1. An indirect setup labor costs, costs of setup and equipment maintenance and costs of indirect material can be categorized as
Correct : C. Variable setup costs
2. To establish an effective system of standard costing it is essential that
1) The technical process of operation should be prone to planning
2) The cost of the products should be given
3) The process or operating costs of products should be provided
4) The standard costing should be consistent with the technical procedure of the production of the specific entity
Correct : B. A, C and D
3. An officer responsible for financial operations of organization is considered as
Correct : A. Chief financial officer
4. Which of the following are the assumptions of marginal costing?
1) All the elements of cost can be divided into fixed and variable components.
2) Total fixed cost remains constant at all levels of output.
3) Total variable costs vary in proportion to the volume of output.
4) Per unit selling price remain unchanged at all levels of operating activity.
Correct : D. A, B, C and D
5. Factory overhead is Rs 3,00,000 and direct material cost is Rs 5,00,000 What is the overhead rate under direct material cost method?
Correct : C. 60%
6. The cost per unit of a product manufactured in a factory amounts to Rs 160 (75% variable) when the production is 10,000 units. When production increases by 25%, the cost of production will be Rs per unit.
Correct : C. Rs 152
7. In master budgeting, the cost drivers for manufacturing overhead costs are
Correct : D. Both 1 and 2
8. Which of the following is incorrect about the statement of cash flows?
Correct : B. It reconciles ending cash balance with the balance as per bank statement.
9. If break-even number of units are 120 units and the fixed cost is $62000, then the contribution margin per unit will be
Correct : C. $516.67
10. Cash flow example from an operating activity is
Correct : C. Interest Paid on Term-deposits by a Bank
11. During the month of December actual direct labour cost amounted to $39,550, the standard direct labour rate was $10 per hour and the direct labour rate variance amounted to $450 favourable. The actual direct labour hours worked were:
Correct : B. 4,000 hours
12. Batch Costing is useful in determining:
Correct : A. Maximum Quantity of output
13. Overhead Cost is the total of
Correct : B. All Indirect Cost
14. Regal Industries is replacing a grinder purchased 5 years ago for $15,000 with a new one costing $25,000 cash. The original grinder is being depreciated on a straight-line basis over 15 years to a zero-salvage value. Regal will sell this old equipment to a third party for $6,000 cash. The new equipment will be depreciated on a straight-line basis over 10 years to a zero-salvage value. Assuming a 40% marginal tax rate, Regal’s net cash investment at the time of purchase if the old grinder is sold and the new one purchased is
Correct : C. $17400
15. The Moore Corporation is considering the acquisition of a new machine. The machine can be purchased for $90000; it will cost $6000 to transport to Moore’s plant and $9,000 to install. It is estimated that the machine will last 10 years, and it is expected to have an estimated salvage value of $5,000. Over its 10-year life, the machine is expected to produce 2,000 units per year, each with a selling price of $500 and combined material and labour costs of $450 per unit. Federal tax regulations permit machines of this type to be depreciated using the straight-line method over 5 years with no estimated salvage value. Moore has a marginal tax rate of 40%. What is the net cash flow for the tenth year of the project that Moore Corporation should use in a capital budgeting analysis?
Correct : D. $63000
16. An annual report is issued by company to its :
Correct : C. Shareholders
17. Which of the following statement is correct ?
Correct : A. Assets = Liabilities + Shareholders funds
18. The process of budgeting includes
Correct : D. All of the above
19. The labour engaged in the making of a product is known as _______
Correct : A. Direct labour
20. Cash from Operations is equal to:
Correct : A. Net Profit plus increase in outstanding Expenses
21. Margin of safety can be increased by
Correct : C. Reduction in fixed or the variable costs or both
22. When profit-volume ratio is 40 % and sales value Rs.10,000, the variable costs will be :
Correct : B. Rs. 6,000
23. Determine B.E.P in units and amount if Units produced if Rs 10,000, Fixed cost is Rs 40,000, Selling price is Rs 50 per unit and Variable cost us Rs 30 per unit.
Correct : C. Rs 20 per unit, Rs 1,00,000
24. When margin of safety is 20% and P/V ratio is 60%, the profit will be :
Correct : C. 12%
25. Which of the following costs is not relevant when considering the closure of a department within a factory?
Correct : C. Fixed overheads
26. A Cost Unit is _____________
Correct : C. A unit of production in relation to which costs are ascertained
27. Factory Overheads are also called :
Correct : B. Works Overhead
28. Expenditure over and above prime cost is known as ________.
Correct : A. overhead
29. If the actual price input is $700, the budgeted price of input is $400 and the actual quantity of input are 50 units, then the price variance will be
Correct : A. $15,000
30. Return on capital employed shows the ________ of a firm.
Correct : C. Both
31. A Company’s Quick Ratio is 1.5 : 1; Current Liabilities are ₹2,00,000 and Inventory is
₹1,80,000. Current Ratio will be :
Correct : D. 2.4 : 1
32. Total revenue from operations ₹27,00,000; Credit revenue from operations ₹18,00,000; Opening Debtors ₹3,20,000; Closing Debtors ₹4,00,000; Provision for Doubtful Debts ₹60,000. Trade Receivables Turnover Ratio will be :
Correct : D. 5 times
33. In a product mix decision, which is the most important factor to consider to try to maximise profit?
Correct : B. Contribution per unit of a scarce resource used to make the product
34. If the contribution margin per unit is $700 per unit and the break-even per unit is $40, then the fixed cost would be
Correct : B. $28,000
35. The budget which commonly takes the form of budgeted Profit and Loss Account and Balance Sheet is
Correct : C. Master Budget
36. Which of the following is not likely to be a reason of unfavourable direct labour efficiency variance?
Correct : A. Increase in direct materials prices
37. What is main component of operating expenses?
Correct : D. None
38. Comprehensive Machine Hour Rate includes :
Correct : A. Machine Operators Wages
39. The purpose of financial accounting is to provide information for ________.
Correct : D. assessing the profitability and financial position of the firm
40. XYZ factory working for 50 hours per week employs hundred workers on a job work. The standard output is 200 units per gang hour and standard rate is Rs 1 per hour. During a week in June, five employees were paid @ Rs 1.20 per hour and ten employees were paid @ 80 paise per hour. Rest of the employees were paid @ standard hour rate. The actual number of units produced was 10,200. Determine labour cost variance