MGT402- Cost & Management Accounting_MIDTERM EXAMINATION

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.