive. (correct)
c.producer surplus exceeds fixed cost.
d.producer surplus exceeds variable cost.
e.profit and producer surplus are equal.
18. A firm's producer surplus equals its economic profit when
a.average variable costs are minimized.
b.average fixed costs are minimized.
c.marginal costs equal marginal revenue.
d.fixed costs are zero. (correct)
19. Imposition of an output tax on all firms in a competitive industry will result in
a.a downward shift in each firm's marginal cost curve.
b.a downward shift in each firm's average cost curve.
c.a leftward shift in the market supply curve. (correct)
d.the entry of new firms into the industry.
20. In long-run competitive equilibrium, a firm that owns factors of production will have an
a.economic profit = $0 and accounting profit > $0.(correct)
b.economic profit > $0 and accounting profit = $0.
c.economic and accounting profit = $0.
d.economic and accounting profit > $0.
21. In an increasing-cost industry, expansion of output
a.causes input prices to rise as demand for them grows.(correct)
b.leaves input prices constant as input demand grows.
c.causes diseconomies of scale to occur.
d.occurs under conditions of increasing returns to scale.
e.occurs without diminishing marginal product.
22. The long run supply curve in a constant-cost industry is linear and
a.upward-sloping.
b.downward-sloping.
c.horizontal. (correct)
d.vertical.
e.could have any constant slope.
23. An increasing-cost industry is so named because of the positive slope of which curve?
a.Each firm's short-run average cost curve
b.Each firm's short-run marginal cost curve
c.Each firm's long-run marginal cost curve
d.The industry's long-run supply curve (correct)
24. A decreasing-cost industry has a downward-sloping
a.long-run average cost curve.
b.long-run marginal cost curve.
c.short-run average cost curve.
d.short-run marginal cost curve.
--
K@sh
Economics_MCQs
Chapter 8 Profit Maximization and Competitive Supply
1. Which of following is a key assumption of a perfectly competitive market?
a. Firms can influence market price
b. Commodities have few sellers
c. It is difficult for new sellers to enter the market.
d. Each seller has a very small share of the market.
2. Owners and managers
a.must be the same people.
b.may be different people with different goals, and in the long run firms that do best are those in which the managers are allowed to pursue their own independent goals.
c. may be different people with different goals, but in the long run firms that do best are those in which the managers pursue the goals of the owners.
d. may be different people with different but exactly complementary goals.
3. The "perfect information" assumption of perfect competition includes all of the following except one. Which one?
a. Consumers know their preferences.
b.Consumers know their income levels.
c.Consumers know the prices available.
d.Consumers can anticipate price changes.
e.Firms know their costs, prices and technology.
4. Revenue is equal to
a.price times quantity.
b.price times quantity minus total cost.
c.price times quantity minus average cost.
d.price times quantity minus marginal cost.
5. If current output is less than the profit-maximizing output, then the next unit produced
a.will decrease profit.
b.will increase cost more than it increases revenue.
c.will increase revenue more than it increases cost.
d.will increase revenue without increasing cost.
e.may or may not increase profit.
6. If current output is less than the profit-maximizing output, which must be true?
a.Total revenue is less than total cost.
b.Average revenue is less than average cost.
c.Average revenue is greater than average cost.
d.Marginal revenue is less than marginal cost.
e.Marginal revenue is greater than marginal cost.
7. Marginal profit is equal to
a.marginal revenue minus marginal cost.
b.marginal revenue plus marginal cost.
c.marginal cost minus marginal revenue.
d.marginal revenue times marginal cost.
8. At the profit-maximizing level of output, marginal profit
a.is also maximized.
b.is zero.
c.is positive.
d.is increasing.
9. The demand curve facing a perfectly competitive firm is
a.the same as the market demand curve.
b.downward-sloping and less flat than the market demand curve.
c.downward-sloping and more flat than the market demand curve.
d.perfectly horizontal.
10. Because of the relationship between a perfectly competitive firm's demand curve and its marginal revenue curve,
the profit maximization condition for the firm can be written as
a.P = MR.
b.P = AVC.
c.P = AC.
d.P = MC.
11. If the market price for a competitive firm's output doubles then
a.the profit maximizing output will double
b.the marginal revenue doubles
c.at the new profit maximizing output, price has increased more than marginal cost
d.at the new profit maximizing output, price has risen more than marginal revenue
12. If price is between AVC and ATC, the best and most practical thing for a perfectly competitive firm to do is
a.raise prices.
b.lower prices to gain revenue from extra volume.
c.shut down immediately, but not liquidate the business.
d.continue operating, but plan to go out of business.
13. An improvement in technology would result in
a.upward shifts of MC and reductions in output.
b.upward shifts of MC and increases in output.
c.downward shifts of MC and reductions in output.
d.downward shifts of MC and increases in output.
14. If a competitive firm's marginal cost curve is U-shaped then
a.its short run supply curve is the downward-sloping portion of the marginal cost curve
b.its short run supply curve is the upward-sloping portion of the marginal cost curve
c.its short run supply curve is the upward-sloping portion of the marginal cost curve that lies above the short run average variable cost curve
d.its short run supply curve is the upward-sloping portion of the marginal cost curve that lies
above the short run average total cost curve
15. A firm never operates
a.at the minimum of its ATC curve.
b.at the minimum of its AVC curve.
c.on the downward-sloping portion of its ATC curve.
d.on the downward-sloping portion of its AVC curve.
16. The supply curve for a competitive firm is
a.its entire MC curve.
b.the upward-sloping portion of its MC curve.
c.its MC curve above the minimum point of the AVC curve.
d.its MC curve above the minimum point of the ATC curve.
e.its MR curve.
17. The shutdown decision can be restated in terms of producer surplus by saying that a firm should produce in the
short run as long as
a.revenue exceeds producer surplus.
b.producer surplus is positive.
c.producer surplus exceeds fixed cost.
d.producer surplus exceeds variable cost.
e.profit and producer surplus are equal.
18. A firm's producer surplus equals its economic profit when
a.average variable costs are minimized.
b.average fixed costs are minimized.
c.marginal costs equal marginal revenue.
d.fixed costs are zero.
19. Imposition of an output tax on all firms in a competitive industry will result in
a.a downward shift in each firm's marginal cost curve.
b.a downward shift in each firm's average cost curve.
c.a leftward shift in the market supply curve.
d.the entry of new firms into the industry.
20. In long-run competitive equilibrium, a firm that owns factors of production will have an
a.economic profit = $0 and accounting profit > $0.
b.economic profit > $0 and accounting profit = $0.
c.economic and accounting profit = $0.
d.economic and accounting profit > $0.
21. In an increasing-cost industry, expansion of output
a.causes input prices to rise as demand for them grows.
b.leaves input prices constant as input demand grows.
c.causes diseconomies of scale to occur.
d.occurs under conditions of increasing returns to scale.
e.occurs without diminishing marginal product.
22. The long run supply curve in a constant-cost industry is linear and
a.upward-sloping.
b.downward-sloping.
c.horizontal.
d.vertical.
e.could have any constant slope.
23. An increasing-cost industry is so named because of the positive slope of which curve?
a.Each firm's short-run average cost curve
b.Each firm's short-run marginal cost curve
c.Each firm's long-run marginal cost curve
d.The industry's long-run supply curve
24. A decreasing-cost industry has a downward-sloping
a.long-run average cost curve.
b.long-run marginal cost curve.
c.short-run average cost curve.
d.short-run marginal cost curve.
1. Which of following is a key assumption of a perfectly competitive market?
a. Firms can influence market price
b. Commodities have few sellers
c. It is difficult for new sellers to enter the market.
d. Each seller has a very small share of the market.
2. Owners and managers
a.must be the same people.
b.may be different people with different goals, and in the long run firms that do best are those in which the managers are allowed to pursue their own independent goals.
c. may be different people with different goals, but in the long run firms that do best are those in which the managers pursue the goals of the owners.
d. may be different people with different but exactly complementary goals.
3. The "perfect information" assumption of perfect competition includes all of the following except one. Which one?
a. Consumers know their preferences.
b.Consumers know their income levels.
c.Consumers know the prices available.
d.Consumers can anticipate price changes.
e.Firms know their costs, prices and technology.
4. Revenue is equal to
a.price times quantity.
b.price times quantity minus total cost.
c.price times quantity minus average cost.
d.price times quantity minus marginal cost.
5. If current output is less than the profit-maximizing output, then the next unit produced
a.will decrease profit.
b.will increase cost more than it increases revenue.
c.will increase revenue more than it increases cost.
d.will increase revenue without increasing cost.
e.may or may not increase profit.
6. If current output is less than the profit-maximizing output, which must be true?
a.Total revenue is less than total cost.
b.Average revenue is less than average cost.
c.Average revenue is greater than average cost.
d.Marginal revenue is less than marginal cost.
e.Marginal revenue is greater than marginal cost.
7. Marginal profit is equal to
a.marginal revenue minus marginal cost.
b.marginal revenue plus marginal cost.
c.marginal cost minus marginal revenue.
d.marginal revenue times marginal cost.
8. At the profit-maximizing level of output, marginal profit
a.is also maximized.
b.is zero.
c.is positive.
d.is increasing.
9. The demand curve facing a perfectly competitive firm is
a.the same as the market demand curve.
b.downward-sloping and less flat than the market demand curve.
c.downward-sloping and more flat than the market demand curve.
d.perfectly horizontal.
10. Because of the relationship between a perfectly competitive firm's demand curve and its marginal revenue curve,
the profit maximization condition for the firm can be written as
a.P = MR.
b.P = AVC.
c.P = AC.
d.P = MC.
11. If the market price for a competitive firm's output doubles then
a.the profit maximizing output will double
b.the marginal revenue doubles
c.at the new profit maximizing output, price has increased more than marginal cost
d.at the new profit maximizing output, price has risen more than marginal revenue
12. If price is between AVC and ATC, the best and most practical thing for a perfectly competitive firm to do is
a.raise prices.
b.lower prices to gain revenue from extra volume.
c.shut down immediately, but not liquidate the business.
d.continue operating, but plan to go out of business.
13. An improvement in technology would result in
a.upward shifts of MC and reductions in output.
b.upward shifts of MC and increases in output.
c.downward shifts of MC and reductions in output.
d.downward shifts of MC and increases in output.
14. If a competitive firm's marginal cost curve is U-shaped then
a.its short run supply curve is the downward-sloping portion of the marginal cost curve
b.its short run supply curve is the upward-sloping portion of the marginal cost curve
c.its short run supply curve is the upward-sloping portion of the marginal cost curve that lies above the short run average variable cost curve
d.its short run supply curve is the upward-sloping portion of the marginal cost curve that lies
above the short run average total cost curve
15. A firm never operates
a.at the minimum of its ATC curve.
b.at the minimum of its AVC curve.
c.on the downward-sloping portion of its ATC curve.
d.on the downward-sloping portion of its AVC curve.
16. The supply curve for a competitive firm is
a.its entire MC curve.
b.the upward-sloping portion of its MC curve.
c.its MC curve above the minimum point of the AVC curve.
d.its MC curve above the minimum point of the ATC curve.
e.its MR curve.
17. The shutdown decision can be restated in terms of producer surplus by saying that a firm should produce in the
short run as long as
a.revenue exceeds producer surplus.
b.producer surplus is positive.
c.producer surplus exceeds fixed cost.
d.producer surplus exceeds variable cost.
e.profit and producer surplus are equal.
18. A firm's producer surplus equals its economic profit when
a.average variable costs are minimized.
b.average fixed costs are minimized.
c.marginal costs equal marginal revenue.
d.fixed costs are zero.
19. Imposition of an output tax on all firms in a competitive industry will result in
a.a downward shift in each firm's marginal cost curve.
b.a downward shift in each firm's average cost curve.
c.a leftward shift in the market supply curve.
d.the entry of new firms into the industry.
20. In long-run competitive equilibrium, a firm that owns factors of production will have an
a.economic profit = $0 and accounting profit > $0.
b.economic profit > $0 and accounting profit = $0.
c.economic and accounting profit = $0.
d.economic and accounting profit > $0.
21. In an increasing-cost industry, expansion of output
a.causes input prices to rise as demand for them grows.
b.leaves input prices constant as input demand grows.
c.causes diseconomies of scale to occur.
d.occurs under conditions of increasing returns to scale.
e.occurs without diminishing marginal product.
22. The long run supply curve in a constant-cost industry is linear and
a.upward-sloping.
b.downward-sloping.
c.horizontal.
d.vertical.
e.could have any constant slope.
23. An increasing-cost industry is so named because of the positive slope of which curve?
a.Each firm's short-run average cost curve
b.Each firm's short-run marginal cost curve
c.Each firm's long-run marginal cost curve
d.The industry's long-run supply curve
24. A decreasing-cost industry has a downward-sloping
a.long-run average cost curve.
b.long-run marginal cost curve.
c.short-run average cost curve.
d.short-run marginal cost curve.
MGT402- Cost & Management Accounting_MIDTERM EXAMINATION
MIDTERM EXAMINATION
Spring 2009
MGT402- Cost & Management Accounting (Session - 2)
Question No: 1 ( Marks: 1 ) - Please choose one
D Corporation uses process costing to calculate the cost of manufacturing Crunchies. During the month 12,500 units were completed, 1,500 units remained in work in process at 25 percent completed. How many equivalent units are produced?
► 12,500 units
► 12,875 units
► 14,250 units
► 12,125 units
Question No: 2 ( Marks: 1 ) - Please choose one
Greenwood petroleum has the data for the year was as follow:
Opening WIP 26,000 barrels.
Introduced during the year 67,000 barrels
Closing WIP 15,000 barrels.
How many barrels were completed and transferred out of work-in-process this period?
► 67,000 barrels
► 78,000 barrels
► 82,000 barrels
► 93,000 barrels
Question No: 3 ( Marks: 1 ) - Please choose one
During the year 50,000 units put in to process.30, 000 units were completed. Closing WIP were 20,000 units, 70% completed. How much the equivalent units of output would be produced?
► 20,000 units
► 30,000 units
► 36,000 units
► 44,000 units
Question No: 4 ( Marks: 1 ) - Please choose one
What would be the effect on the cost of a department in case of normal Loss?
► Decreased
► Increased
► No effect
► Increase to the %age of loss
Question No: 5 ( Marks: 1 ) - Please choose one
When 10,000 ending units of work-in-process are 30% completed as to conversion, it means:
► 30% of the units are completed
► 70% of the units are completed
► Each unit has been completed to 70% of its final stage
► Each of the units is 30% completed
Question No: 6 ( Marks: 1 ) - Please choose one
In order to compute equivalent units of production, which of the following must be reasonably estimated?
► Units
► The percentage of completion
► Direct material cost
► Units started and completed
Question No: 7 ( Marks: 1 ) - Please choose one
In a job order cost system, the use of direct materials would be recorded as a debit to:
► Finished Goods inventory
► Manufacturing Overhead
► Raw Materials inventory
► Work in Process inventory
Question No: 8 ( Marks: 1 ) - Please choose one
If management predicts total direct labor costs of Rs. 100,000 and total overhead costs of Rs. 200,000, what is its predetermined overhead rate based on direct labor costs?
► 50%
► 100%
► 200%
► Cannot be determined
Question No: 9 ( Marks: 1 ) - Please choose one
P Ltd applied overheads on the basis of direct labor hours. The overhead applied rate for the period has been based on budgeted overhead of Rs.150, 000 and 50,000 direct labor hours. During the period overhead of Rs. 180,000 were incurred and 60,000 direct labor hours were used.
Which of the following statement is correct?
► Overhead was Rs.30,000 over applied
► Overhead was Rs.30,000 under applied
► No under or over applied occurred
► None of the given
Question No: 10 ( Marks: 1 ) - Please choose one
Raymond Corporation estimates factory overhead of Rs. 345,000 for next fiscal year. It is estimated that 60,000 units will be produced at a material cost of Rs. 575,000. Conversion will require 34,500 direct labor hours at a cost of Rs. 10 per hour, with 25,875 machine hours.
FOH rate on the bases of Prime cost would be?
► Rs. 37.5 per unit
► Rs. 56.6 per unit
► Rs. 60 per unit
► Rs.1 per unit
Question No: 11 ( Marks: 1 ) - Please choose one
Nelson Company has following FOH detail.
Budgeted (Rs.) Actual (Rs.)
Production Fixed overheads 36,000 39,000
Production Variable overheads 9,000 12,000
Direct labor hours 18,000 20,000
What would be the amount of under/over applied FOH
► Under applied by Rs.1,000
► Over applied by Rs.1,000
► Under applied by Rs.11,000
► Over applied by Rs.38,000
Question No: 12 ( Marks: 1 ) - Please choose one
Which of the following is TRUE regarding the use of blanket rate?
► The use of a single blanket rate makes the apportionment of overhead costs unnecessary
► The use of a single blanket rate makes the apportionment of overhead costs necessary
► The use of a single blanket rate makes the apportionment of overhead costs uniform
► None of the given options
Question No: 13 ( Marks: 1 ) - Please choose one
A Blanket Rate is:
► A single rates which used throughout the organisation departments
► A double rates which used throughout the organisation departments
► A single rates which used in different departments of the organisation.
► None of the Given
Question No: 14 ( Marks: 1 ) - Please choose one
It is possible for an item of overhead expenditure to be shared amongst many departments. It is also possible that this same item may relate to just one specific department.
If the item was not charged specifically to a single department this would be an example of:
► Apportionment
► Allocation
► Re-apportionment
► Absorption
Question No: 15 ( Marks: 1 ) - Please choose one
FOH absorption rate is calculated by the way of:
► Estimated FOH Cost/Direct labor hours
► Estimated FOH Cost/Direct labor cost
► Estimated FOH Cost/Machine hours
► All of the given options
Question No: 16 ( Marks: 1 ) - Please choose one
Which of the following is / are time based incentive wage plan?
► Hasley Premium Plan
► Hasley Weir Premium Plan
► Rowan Premium Plan
► All of the given options
Question No: 17 ( Marks: 1 ) - Please choose one
If, Basic Salary Rs.10,000
Per Piece commission Rs. 5
Unit sold 700 pieces
What will be the total Salary?
► Rs. 3,500
► Rs. 13,500
► Rs. 10,000
► Rs. 6,500
Question No: 18 ( Marks: 1 ) - Please choose one
Payroll includes:
► Salaries & Wages of direct labor
► Salaries & Wages of Indirect labor
► Salaries & Wages of Administrative
► Salaries & Wages of direct labor, Indirect labor, and Administrative
Question No: 19 ( Marks: 1 ) - Please choose one
Which of the following document evidences the transaction of purchase of material?
► Material requisition
► Store requisition
► Purchase order
► Purchase invoice
Question No: 20 ( Marks: 1 ) - Please choose one
Which of the following is NOT an assumption of the basic economic-order quantity model?
► Annual demand is known
► Ordering cost is known
► Carrying cost is known
► Quantity discounts are available
Question No: 21 ( Marks: 1 ) - Please choose one
A store sells five cases of soda each day. Ordering costs are Rs. 8 per order, and soda costs Rs. 3 per case. Orders arrive four days from the time they are placed. Daily holding costs are equal to 5% of the cost of the soda. What is the EOQ for soda?
► 4 cases
► 8 cases
► 10 cases
► 23 cases
Question No: 22 ( Marks: 1 ) - Please choose one
All of the following are deducted from Gross Profit to calculate Operating income EXCEPT:
► Selling expenses
► Advertising expenses
► Administrative expenses
► Financial expenses
Question No: 23 ( Marks: 1 ) - Please choose one
Which of the following is CORRECT to calculate cost of goods manufactured?
► Direct labor costs plus total manufacturing costs
► The beginning work in process inventory plus total manufacturing costs and subtract the ending work in process inventory
► Beginning raw materials inventory plus direct labor plus factory overhead
► Conversion costs and work in process inventory adjustments results in cost of goods manufactured
Question No: 24 ( Marks: 1 ) - Please choose one
Which of the following is a period cost?
► Direct materials
► Indirect materials
► Factory utilities
► Administrative expenses
Question No: 25 ( Marks: 1 ) - Please choose one
The salary of factory clerk is treated as:
► Direct labor cost
► Indirect labor cost
► Conversion cost
► Prime cost
Question No: 26 ( Marks: 1 ) - Please choose one
The components of the conversion cost are:
► Direct Material + Direct Labor + Other Direct Cost
► Direct Labor + FOH
► Prime Cost + FOH+ Other Direct Cost
► Prime Cost + FOH
Question No: 27 ( Marks: 1 ) - Please choose one
The cost of Telephone bill of the factory is treated as:
► Fixed cost
► Variable cost
► Step cost
► Semi variable cost
Question No: 28 ( Marks: 1 ) - Please choose one
Which of the following is a cost that changes in proportion to changes in volume?
► Fixed cost
► Sunk cost
► Opportunity cost
► None of the given options
Question No: 29 ( Marks: 1 ) - Please choose one
Cost accounting concepts include all of the following EXCEPT:
► Planning
► Controlling
► Sharing
► Costing
Question No: 30 ( Marks: 1 ) - Please choose one
If a predetermined FOH rate is not applied and the volume of production is reduced from the planned capacity level, the cost per unit expected to:
► Remain unchanged for fixed cost and increased for variable cost
► Increase for fixed cost and remain unchanged for variable cost
► Increase for fixed cost and decreased for variable cost
► Decrease for both fixed and variable costs
Question No: 31 ( Marks: 1 ) - Please choose one
All of the following are characteristics of Group Bonus Scheme EXCEPT:
► A standard time is set for the completion of a job
► If the time taken is greater than the time allowed, the workers in the group receive time wages
► If the time taken is less than the time allowed, the group receives a bonus on time saved
► If the time taken is greater than the time allowed, the workers in the group receive time deductions for extra hours
Question No: 32 ( Marks: 1 ) - Please choose one
Which of the following is TRUE when piece rate system is used for wage determination?
► Under this method of remuneration a worker is paid on the basis of time taken by him to perform the work
► Under this method of remuneration a worker is paid on the basis of production
► The rate is expressed in terms of certain sum of money for total production
► The rate is not expressed in terms of certain sum of money for total production
Question No: 33 ( Marks: 1 ) - Please choose one
Under Halsey premium plan, if the employee completes his job in less than the standard time fixed for the job, he is given:
► Only wages for the actual hours taken
► Wages for the actual hours taken plus bonus equal to one half of the wage of the time saved
► Wages for the actual hours taken plus bonus equal to one third of the wage of the time saved
► Only the bonus equal to one half of the time saved
Question No: 34 ( Marks: 1 ) - Please choose one
Which of the following is NOT a reason for carrying inventory?
► To maintain independence of operations
► To take advantage of economic purchase-order size
► To make the system less productive
► To meet variation in product demand
Question No: 35 ( Marks: 1 ) - Please choose one
Restocking of stores, in order to ensure efficient functioning of the stores department and steady flow of materials to the production departments, is duty of:
► Managers
► Storekeeper
► Production In charge
► Sales supervisor
Question No: 36 ( Marks: 1 ) - Please choose one
You made Rs. 10,000 loan to your cousin's company. At the end of one year, the company returned to you Rs. 10,850. The Rs. 850 is called which one of the following?
► Increases in loan
► Increases in dividends
► An 8.5% return on investment
► All of the given options
Question No: 37 ( Marks: 1 ) - Please choose one
The net sales of the business totals Rs. 200,000 and the Cost of Goods Sold for the same period totals Rs.146,000. What is the gross margin ratio?
► 0.22
► 0.25
► 0.27
► 0.33
Question No: 38 ( Marks: 1 ) - Please choose one
If, Gross profit = Rs. 40,000
GP Margin = 25% of sales
What will be the value of cost of goods sold?
► Rs. 160,000
► Rs. 120,000
► Rs. 40,000
► Can not be determined
Question No: 39 ( Marks: 1 ) - Please choose one
Cost accountants are concerned about the ratios relating to the Profits and Manufacturing costs. These ratios might include:
► Gross Mark up rate
► Inventory turnover ratio
► Cost of goods sold to sales ratio
► All of the given options
Question No: 40 ( Marks: 1 ) - Please choose one
The total cost to produce one unit is Rs. 600. Direct materials are 20% of the total cost and direct labor is 1/3 of the combined total of direct labor and direct materials. What was the cost for direct materials, direct labor, and factory overhead?
► Rs. 420, Rs. 60 and Rs. 120, respectively
► Rs. 60, Rs. 120 and Rs. 420, respectively
► Rs. 120, Rs. 60 and Rs. 420, respectively
► Rs 60, Rs. 420 and Rs. 120, respectively
Question No: 41 ( Marks: 10 )
CK Products Limited purchased materials of Rs. 550,000 and incurred direct labor of Rs. 420,000 during the year ended June 30, 2006. Factory overheads for the year were Rs.380,000. The inventory balances are as follows:
July 1, 2005 June 30, 2006
Rupees Rupees
Finished goods 90,000 105,000
Work in process 121,000 110,000
Materials 100,000 105,000
Required:
1) Cost Of Goods Manufactured Statement.
2) Cost Of Goods Sold Statement.
Spring 2009
MGT402- Cost & Management Accounting (Session - 2)
Question No: 1 ( Marks: 1 ) - Please choose one
D Corporation uses process costing to calculate the cost of manufacturing Crunchies. During the month 12,500 units were completed, 1,500 units remained in work in process at 25 percent completed. How many equivalent units are produced?
► 12,500 units
► 12,875 units
► 14,250 units
► 12,125 units
Question No: 2 ( Marks: 1 ) - Please choose one
Greenwood petroleum has the data for the year was as follow:
Opening WIP 26,000 barrels.
Introduced during the year 67,000 barrels
Closing WIP 15,000 barrels.
How many barrels were completed and transferred out of work-in-process this period?
► 67,000 barrels
► 78,000 barrels
► 82,000 barrels
► 93,000 barrels
Question No: 3 ( Marks: 1 ) - Please choose one
During the year 50,000 units put in to process.30, 000 units were completed. Closing WIP were 20,000 units, 70% completed. How much the equivalent units of output would be produced?
► 20,000 units
► 30,000 units
► 36,000 units
► 44,000 units
Question No: 4 ( Marks: 1 ) - Please choose one
What would be the effect on the cost of a department in case of normal Loss?
► Decreased
► Increased
► No effect
► Increase to the %age of loss
Question No: 5 ( Marks: 1 ) - Please choose one
When 10,000 ending units of work-in-process are 30% completed as to conversion, it means:
► 30% of the units are completed
► 70% of the units are completed
► Each unit has been completed to 70% of its final stage
► Each of the units is 30% completed
Question No: 6 ( Marks: 1 ) - Please choose one
In order to compute equivalent units of production, which of the following must be reasonably estimated?
► Units
► The percentage of completion
► Direct material cost
► Units started and completed
Question No: 7 ( Marks: 1 ) - Please choose one
In a job order cost system, the use of direct materials would be recorded as a debit to:
► Finished Goods inventory
► Manufacturing Overhead
► Raw Materials inventory
► Work in Process inventory
Question No: 8 ( Marks: 1 ) - Please choose one
If management predicts total direct labor costs of Rs. 100,000 and total overhead costs of Rs. 200,000, what is its predetermined overhead rate based on direct labor costs?
► 50%
► 100%
► 200%
► Cannot be determined
Question No: 9 ( Marks: 1 ) - Please choose one
P Ltd applied overheads on the basis of direct labor hours. The overhead applied rate for the period has been based on budgeted overhead of Rs.150, 000 and 50,000 direct labor hours. During the period overhead of Rs. 180,000 were incurred and 60,000 direct labor hours were used.
Which of the following statement is correct?
► Overhead was Rs.30,000 over applied
► Overhead was Rs.30,000 under applied
► No under or over applied occurred
► None of the given
Question No: 10 ( Marks: 1 ) - Please choose one
Raymond Corporation estimates factory overhead of Rs. 345,000 for next fiscal year. It is estimated that 60,000 units will be produced at a material cost of Rs. 575,000. Conversion will require 34,500 direct labor hours at a cost of Rs. 10 per hour, with 25,875 machine hours.
FOH rate on the bases of Prime cost would be?
► Rs. 37.5 per unit
► Rs. 56.6 per unit
► Rs. 60 per unit
► Rs.1 per unit
Question No: 11 ( Marks: 1 ) - Please choose one
Nelson Company has following FOH detail.
Budgeted (Rs.) Actual (Rs.)
Production Fixed overheads 36,000 39,000
Production Variable overheads 9,000 12,000
Direct labor hours 18,000 20,000
What would be the amount of under/over applied FOH
► Under applied by Rs.1,000
► Over applied by Rs.1,000
► Under applied by Rs.11,000
► Over applied by Rs.38,000
Question No: 12 ( Marks: 1 ) - Please choose one
Which of the following is TRUE regarding the use of blanket rate?
► The use of a single blanket rate makes the apportionment of overhead costs unnecessary
► The use of a single blanket rate makes the apportionment of overhead costs necessary
► The use of a single blanket rate makes the apportionment of overhead costs uniform
► None of the given options
Question No: 13 ( Marks: 1 ) - Please choose one
A Blanket Rate is:
► A single rates which used throughout the organisation departments
► A double rates which used throughout the organisation departments
► A single rates which used in different departments of the organisation.
► None of the Given
Question No: 14 ( Marks: 1 ) - Please choose one
It is possible for an item of overhead expenditure to be shared amongst many departments. It is also possible that this same item may relate to just one specific department.
If the item was not charged specifically to a single department this would be an example of:
► Apportionment
► Allocation
► Re-apportionment
► Absorption
Question No: 15 ( Marks: 1 ) - Please choose one
FOH absorption rate is calculated by the way of:
► Estimated FOH Cost/Direct labor hours
► Estimated FOH Cost/Direct labor cost
► Estimated FOH Cost/Machine hours
► All of the given options
Question No: 16 ( Marks: 1 ) - Please choose one
Which of the following is / are time based incentive wage plan?
► Hasley Premium Plan
► Hasley Weir Premium Plan
► Rowan Premium Plan
► All of the given options
Question No: 17 ( Marks: 1 ) - Please choose one
If, Basic Salary Rs.10,000
Per Piece commission Rs. 5
Unit sold 700 pieces
What will be the total Salary?
► Rs. 3,500
► Rs. 13,500
► Rs. 10,000
► Rs. 6,500
Question No: 18 ( Marks: 1 ) - Please choose one
Payroll includes:
► Salaries & Wages of direct labor
► Salaries & Wages of Indirect labor
► Salaries & Wages of Administrative
► Salaries & Wages of direct labor, Indirect labor, and Administrative
Question No: 19 ( Marks: 1 ) - Please choose one
Which of the following document evidences the transaction of purchase of material?
► Material requisition
► Store requisition
► Purchase order
► Purchase invoice
Question No: 20 ( Marks: 1 ) - Please choose one
Which of the following is NOT an assumption of the basic economic-order quantity model?
► Annual demand is known
► Ordering cost is known
► Carrying cost is known
► Quantity discounts are available
Question No: 21 ( Marks: 1 ) - Please choose one
A store sells five cases of soda each day. Ordering costs are Rs. 8 per order, and soda costs Rs. 3 per case. Orders arrive four days from the time they are placed. Daily holding costs are equal to 5% of the cost of the soda. What is the EOQ for soda?
► 4 cases
► 8 cases
► 10 cases
► 23 cases
Question No: 22 ( Marks: 1 ) - Please choose one
All of the following are deducted from Gross Profit to calculate Operating income EXCEPT:
► Selling expenses
► Advertising expenses
► Administrative expenses
► Financial expenses
Question No: 23 ( Marks: 1 ) - Please choose one
Which of the following is CORRECT to calculate cost of goods manufactured?
► Direct labor costs plus total manufacturing costs
► The beginning work in process inventory plus total manufacturing costs and subtract the ending work in process inventory
► Beginning raw materials inventory plus direct labor plus factory overhead
► Conversion costs and work in process inventory adjustments results in cost of goods manufactured
Question No: 24 ( Marks: 1 ) - Please choose one
Which of the following is a period cost?
► Direct materials
► Indirect materials
► Factory utilities
► Administrative expenses
Question No: 25 ( Marks: 1 ) - Please choose one
The salary of factory clerk is treated as:
► Direct labor cost
► Indirect labor cost
► Conversion cost
► Prime cost
Question No: 26 ( Marks: 1 ) - Please choose one
The components of the conversion cost are:
► Direct Material + Direct Labor + Other Direct Cost
► Direct Labor + FOH
► Prime Cost + FOH+ Other Direct Cost
► Prime Cost + FOH
Question No: 27 ( Marks: 1 ) - Please choose one
The cost of Telephone bill of the factory is treated as:
► Fixed cost
► Variable cost
► Step cost
► Semi variable cost
Question No: 28 ( Marks: 1 ) - Please choose one
Which of the following is a cost that changes in proportion to changes in volume?
► Fixed cost
► Sunk cost
► Opportunity cost
► None of the given options
Question No: 29 ( Marks: 1 ) - Please choose one
Cost accounting concepts include all of the following EXCEPT:
► Planning
► Controlling
► Sharing
► Costing
Question No: 30 ( Marks: 1 ) - Please choose one
If a predetermined FOH rate is not applied and the volume of production is reduced from the planned capacity level, the cost per unit expected to:
► Remain unchanged for fixed cost and increased for variable cost
► Increase for fixed cost and remain unchanged for variable cost
► Increase for fixed cost and decreased for variable cost
► Decrease for both fixed and variable costs
Question No: 31 ( Marks: 1 ) - Please choose one
All of the following are characteristics of Group Bonus Scheme EXCEPT:
► A standard time is set for the completion of a job
► If the time taken is greater than the time allowed, the workers in the group receive time wages
► If the time taken is less than the time allowed, the group receives a bonus on time saved
► If the time taken is greater than the time allowed, the workers in the group receive time deductions for extra hours
Question No: 32 ( Marks: 1 ) - Please choose one
Which of the following is TRUE when piece rate system is used for wage determination?
► Under this method of remuneration a worker is paid on the basis of time taken by him to perform the work
► Under this method of remuneration a worker is paid on the basis of production
► The rate is expressed in terms of certain sum of money for total production
► The rate is not expressed in terms of certain sum of money for total production
Question No: 33 ( Marks: 1 ) - Please choose one
Under Halsey premium plan, if the employee completes his job in less than the standard time fixed for the job, he is given:
► Only wages for the actual hours taken
► Wages for the actual hours taken plus bonus equal to one half of the wage of the time saved
► Wages for the actual hours taken plus bonus equal to one third of the wage of the time saved
► Only the bonus equal to one half of the time saved
Question No: 34 ( Marks: 1 ) - Please choose one
Which of the following is NOT a reason for carrying inventory?
► To maintain independence of operations
► To take advantage of economic purchase-order size
► To make the system less productive
► To meet variation in product demand
Question No: 35 ( Marks: 1 ) - Please choose one
Restocking of stores, in order to ensure efficient functioning of the stores department and steady flow of materials to the production departments, is duty of:
► Managers
► Storekeeper
► Production In charge
► Sales supervisor
Question No: 36 ( Marks: 1 ) - Please choose one
You made Rs. 10,000 loan to your cousin's company. At the end of one year, the company returned to you Rs. 10,850. The Rs. 850 is called which one of the following?
► Increases in loan
► Increases in dividends
► An 8.5% return on investment
► All of the given options
Question No: 37 ( Marks: 1 ) - Please choose one
The net sales of the business totals Rs. 200,000 and the Cost of Goods Sold for the same period totals Rs.146,000. What is the gross margin ratio?
► 0.22
► 0.25
► 0.27
► 0.33
Question No: 38 ( Marks: 1 ) - Please choose one
If, Gross profit = Rs. 40,000
GP Margin = 25% of sales
What will be the value of cost of goods sold?
► Rs. 160,000
► Rs. 120,000
► Rs. 40,000
► Can not be determined
Question No: 39 ( Marks: 1 ) - Please choose one
Cost accountants are concerned about the ratios relating to the Profits and Manufacturing costs. These ratios might include:
► Gross Mark up rate
► Inventory turnover ratio
► Cost of goods sold to sales ratio
► All of the given options
Question No: 40 ( Marks: 1 ) - Please choose one
The total cost to produce one unit is Rs. 600. Direct materials are 20% of the total cost and direct labor is 1/3 of the combined total of direct labor and direct materials. What was the cost for direct materials, direct labor, and factory overhead?
► Rs. 420, Rs. 60 and Rs. 120, respectively
► Rs. 60, Rs. 120 and Rs. 420, respectively
► Rs. 120, Rs. 60 and Rs. 420, respectively
► Rs 60, Rs. 420 and Rs. 120, respectively
Question No: 41 ( Marks: 10 )
CK Products Limited purchased materials of Rs. 550,000 and incurred direct labor of Rs. 420,000 during the year ended June 30, 2006. Factory overheads for the year were Rs.380,000. The inventory balances are as follows:
July 1, 2005 June 30, 2006
Rupees Rupees
Finished goods 90,000 105,000
Work in process 121,000 110,000
Materials 100,000 105,000
Required:
1) Cost Of Goods Manufactured Statement.
2) Cost Of Goods Sold Statement.
MGT402- Cost & Management Accounting_MIDTERM EXAMINATION
MIDTERM EXAMINATION
Spring 2009
MGT402- Cost & Management Accounting (Session - 4)
Time: 60 min
Marks: 50
Question No: 1 ( Marks: 1 ) - Please choose one
D Corporation uses process costing to calculate the cost of manufacturing Crunchies. During the month 12,500 units were completed, 1,500 units remained in work in process at 25 percent completed. How many equivalent units are produced?
► 12,500 units
► 12,875 units
► 14,250 units
► 12,125 units
Question No: 2 ( Marks: 1 ) - Please choose one
Details of the process for the last period are as follows:
Materials 5,000 Kgs at 0.50 per Kg
Labor Rs.700
Production overheads 200% of labor
Normal losses are 10% of input in the process. The out put for the period was 4,200Kg from the process. There was no opening and closing Work- in- process. What were the units of abnormal loss?
► 500 units
► 300 units
► 200 units
► 100 units
Question No: 3 ( Marks: 1 ) - Please choose one
The following data is available for the Bricks Company:
Particulars Rs.
Freight in 20,000
Purchases return and allowances 80,000
Marketing expenses 200,000
Finished goods Inventory, ending 90,000
Cost of goods sold 700% of marketing expenses
Calculate the cost of goods available for sales if Gross Profit is 50% of cost of goods sold.
► Rs. 1,390,000
► Rs. 1,490,000
► Rs. 1,500,000
► Rs. 1,590,000
Question No: 4 ( Marks: 1 ) - Please choose one
Which of the following is NOT an element of factory overhead?
► Depreciation of the maintenance on equipment
► Salary of the plant supervisor
► Property taxes on the plant buildings
► Salary of a marketing manager
Question No: 5 ( Marks: 1 ) - Please choose one
Which of the following is NOT reason of abnormal loss?
► Defective material used
► Machine breakdown
► Poor workmanships
► Natural disaster
Question No: 6 ( Marks: 1 ) - Please choose one
Which of the following loss is not included as part of the cost of transferred or finished goods, but rather treated as a period cost?
► Operating loss
► Abnormal loss
► Normal loss
► Non-operating loss
Question No: 7 ( Marks: 1 ) - Please choose one
Which cost accumulation procedure is best suited to a continuous mass production process of similar units?
► Job order costing
► Process costing
► Standard costing
► Actual costing
Question No: 8 ( Marks: 1 ) - Please choose one
In a job order cost system, the use of direct materials would be recorded as a debit to:
► Finished Goods inventory
► Manufacturing Overhead
► Raw Materials inventory
► Work in Process inventory
Question No: 9 ( Marks: 1 ) - Please choose one
P Ltd applied overheads on the basis of direct labor hours. The overhead applied rate for the period has been based on budgeted overhead of Rs.150, 000 and 50,000 direct labor hours. During the period overhead of Rs. 180,000 were incurred and 60,000 direct labor hours were used.
Which of the following statement is correct?
► Overhead was Rs.30,000 over applied
► Overhead was Rs.30,000 under applied
► No under or over applied occurred
► None of the given
Question No: 10 ( Marks: 1 ) - Please choose one
Under applied FOH costs are:
► Fixed costs not allocated to units produced
► Factory overhead costs not allocated to units costs
► Excess variable factory overhead costs
► Costs that can not be controlled
Question No: 11 ( Marks: 1 ) - Please choose one
A spending variance for factory overhead is the difference between actual factory overhead cost and factory overhead cost that should have been incurred for actual hours worked and results from:
► Price difference of FOH costs
► Quantity differences of FOH costs
► Price and quantity differences for FOH costs
► Difference caused by production volume variations
Question No: 12 ( Marks: 1 ) - Please choose one
Capacity Variance / Volume Variance arises due to
► Difference between Absorbed factory overhead and budgeted factory for capacity attained
► Difference between Absorbed factory overhead and absorption rate
► Difference between Budgeted factory overhead for capacity attained and FOH actually incurred
► None of the given options
Question No: 13 ( Marks: 1 ) - Please choose one
Budget/spending variance arises due to:
► Difference between absorbed factory overhead & capacity level attained
► Difference between budgeted factory overhead for capacity attained and FOH actually incurred
► Difference between absorbed factory overhead and FOH actually incurred
► None of the given options
Question No: 14 ( Marks: 1 ) - Please choose one
Which of the following statement about overhead applied rates are NOT true?
► They are predetermined in advance for each period
► They are used to charge overheads to product
► They are based on actual data for each period
► None of the given options
Question No: 15 ( Marks: 1 ) - Please choose one
Which of the following is TRUE regarding the use of blanket rate?
► The use of a single blanket rate makes the apportionment of overhead costs unnecessary
► The use of a single blanket rate makes the apportionment of overhead costs necessary
► The use of a single blanket rate makes the apportionment of overhead costs uniform
► None of the given options
Question No: 16 ( Marks: 1 ) - Please choose one
A Blanket Rate is:
► A single rates which used throughout the organisation departments
► A double rates which used throughout the organisation departments
► A single rates which used in different departments of the organisation.
► None of the Given
Question No: 17 ( Marks: 1 ) - Please choose one
Which of the following is NOT included under the head of FOH cost?
► Indirect Material
► Indirect Labor
► Indirect Expense
► Direct labor
Question No: 18 ( Marks: 1 ) - Please choose one
Which of the following is a point of differentiation between blanket rates and department rates?
► Blanket rate is a single overhead rate established for the entire factory
► Department rates are separate overhead rates for all departments of factory through which the products pass
► Department rate is a single overhead rate established for the entire factory
► Blanket rates are separate overhead rates for all departments of factory through which the product passes
Question No: 19 ( Marks: 1 ) - Please choose one
Which of the following is TRUE for Merrick Differential System?
► Merrick Differential system is a slight modification of the Taylor's system
► Merrick Differential system used two rates of wage determination instead of three
► Normal piece rates are applicable at 75% of efficiency of worker
► Normal piece rates are applicable at 125% of efficiency of worker
Question No: 20 ( Marks: 1 ) - Please choose one
A worker is paid Rs. 0.50 per unit and he produces 18 units in 7 hours. Keeping in view the piece rate system, the total wages of the worker would be:
► 18 x 0.50 = Rs. 9
► 18 x 7 = Rs. 126
► 7 x 0.5 = Rs. 3.5
► 18 x 7 x 0.50 = Rs. 63
Question No: 21 ( Marks: 1 ) - Please choose one
Which of the following is NOT time based incentive wage plan?
► Hasley Premium Plan
► Hasley Weir Premium Plan
► Rowan Premium Plan
► Merrick Differential Piece Rates System
Question No: 22 ( Marks: 1 ) - Please choose one
Payroll includes:
► Salaries & Wages of direct labor
► Salaries & Wages of Indirect labor
► Salaries & Wages of Administrative
► Salaries & Wages of direct labor, Indirect labor, and Administrative
Question No: 23 ( Marks: 1 ) - Please choose one
Material requisition is a document that supports the requirement of the material. This document is sent to store incharge and approved by:
► Store manager
► Production manager
► Supplier manager
► Purchase manager
Question No: 24 ( Marks: 1 ) - Please choose one
In the basic EOQ model, if Units= 50 per month, Ordering cost =Rs. 10, and carrying cost =Rs. 10 per unit per month, EOQ is:
► 10
► 12
► 25
► 30
Question No: 25 ( Marks: 1 ) - Please choose one
Which of the following is important requirement of the effective material control?
► There are proper storage facilities
► There is a proper authority that will regulate the supply of material
► The accounts should provide a running balance of the value of the materials on hand
► All of the given options
Question No: 26 ( Marks: 1 ) - Please choose one
Which of the following method of inventory valuation is not recommended under IAS 02?
► LIFO
► FIFO
► Weighted Average
► Both LIFO & FIFO
Question No: 27 ( Marks: 1 ) - Please choose one
Average consumption x Emergency time is a formula for the calculation of:
► Lead time
► Re-order level
► Maximum consumption
► Danger level
Question No: 28 ( Marks: 1 ) - Please choose one
Period costs are:
► Expensed when the product is sold
► Included in the cost of goods sold
► Related to specific period
► Not expensed
Question No: 29 ( Marks: 1 ) - Please choose one
The components of the conversion cost are:
► Direct Material + Direct Labor + Other Direct Cost
► Direct Labor + FOH
► Prime Cost + FOH+ Other Direct Cost
► Prime Cost + FOH
Question No: 30 ( Marks: 1 ) - Please choose one
The cost of Telephone bill of the factory is treated as:
► Fixed cost
► Variable cost
► Step cost
► Semi variable cost
Question No: 31 ( Marks: 1 ) - Please choose one
Which of the following is indirect cost?
► The overtime premium incurred at the specific request of a customer
► The hire of tools for a specific job
► The repair of machinery
► All of the given options
Question No: 32 ( Marks: 1 ) - Please choose one
Which of the following are basic inventories for a manufacturing concern?
► Indirect materials, goods in process, and raw materials
► Finished goods, raw materials, and direct materials
► Raw materials, goods in process, and finished goods
► Raw materials, factory overhead, and direct labor
Question No: 33 ( Marks: 1 ) - Please choose one
Machine lubricant used on processing equipment in a manufacturing plant would be classified as a:
► Period cost (manufacturing overhead)
► Period cost (Selling, General & Admin)
► Product cost (manufacturing overhead)
► Product cost (Selling, General & Admin)
Question No: 34 ( Marks: 1 ) - Please choose one
Cost accounting concepts include all of the following EXCEPT:
► Planning
► Controlling
► Sharing
► Costing
Question No: 35 ( Marks: 1 ) - Please choose one
Under Halsey premium plan, if the employee completes his job in less than the standard time fixed for the job, he is given:
► Only wages for the actual hours taken
► Wages for the actual hours taken plus bonus equal to one half of the wage of the time saved
► Wages for the actual hours taken plus bonus equal to one third of the wage of the time saved
► Only the bonus equal to one half of the time saved
Question No: 36 ( Marks: 1 ) - Please choose one
Which of the following is NOT a reason for carrying inventory?
► To maintain independence of operations
► To take advantage of economic purchase-order size
► To make the system less productive
► To meet variation in product demand
Question No: 37 ( Marks: 1 ) - Please choose one
“Taking steps for the fresh purchase of those stocks which have been exhausted and for which requisitions are to be honored in future” is an easy explanation of:
► Over stocking
► Under stocking
► Replenishment of stock
► Acquisition of stock
Question No: 38 ( Marks: 1 ) - Please choose one
Which of the following formula is used to calculate the Number of units manufactured?
► Sold units - Units of closing finished goods inventory + Units of opening finished goods inventory
► Sold units + Average units of finished goods inventory
► Sold units - Average units of finished goods inventory
► Sold units + Units of closing finished goods inventory - Units of opening finished goods inventory
Question No: 39 ( Marks: 1 ) - Please choose one
The total cost to produce one unit is Rs. 600. Direct materials are 20% of the total cost and direct labor is 1/3 of the combined total of direct labor and direct materials. What was the cost for direct materials, direct labor, and factory overhead?
► Rs. 420, Rs. 60 and Rs. 120, respectively
► Rs. 60, Rs. 120 and Rs. 420, respectively
► Rs. 120, Rs. 60 and Rs. 420, respectively
► Rs 60, Rs. 420 and Rs. 120, respectively
Question No: 40 ( Marks: 1 ) - Please choose one
Opportunity cost is the best example of:
► Relevant Cost
► Irrelevant Cost
► Standard Cost
► Sunk Cost
Question No: 41 ( Marks: 10 )
Differentiate between process costing and job order costing.
Process costing
It is a method of cost accounting applied to production carried out by a series of operational, stages or processes. It is a continuous production process.
In process costing all units produce are similar. The whole process is divided into several departments.
Job order costing.
The costing system that separately accumulates costs incurred to produce each job in a situation where each job is distinguishable from the other throughout the production process. The job may be a single unit or a multi unit batch, a contract or a project, program or a service. Job costing is employed by organizations possessing following characteristics.
1. Every order has its own manufacturing specifications. Therefore, every job is different from the other and requires different amounts materials, labor and overhead.
2. Each job is clearly distinguishable from the other at all stages production process which makes job wise accumulation of possible.
3. Each job is generally of high value.
4. Production is generally in response of customers' orders
5. Job wise accumulation of cost is desirable and/or necessary for and profit determination.
Job costing is more expensive as compared with process costing.
Spring 2009
MGT402- Cost & Management Accounting (Session - 4)
Time: 60 min
Marks: 50
Question No: 1 ( Marks: 1 ) - Please choose one
D Corporation uses process costing to calculate the cost of manufacturing Crunchies. During the month 12,500 units were completed, 1,500 units remained in work in process at 25 percent completed. How many equivalent units are produced?
► 12,500 units
► 12,875 units
► 14,250 units
► 12,125 units
Question No: 2 ( Marks: 1 ) - Please choose one
Details of the process for the last period are as follows:
Materials 5,000 Kgs at 0.50 per Kg
Labor Rs.700
Production overheads 200% of labor
Normal losses are 10% of input in the process. The out put for the period was 4,200Kg from the process. There was no opening and closing Work- in- process. What were the units of abnormal loss?
► 500 units
► 300 units
► 200 units
► 100 units
Question No: 3 ( Marks: 1 ) - Please choose one
The following data is available for the Bricks Company:
Particulars Rs.
Freight in 20,000
Purchases return and allowances 80,000
Marketing expenses 200,000
Finished goods Inventory, ending 90,000
Cost of goods sold 700% of marketing expenses
Calculate the cost of goods available for sales if Gross Profit is 50% of cost of goods sold.
► Rs. 1,390,000
► Rs. 1,490,000
► Rs. 1,500,000
► Rs. 1,590,000
Question No: 4 ( Marks: 1 ) - Please choose one
Which of the following is NOT an element of factory overhead?
► Depreciation of the maintenance on equipment
► Salary of the plant supervisor
► Property taxes on the plant buildings
► Salary of a marketing manager
Question No: 5 ( Marks: 1 ) - Please choose one
Which of the following is NOT reason of abnormal loss?
► Defective material used
► Machine breakdown
► Poor workmanships
► Natural disaster
Question No: 6 ( Marks: 1 ) - Please choose one
Which of the following loss is not included as part of the cost of transferred or finished goods, but rather treated as a period cost?
► Operating loss
► Abnormal loss
► Normal loss
► Non-operating loss
Question No: 7 ( Marks: 1 ) - Please choose one
Which cost accumulation procedure is best suited to a continuous mass production process of similar units?
► Job order costing
► Process costing
► Standard costing
► Actual costing
Question No: 8 ( Marks: 1 ) - Please choose one
In a job order cost system, the use of direct materials would be recorded as a debit to:
► Finished Goods inventory
► Manufacturing Overhead
► Raw Materials inventory
► Work in Process inventory
Question No: 9 ( Marks: 1 ) - Please choose one
P Ltd applied overheads on the basis of direct labor hours. The overhead applied rate for the period has been based on budgeted overhead of Rs.150, 000 and 50,000 direct labor hours. During the period overhead of Rs. 180,000 were incurred and 60,000 direct labor hours were used.
Which of the following statement is correct?
► Overhead was Rs.30,000 over applied
► Overhead was Rs.30,000 under applied
► No under or over applied occurred
► None of the given
Question No: 10 ( Marks: 1 ) - Please choose one
Under applied FOH costs are:
► Fixed costs not allocated to units produced
► Factory overhead costs not allocated to units costs
► Excess variable factory overhead costs
► Costs that can not be controlled
Question No: 11 ( Marks: 1 ) - Please choose one
A spending variance for factory overhead is the difference between actual factory overhead cost and factory overhead cost that should have been incurred for actual hours worked and results from:
► Price difference of FOH costs
► Quantity differences of FOH costs
► Price and quantity differences for FOH costs
► Difference caused by production volume variations
Question No: 12 ( Marks: 1 ) - Please choose one
Capacity Variance / Volume Variance arises due to
► Difference between Absorbed factory overhead and budgeted factory for capacity attained
► Difference between Absorbed factory overhead and absorption rate
► Difference between Budgeted factory overhead for capacity attained and FOH actually incurred
► None of the given options
Question No: 13 ( Marks: 1 ) - Please choose one
Budget/spending variance arises due to:
► Difference between absorbed factory overhead & capacity level attained
► Difference between budgeted factory overhead for capacity attained and FOH actually incurred
► Difference between absorbed factory overhead and FOH actually incurred
► None of the given options
Question No: 14 ( Marks: 1 ) - Please choose one
Which of the following statement about overhead applied rates are NOT true?
► They are predetermined in advance for each period
► They are used to charge overheads to product
► They are based on actual data for each period
► None of the given options
Question No: 15 ( Marks: 1 ) - Please choose one
Which of the following is TRUE regarding the use of blanket rate?
► The use of a single blanket rate makes the apportionment of overhead costs unnecessary
► The use of a single blanket rate makes the apportionment of overhead costs necessary
► The use of a single blanket rate makes the apportionment of overhead costs uniform
► None of the given options
Question No: 16 ( Marks: 1 ) - Please choose one
A Blanket Rate is:
► A single rates which used throughout the organisation departments
► A double rates which used throughout the organisation departments
► A single rates which used in different departments of the organisation.
► None of the Given
Question No: 17 ( Marks: 1 ) - Please choose one
Which of the following is NOT included under the head of FOH cost?
► Indirect Material
► Indirect Labor
► Indirect Expense
► Direct labor
Question No: 18 ( Marks: 1 ) - Please choose one
Which of the following is a point of differentiation between blanket rates and department rates?
► Blanket rate is a single overhead rate established for the entire factory
► Department rates are separate overhead rates for all departments of factory through which the products pass
► Department rate is a single overhead rate established for the entire factory
► Blanket rates are separate overhead rates for all departments of factory through which the product passes
Question No: 19 ( Marks: 1 ) - Please choose one
Which of the following is TRUE for Merrick Differential System?
► Merrick Differential system is a slight modification of the Taylor's system
► Merrick Differential system used two rates of wage determination instead of three
► Normal piece rates are applicable at 75% of efficiency of worker
► Normal piece rates are applicable at 125% of efficiency of worker
Question No: 20 ( Marks: 1 ) - Please choose one
A worker is paid Rs. 0.50 per unit and he produces 18 units in 7 hours. Keeping in view the piece rate system, the total wages of the worker would be:
► 18 x 0.50 = Rs. 9
► 18 x 7 = Rs. 126
► 7 x 0.5 = Rs. 3.5
► 18 x 7 x 0.50 = Rs. 63
Question No: 21 ( Marks: 1 ) - Please choose one
Which of the following is NOT time based incentive wage plan?
► Hasley Premium Plan
► Hasley Weir Premium Plan
► Rowan Premium Plan
► Merrick Differential Piece Rates System
Question No: 22 ( Marks: 1 ) - Please choose one
Payroll includes:
► Salaries & Wages of direct labor
► Salaries & Wages of Indirect labor
► Salaries & Wages of Administrative
► Salaries & Wages of direct labor, Indirect labor, and Administrative
Question No: 23 ( Marks: 1 ) - Please choose one
Material requisition is a document that supports the requirement of the material. This document is sent to store incharge and approved by:
► Store manager
► Production manager
► Supplier manager
► Purchase manager
Question No: 24 ( Marks: 1 ) - Please choose one
In the basic EOQ model, if Units= 50 per month, Ordering cost =Rs. 10, and carrying cost =Rs. 10 per unit per month, EOQ is:
► 10
► 12
► 25
► 30
Question No: 25 ( Marks: 1 ) - Please choose one
Which of the following is important requirement of the effective material control?
► There are proper storage facilities
► There is a proper authority that will regulate the supply of material
► The accounts should provide a running balance of the value of the materials on hand
► All of the given options
Question No: 26 ( Marks: 1 ) - Please choose one
Which of the following method of inventory valuation is not recommended under IAS 02?
► LIFO
► FIFO
► Weighted Average
► Both LIFO & FIFO
Question No: 27 ( Marks: 1 ) - Please choose one
Average consumption x Emergency time is a formula for the calculation of:
► Lead time
► Re-order level
► Maximum consumption
► Danger level
Question No: 28 ( Marks: 1 ) - Please choose one
Period costs are:
► Expensed when the product is sold
► Included in the cost of goods sold
► Related to specific period
► Not expensed
Question No: 29 ( Marks: 1 ) - Please choose one
The components of the conversion cost are:
► Direct Material + Direct Labor + Other Direct Cost
► Direct Labor + FOH
► Prime Cost + FOH+ Other Direct Cost
► Prime Cost + FOH
Question No: 30 ( Marks: 1 ) - Please choose one
The cost of Telephone bill of the factory is treated as:
► Fixed cost
► Variable cost
► Step cost
► Semi variable cost
Question No: 31 ( Marks: 1 ) - Please choose one
Which of the following is indirect cost?
► The overtime premium incurred at the specific request of a customer
► The hire of tools for a specific job
► The repair of machinery
► All of the given options
Question No: 32 ( Marks: 1 ) - Please choose one
Which of the following are basic inventories for a manufacturing concern?
► Indirect materials, goods in process, and raw materials
► Finished goods, raw materials, and direct materials
► Raw materials, goods in process, and finished goods
► Raw materials, factory overhead, and direct labor
Question No: 33 ( Marks: 1 ) - Please choose one
Machine lubricant used on processing equipment in a manufacturing plant would be classified as a:
► Period cost (manufacturing overhead)
► Period cost (Selling, General & Admin)
► Product cost (manufacturing overhead)
► Product cost (Selling, General & Admin)
Question No: 34 ( Marks: 1 ) - Please choose one
Cost accounting concepts include all of the following EXCEPT:
► Planning
► Controlling
► Sharing
► Costing
Question No: 35 ( Marks: 1 ) - Please choose one
Under Halsey premium plan, if the employee completes his job in less than the standard time fixed for the job, he is given:
► Only wages for the actual hours taken
► Wages for the actual hours taken plus bonus equal to one half of the wage of the time saved
► Wages for the actual hours taken plus bonus equal to one third of the wage of the time saved
► Only the bonus equal to one half of the time saved
Question No: 36 ( Marks: 1 ) - Please choose one
Which of the following is NOT a reason for carrying inventory?
► To maintain independence of operations
► To take advantage of economic purchase-order size
► To make the system less productive
► To meet variation in product demand
Question No: 37 ( Marks: 1 ) - Please choose one
“Taking steps for the fresh purchase of those stocks which have been exhausted and for which requisitions are to be honored in future” is an easy explanation of:
► Over stocking
► Under stocking
► Replenishment of stock
► Acquisition of stock
Question No: 38 ( Marks: 1 ) - Please choose one
Which of the following formula is used to calculate the Number of units manufactured?
► Sold units - Units of closing finished goods inventory + Units of opening finished goods inventory
► Sold units + Average units of finished goods inventory
► Sold units - Average units of finished goods inventory
► Sold units + Units of closing finished goods inventory - Units of opening finished goods inventory
Question No: 39 ( Marks: 1 ) - Please choose one
The total cost to produce one unit is Rs. 600. Direct materials are 20% of the total cost and direct labor is 1/3 of the combined total of direct labor and direct materials. What was the cost for direct materials, direct labor, and factory overhead?
► Rs. 420, Rs. 60 and Rs. 120, respectively
► Rs. 60, Rs. 120 and Rs. 420, respectively
► Rs. 120, Rs. 60 and Rs. 420, respectively
► Rs 60, Rs. 420 and Rs. 120, respectively
Question No: 40 ( Marks: 1 ) - Please choose one
Opportunity cost is the best example of:
► Relevant Cost
► Irrelevant Cost
► Standard Cost
► Sunk Cost
Question No: 41 ( Marks: 10 )
Differentiate between process costing and job order costing.
Process costing
It is a method of cost accounting applied to production carried out by a series of operational, stages or processes. It is a continuous production process.
In process costing all units produce are similar. The whole process is divided into several departments.
Job order costing.
The costing system that separately accumulates costs incurred to produce each job in a situation where each job is distinguishable from the other throughout the production process. The job may be a single unit or a multi unit batch, a contract or a project, program or a service. Job costing is employed by organizations possessing following characteristics.
1. Every order has its own manufacturing specifications. Therefore, every job is different from the other and requires different amounts materials, labor and overhead.
2. Each job is clearly distinguishable from the other at all stages production process which makes job wise accumulation of possible.
3. Each job is generally of high value.
4. Production is generally in response of customers' orders
5. Job wise accumulation of cost is desirable and/or necessary for and profit determination.
Job costing is more expensive as compared with process costing.
MGT402- Cost & Management Accounting_MIDTERM EXAMINATION_2009
MIDTERM EXAMINATION
Spring 2009
MGT402- Cost & Management Accounting (Session - 2)
Time: 60 min
Marks: 50
Question No: 1 ( Marks: 1 ) - Please choose one
D Corporation uses process costing to calculate the cost of manufacturing Crunchies. During the month 12,500 units were completed, 1,500 units remained in work in process at 25 percent completed. How many equivalent units are produced?
► 12,500 units
► 12,875 units
► 14,250 units
► 12,125 units
Question No: 2 ( Marks: 1 ) - Please choose one
Greenwood petroleum has the data for the year was as follow:
Opening WIP 26,000 barrels.
Introduced during the year 67,000 barrels
Closing WIP 15,000 barrels.
How many barrels were completed and transferred out of work-in-process this period?
► 67,000 barrels
► 78,000 barrels
► 82,000 barrels
► 93,000 barrels
Question No: 3 ( Marks: 1 ) - Please choose one
During the year 50,000 units put in to process.30, 000 units were completed. Closing WIP were 20,000 units, 70% completed. How much the equivalent units of output would be produced?
► 20,000 units
► 30,000 units
► 36,000 units
► 44,000 units
Question No: 4 ( Marks: 1 ) - Please choose one
What would be the effect on the cost of a department in case of normal Loss?
► Decreased
► Increased
► No effect
► Increase to the %age of loss
Question No: 5 ( Marks: 1 ) - Please choose one
When 10,000 ending units of work-in-process are 30% completed as to conversion, it means:
► 30% of the units are completed
► 70% of the units are completed
► Each unit has been completed to 70% of its final stage
► Each of the units is 30% completed
Question No: 6 ( Marks: 1 ) - Please choose one
In order to compute equivalent units of production, which of the following must be reasonably estimated?
► Units
► The percentage of completion
► Direct material cost
► Units started and completed
Question No: 7 ( Marks: 1 ) - Please choose one
In a job order cost system, the use of direct materials would be recorded as a debit to:
► Finished Goods inventory
► Manufacturing Overhead
► Raw Materials inventory
► Work in Process inventory
Question No: 8 ( Marks: 1 ) - Please choose one
If management predicts total direct labor costs of Rs. 100,000 and total overhead costs of Rs. 200,000, what is its predetermined overhead rate based on direct labor costs?
► 50%
► 100%
► 200%
► Cannot be determined
Question No: 9 ( Marks: 1 ) - Please choose one
P Ltd applied overheads on the basis of direct labor hours. The overhead applied rate for the period has been based on budgeted overhead of Rs.150, 000 and 50,000 direct labor hours. During the period overhead of Rs. 180,000 were incurred and 60,000 direct labor hours were used.
Which of the following statement is correct?
► Overhead was Rs.30,000 over applied
► Overhead was Rs.30,000 under applied
► No under or over applied occurred
► None of the given
Question No: 10 ( Marks: 1 ) - Please choose one
Raymond Corporation estimates factory overhead of Rs. 345,000 for next fiscal year. It is estimated that 60,000 units will be produced at a material cost of Rs. 575,000. Conversion will require 34,500 direct labor hours at a cost of Rs. 10 per hour, with 25,875 machine hours.
FOH rate on the bases of Prime cost would be?
► Rs. 37.5 per unit
► Rs. 56.6 per unit
► Rs. 60 per unit
► Rs.1 per unit
Question No: 11 ( Marks: 1 ) - Please choose one
Nelson Company has following FOH detail.
Budgeted (Rs.) Actual (Rs.)
Production Fixed overheads 36,000 39,000
Production Variable overheads 9,000 12,000
Direct labor hours 18,000 20,000
What would be the amount of under/over applied FOH
► Under applied by Rs.1,000
► Over applied by Rs.1,000
► Under applied by Rs.11,000
► Over applied by Rs.38,000
Question No: 12 ( Marks: 1 ) - Please choose one
Which of the following is TRUE regarding the use of blanket rate?
► The use of a single blanket rate makes the apportionment of overhead costs unnecessary
► The use of a single blanket rate makes the apportionment of overhead costs necessary
► The use of a single blanket rate makes the apportionment of overhead costs uniform
► None of the given options
Question No: 13 ( Marks: 1 ) - Please choose one
A Blanket Rate is:
► A single rates which used throughout the organisation departments
► A double rates which used throughout the organisation departments
► A single rates which used in different departments of the organisation.
► None of the Given
Question No: 14 ( Marks: 1 ) - Please choose one
It is possible for an item of overhead expenditure to be shared amongst many departments. It is also possible that this same item may relate to just one specific department.
If the item was not charged specifically to a single department this would be an example of:
► Apportionment
► Allocation
► Re-apportionment
► Absorption
Question No: 15 ( Marks: 1 ) - Please choose one
FOH absorption rate is calculated by the way of:
► Estimated FOH Cost/Direct labor hours
► Estimated FOH Cost/Direct labor cost
► Estimated FOH Cost/Machine hours
► All of the given options
Question No: 16 ( Marks: 1 ) - Please choose one
Which of the following is / are time based incentive wage plan?
► Hasley Premium Plan
► Hasley Weir Premium Plan
► Rowan Premium Plan
► All of the given options
Question No: 17 ( Marks: 1 ) - Please choose one
If, Basic Salary Rs.10,000
Per Piece commission Rs. 5
Unit sold 700 pieces
What will be the total Salary?
► Rs. 3,500
► Rs. 13,500
► Rs. 10,000
► Rs. 6,500
Question No: 18 ( Marks: 1 ) - Please choose one
Payroll includes:
► Salaries & Wages of direct labor
► Salaries & Wages of Indirect labor
► Salaries & Wages of Administrative
► Salaries & Wages of direct labor, Indirect labor, and Administrative
Question No: 19 ( Marks: 1 ) - Please choose one
Which of the following document evidences the transaction of purchase of material?
► Material requisition
► Store requisition
► Purchase order
► Purchase invoice
Question No: 20 ( Marks: 1 ) - Please choose one
Which of the following is NOT an assumption of the basic economic-order quantity model?
► Annual demand is known
► Ordering cost is known
► Carrying cost is known
► Quantity discounts are available
Question No: 21 ( Marks: 1 ) - Please choose one
A store sells five cases of soda each day. Ordering costs are Rs. 8 per order, and soda costs Rs. 3 per case. Orders arrive four days from the time they are placed. Daily holding costs are equal to 5% of the cost of the soda. What is the EOQ for soda?
► 4 cases
► 8 cases
► 10 cases
► 23 cases
Question No: 22 ( Marks: 1 ) - Please choose one
All of the following are deducted from Gross Profit to calculate Operating income EXCEPT:
► Selling expenses
► Advertising expenses
► Administrative expenses
► Financial expenses
Question No: 23 ( Marks: 1 ) - Please choose one
Which of the following is CORRECT to calculate cost of goods manufactured?
► Direct labor costs plus total manufacturing costs
► The beginning work in process inventory plus total manufacturing costs and subtract the ending work in process inventory
► Beginning raw materials inventory plus direct labor plus factory overhead
► Conversion costs and work in process inventory adjustments results in cost of goods manufactured
Question No: 24 ( Marks: 1 ) - Please choose one
Which of the following is a period cost?
► Direct materials
► Indirect materials
► Factory utilities
► Administrative expenses
Question No: 25 ( Marks: 1 ) - Please choose one
The salary of factory clerk is treated as:
► Direct labor cost
► Indirect labor cost
► Conversion cost
► Prime cost
Question No: 26 ( Marks: 1 ) - Please choose one
The components of the conversion cost are:
► Direct Material + Direct Labor + Other Direct Cost
► Direct Labor + FOH
► Prime Cost + FOH+ Other Direct Cost
► Prime Cost + FOH
Question No: 27 ( Marks: 1 ) - Please choose one
The cost of Telephone bill of the factory is treated as:
► Fixed cost
► Variable cost
► Step cost
► Semi variable cost
Question No: 28 ( Marks: 1 ) - Please choose one
Which of the following is a cost that changes in proportion to changes in volume?
► Fixed cost
► Sunk cost
► Opportunity cost
► None of the given options
Question No: 29 ( Marks: 1 ) - Please choose one
Cost accounting concepts include all of the following EXCEPT:
► Planning
► Controlling
► Sharing
► Costing
Question No: 30 ( Marks: 1 ) - Please choose one
If a predetermined FOH rate is not applied and the volume of production is reduced from the planned capacity level, the cost per unit expected to:
► Remain unchanged for fixed cost and increased for variable cost
► Increase for fixed cost and remain unchanged for variable cost
► Increase for fixed cost and decreased for variable cost
► Decrease for both fixed and variable costs
Question No: 31 ( Marks: 1 ) - Please choose one
All of the following are characteristics of Group Bonus Scheme EXCEPT:
► A standard time is set for the completion of a job
► If the time taken is greater than the time allowed, the workers in the group receive time wages
► If the time taken is less than the time allowed, the group receives a bonus on time saved
► If the time taken is greater than the time allowed, the workers in the group receive time deductions for extra hours
Question No: 32 ( Marks: 1 ) - Please choose one
Which of the following is TRUE when piece rate system is used for wage determination?
► Under this method of remuneration a worker is paid on the basis of time taken by him to perform the work
► Under this method of remuneration a worker is paid on the basis of production
► The rate is expressed in terms of certain sum of money for total production
► The rate is not expressed in terms of certain sum of money for total production
Question No: 33 ( Marks: 1 ) - Please choose one
Under Halsey premium plan, if the employee completes his job in less than the standard time fixed for the job, he is given:
► Only wages for the actual hours taken
► Wages for the actual hours taken plus bonus equal to one half of the wage of the time saved
► Wages for the actual hours taken plus bonus equal to one third of the wage of the time saved
► Only the bonus equal to one half of the time saved
Question No: 34 ( Marks: 1 ) - Please choose one
Which of the following is NOT a reason for carrying inventory?
► To maintain independence of operations
► To take advantage of economic purchase-order size
► To make the system less productive
► To meet variation in product demand
Question No: 35 ( Marks: 1 ) - Please choose one
Restocking of stores, in order to ensure efficient functioning of the stores department and steady flow of materials to the production departments, is duty of:
► Managers
► Storekeeper
► Production In charge
► Sales supervisor
Question No: 36 ( Marks: 1 ) - Please choose one
You made Rs. 10,000 loan to your cousin's company. At the end of one year, the company returned to you Rs. 10,850. The Rs. 850 is called which one of the following?
► Increases in loan
► Increases in dividends
► An 8.5% return on investment
► All of the given options
Question No: 37 ( Marks: 1 ) - Please choose one
The net sales of the business totals Rs. 200,000 and the Cost of Goods Sold for the same period totals Rs.146,000. What is the gross margin ratio?
► 0.22
► 0.25
► 0.27
► 0.33
Question No: 38 ( Marks: 1 ) - Please choose one
If, Gross profit = Rs. 40,000
GP Margin = 25% of sales
What will be the value of cost of goods sold?
► Rs. 160,000
► Rs. 120,000
► Rs. 40,000
► Can not be determined
Question No: 39 ( Marks: 1 ) - Please choose one
Cost accountants are concerned about the ratios relating to the Profits and Manufacturing costs. These ratios might include:
► Gross Mark up rate
► Inventory turnover ratio
► Cost of goods sold to sales ratio
► All of the given options
Question No: 40 ( Marks: 1 ) - Please choose one
The total cost to produce one unit is Rs. 600. Direct materials are 20% of the total cost and direct labor is 1/3 of the combined total of direct labor and direct materials. What was the cost for direct materials, direct labor, and factory overhead?
► Rs. 420, Rs. 60 and Rs. 120, respectively
► Rs. 60, Rs. 120 and Rs. 420, respectively
► Rs. 120, Rs. 60 and Rs. 420, respectively
► Rs 60, Rs. 420 and Rs. 120, respectively
Question No: 41 ( Marks: 10 )
CK Products Limited purchased materials of Rs. 550,000 and incurred direct labor of Rs. 420,000 during the year ended June 30, 2006. Factory overheads for the year were Rs.380,000. The inventory balances are as follows:
July 1, 2005 June 30, 2006
Rupees Rupees
Finished goods 90,000 105,000
Work in process 121,000 110,000
Materials 100,000 105,000
Required:
1) Cost Of Goods Manufactured Statement.
2) Cost Of Goods Sold Statement.
Spring 2009
MGT402- Cost & Management Accounting (Session - 2)
Time: 60 min
Marks: 50
Question No: 1 ( Marks: 1 ) - Please choose one
D Corporation uses process costing to calculate the cost of manufacturing Crunchies. During the month 12,500 units were completed, 1,500 units remained in work in process at 25 percent completed. How many equivalent units are produced?
► 12,500 units
► 12,875 units
► 14,250 units
► 12,125 units
Question No: 2 ( Marks: 1 ) - Please choose one
Greenwood petroleum has the data for the year was as follow:
Opening WIP 26,000 barrels.
Introduced during the year 67,000 barrels
Closing WIP 15,000 barrels.
How many barrels were completed and transferred out of work-in-process this period?
► 67,000 barrels
► 78,000 barrels
► 82,000 barrels
► 93,000 barrels
Question No: 3 ( Marks: 1 ) - Please choose one
During the year 50,000 units put in to process.30, 000 units were completed. Closing WIP were 20,000 units, 70% completed. How much the equivalent units of output would be produced?
► 20,000 units
► 30,000 units
► 36,000 units
► 44,000 units
Question No: 4 ( Marks: 1 ) - Please choose one
What would be the effect on the cost of a department in case of normal Loss?
► Decreased
► Increased
► No effect
► Increase to the %age of loss
Question No: 5 ( Marks: 1 ) - Please choose one
When 10,000 ending units of work-in-process are 30% completed as to conversion, it means:
► 30% of the units are completed
► 70% of the units are completed
► Each unit has been completed to 70% of its final stage
► Each of the units is 30% completed
Question No: 6 ( Marks: 1 ) - Please choose one
In order to compute equivalent units of production, which of the following must be reasonably estimated?
► Units
► The percentage of completion
► Direct material cost
► Units started and completed
Question No: 7 ( Marks: 1 ) - Please choose one
In a job order cost system, the use of direct materials would be recorded as a debit to:
► Finished Goods inventory
► Manufacturing Overhead
► Raw Materials inventory
► Work in Process inventory
Question No: 8 ( Marks: 1 ) - Please choose one
If management predicts total direct labor costs of Rs. 100,000 and total overhead costs of Rs. 200,000, what is its predetermined overhead rate based on direct labor costs?
► 50%
► 100%
► 200%
► Cannot be determined
Question No: 9 ( Marks: 1 ) - Please choose one
P Ltd applied overheads on the basis of direct labor hours. The overhead applied rate for the period has been based on budgeted overhead of Rs.150, 000 and 50,000 direct labor hours. During the period overhead of Rs. 180,000 were incurred and 60,000 direct labor hours were used.
Which of the following statement is correct?
► Overhead was Rs.30,000 over applied
► Overhead was Rs.30,000 under applied
► No under or over applied occurred
► None of the given
Question No: 10 ( Marks: 1 ) - Please choose one
Raymond Corporation estimates factory overhead of Rs. 345,000 for next fiscal year. It is estimated that 60,000 units will be produced at a material cost of Rs. 575,000. Conversion will require 34,500 direct labor hours at a cost of Rs. 10 per hour, with 25,875 machine hours.
FOH rate on the bases of Prime cost would be?
► Rs. 37.5 per unit
► Rs. 56.6 per unit
► Rs. 60 per unit
► Rs.1 per unit
Question No: 11 ( Marks: 1 ) - Please choose one
Nelson Company has following FOH detail.
Budgeted (Rs.) Actual (Rs.)
Production Fixed overheads 36,000 39,000
Production Variable overheads 9,000 12,000
Direct labor hours 18,000 20,000
What would be the amount of under/over applied FOH
► Under applied by Rs.1,000
► Over applied by Rs.1,000
► Under applied by Rs.11,000
► Over applied by Rs.38,000
Question No: 12 ( Marks: 1 ) - Please choose one
Which of the following is TRUE regarding the use of blanket rate?
► The use of a single blanket rate makes the apportionment of overhead costs unnecessary
► The use of a single blanket rate makes the apportionment of overhead costs necessary
► The use of a single blanket rate makes the apportionment of overhead costs uniform
► None of the given options
Question No: 13 ( Marks: 1 ) - Please choose one
A Blanket Rate is:
► A single rates which used throughout the organisation departments
► A double rates which used throughout the organisation departments
► A single rates which used in different departments of the organisation.
► None of the Given
Question No: 14 ( Marks: 1 ) - Please choose one
It is possible for an item of overhead expenditure to be shared amongst many departments. It is also possible that this same item may relate to just one specific department.
If the item was not charged specifically to a single department this would be an example of:
► Apportionment
► Allocation
► Re-apportionment
► Absorption
Question No: 15 ( Marks: 1 ) - Please choose one
FOH absorption rate is calculated by the way of:
► Estimated FOH Cost/Direct labor hours
► Estimated FOH Cost/Direct labor cost
► Estimated FOH Cost/Machine hours
► All of the given options
Question No: 16 ( Marks: 1 ) - Please choose one
Which of the following is / are time based incentive wage plan?
► Hasley Premium Plan
► Hasley Weir Premium Plan
► Rowan Premium Plan
► All of the given options
Question No: 17 ( Marks: 1 ) - Please choose one
If, Basic Salary Rs.10,000
Per Piece commission Rs. 5
Unit sold 700 pieces
What will be the total Salary?
► Rs. 3,500
► Rs. 13,500
► Rs. 10,000
► Rs. 6,500
Question No: 18 ( Marks: 1 ) - Please choose one
Payroll includes:
► Salaries & Wages of direct labor
► Salaries & Wages of Indirect labor
► Salaries & Wages of Administrative
► Salaries & Wages of direct labor, Indirect labor, and Administrative
Question No: 19 ( Marks: 1 ) - Please choose one
Which of the following document evidences the transaction of purchase of material?
► Material requisition
► Store requisition
► Purchase order
► Purchase invoice
Question No: 20 ( Marks: 1 ) - Please choose one
Which of the following is NOT an assumption of the basic economic-order quantity model?
► Annual demand is known
► Ordering cost is known
► Carrying cost is known
► Quantity discounts are available
Question No: 21 ( Marks: 1 ) - Please choose one
A store sells five cases of soda each day. Ordering costs are Rs. 8 per order, and soda costs Rs. 3 per case. Orders arrive four days from the time they are placed. Daily holding costs are equal to 5% of the cost of the soda. What is the EOQ for soda?
► 4 cases
► 8 cases
► 10 cases
► 23 cases
Question No: 22 ( Marks: 1 ) - Please choose one
All of the following are deducted from Gross Profit to calculate Operating income EXCEPT:
► Selling expenses
► Advertising expenses
► Administrative expenses
► Financial expenses
Question No: 23 ( Marks: 1 ) - Please choose one
Which of the following is CORRECT to calculate cost of goods manufactured?
► Direct labor costs plus total manufacturing costs
► The beginning work in process inventory plus total manufacturing costs and subtract the ending work in process inventory
► Beginning raw materials inventory plus direct labor plus factory overhead
► Conversion costs and work in process inventory adjustments results in cost of goods manufactured
Question No: 24 ( Marks: 1 ) - Please choose one
Which of the following is a period cost?
► Direct materials
► Indirect materials
► Factory utilities
► Administrative expenses
Question No: 25 ( Marks: 1 ) - Please choose one
The salary of factory clerk is treated as:
► Direct labor cost
► Indirect labor cost
► Conversion cost
► Prime cost
Question No: 26 ( Marks: 1 ) - Please choose one
The components of the conversion cost are:
► Direct Material + Direct Labor + Other Direct Cost
► Direct Labor + FOH
► Prime Cost + FOH+ Other Direct Cost
► Prime Cost + FOH
Question No: 27 ( Marks: 1 ) - Please choose one
The cost of Telephone bill of the factory is treated as:
► Fixed cost
► Variable cost
► Step cost
► Semi variable cost
Question No: 28 ( Marks: 1 ) - Please choose one
Which of the following is a cost that changes in proportion to changes in volume?
► Fixed cost
► Sunk cost
► Opportunity cost
► None of the given options
Question No: 29 ( Marks: 1 ) - Please choose one
Cost accounting concepts include all of the following EXCEPT:
► Planning
► Controlling
► Sharing
► Costing
Question No: 30 ( Marks: 1 ) - Please choose one
If a predetermined FOH rate is not applied and the volume of production is reduced from the planned capacity level, the cost per unit expected to:
► Remain unchanged for fixed cost and increased for variable cost
► Increase for fixed cost and remain unchanged for variable cost
► Increase for fixed cost and decreased for variable cost
► Decrease for both fixed and variable costs
Question No: 31 ( Marks: 1 ) - Please choose one
All of the following are characteristics of Group Bonus Scheme EXCEPT:
► A standard time is set for the completion of a job
► If the time taken is greater than the time allowed, the workers in the group receive time wages
► If the time taken is less than the time allowed, the group receives a bonus on time saved
► If the time taken is greater than the time allowed, the workers in the group receive time deductions for extra hours
Question No: 32 ( Marks: 1 ) - Please choose one
Which of the following is TRUE when piece rate system is used for wage determination?
► Under this method of remuneration a worker is paid on the basis of time taken by him to perform the work
► Under this method of remuneration a worker is paid on the basis of production
► The rate is expressed in terms of certain sum of money for total production
► The rate is not expressed in terms of certain sum of money for total production
Question No: 33 ( Marks: 1 ) - Please choose one
Under Halsey premium plan, if the employee completes his job in less than the standard time fixed for the job, he is given:
► Only wages for the actual hours taken
► Wages for the actual hours taken plus bonus equal to one half of the wage of the time saved
► Wages for the actual hours taken plus bonus equal to one third of the wage of the time saved
► Only the bonus equal to one half of the time saved
Question No: 34 ( Marks: 1 ) - Please choose one
Which of the following is NOT a reason for carrying inventory?
► To maintain independence of operations
► To take advantage of economic purchase-order size
► To make the system less productive
► To meet variation in product demand
Question No: 35 ( Marks: 1 ) - Please choose one
Restocking of stores, in order to ensure efficient functioning of the stores department and steady flow of materials to the production departments, is duty of:
► Managers
► Storekeeper
► Production In charge
► Sales supervisor
Question No: 36 ( Marks: 1 ) - Please choose one
You made Rs. 10,000 loan to your cousin's company. At the end of one year, the company returned to you Rs. 10,850. The Rs. 850 is called which one of the following?
► Increases in loan
► Increases in dividends
► An 8.5% return on investment
► All of the given options
Question No: 37 ( Marks: 1 ) - Please choose one
The net sales of the business totals Rs. 200,000 and the Cost of Goods Sold for the same period totals Rs.146,000. What is the gross margin ratio?
► 0.22
► 0.25
► 0.27
► 0.33
Question No: 38 ( Marks: 1 ) - Please choose one
If, Gross profit = Rs. 40,000
GP Margin = 25% of sales
What will be the value of cost of goods sold?
► Rs. 160,000
► Rs. 120,000
► Rs. 40,000
► Can not be determined
Question No: 39 ( Marks: 1 ) - Please choose one
Cost accountants are concerned about the ratios relating to the Profits and Manufacturing costs. These ratios might include:
► Gross Mark up rate
► Inventory turnover ratio
► Cost of goods sold to sales ratio
► All of the given options
Question No: 40 ( Marks: 1 ) - Please choose one
The total cost to produce one unit is Rs. 600. Direct materials are 20% of the total cost and direct labor is 1/3 of the combined total of direct labor and direct materials. What was the cost for direct materials, direct labor, and factory overhead?
► Rs. 420, Rs. 60 and Rs. 120, respectively
► Rs. 60, Rs. 120 and Rs. 420, respectively
► Rs. 120, Rs. 60 and Rs. 420, respectively
► Rs 60, Rs. 420 and Rs. 120, respectively
Question No: 41 ( Marks: 10 )
CK Products Limited purchased materials of Rs. 550,000 and incurred direct labor of Rs. 420,000 during the year ended June 30, 2006. Factory overheads for the year were Rs.380,000. The inventory balances are as follows:
July 1, 2005 June 30, 2006
Rupees Rupees
Finished goods 90,000 105,000
Work in process 121,000 110,000
Materials 100,000 105,000
Required:
1) Cost Of Goods Manufactured Statement.
2) Cost Of Goods Sold Statement.
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