Objective Type Questions
Q.1 Identify the normal loss of materials among the following
a. Pilferage
b. Loss due to accidents
c. Loss due to breaking the bulk of materials
d. Loss due to careless handling of materials
Q.2 When the prices of materials are rising,then, which one of the following method should be used for
valuing the issue of materials
a. FIFO
b. LIFO
c. HIFO
d. Weighted average price
Q.3 Economic order quantity is that quantity of an inventory item for which order is placed again and again,
so that
a. Total purchase cost of inventory item purchased is minimum
b. Ordering cost is minimum
c. Carrying cost is minimum
d. Ordering and carrying costs are minimum
Q.4 If standard output is 5 units per hour and actual out put is 8 units per hour, then efficiency is
a. 160%
b. 62.5%
c. 80%
d. 120%
Q.5 Under Taylor’s differential piece rate scheme, if a worker failed to complete the task within the standard
time, then he was paid
a. 67% of the piece work rate
b. 125% of the piece work rate
c. 83% of the piece work rate
d. 175% of the piece work rate
Q.6 If the time saved is less then 50% of the standard time, then the wages under Rowan and Halsey
premium plan on comparison gives
a. More wages to workers under Rowan plan than Halsey plan
b. More wages to workers under Halsey plan than Rowan plan
c. Equal wages under two plans
d. None of the above
Q.7 The difference between actual factory overhead and absorbed factory overhead will be usually at the
minimum level, provided pre- determined overhead rate is based on
a. Maximum capacity
b. Direct labour hours
c. Machine hours
d. Normal capacity
Q.8 The method that may be used for the disposal of under or over absorption of overheads in the case of a
new project is
a. Carrying over of overheads
b. Use of supplementary rate
c. Transfer to costing profit & loss account
d. None of the above
Q.9 “Fixed overhead costs are not affected in monetary terms during a given period by a change in output”.
But this statement holds good provided
a. Increase in output is not substantial
b. Increase in output is substantial
c. Both (a) and (b)
d. None of the above
Q.10 Under control accounts, if material worth Rs. 1500 is purchased for a special job, then which account
will be debited
a. Special job account / work in progress account
b. Material control account
c. Cost control account
d. None of the above
Q.11 Integrated accounts eliminates the necessity of making
a. Cost ledger control account
b. Stores ledger control account
c. Overhead adjustment account
d. All of the above
Q.12 When costing profit is 10,000 and a charge in lieu of rent is Rs. 1,000, the financial profit should be
a. Rs. 10,000
b. Rs. 9,000
c. Rs. 11,000
d. None of the above
Q.13 The production planning department prepares a list of materials and stores required for the completion
of a specific job order, this list is known as
a. B in card
b. Bill of material
c. Material requisition slip
d. None of the above
Q.14 In case product produced or jobs undertaken are of diverse nature, the system of costing to be
used should be
a. Process costing
b. Operating costing
c. Job costing
d. None of the above
Q.15 When a contract is 50% complete, the amount of profit to be taken credit for, is usually
a. 50% of the notional profit
b. 1/3 notional profit cash received/ work certified
c. 2/3 notional profit cash received/ work certified
d. None of the above
Q.16 200 units were introduced in a process in which 20 units is the normal loss. If the actual output is 150
units, then there is
a. No abnormal loss
b. No abnormal gain
c. Abnormal loss of 30 units
d. Abnormal gain of 30 units
Q.17 In the market price method, used for apportioning costs over the joint products, the basis of
apportionment makes use of
a. Selling price per unit of each of the joint products
b. Selling price multiplied by units sold of each of the joint products
c. Sales value of each joint product less further processing costs of individual products
d. Both (b) and (c)
Q.18 The incidental residue from certain types of manufacture, usually of small amount and low value,
recoverable without further processing is called
a. Waste
b. Scrap
c. Spoilage
d. Defectives
Q.19 If P/V ratio is 40% of sales then what about the remaining 60% of sales
a. Profit
b. Fixed cost
c. Variable cost
d. Margin of safety
Q.20 Angle of incidence in the case of break-even chart represents the angle between
a. Total sales revenue line and total cost line
b. Total sales revenue line and x-axis
c. Total cost line and Y-axis
d. Total sales revenue line and Y-axis
Q.21 When fixed cost is Rs. 10,000, profit is Rs. 5,000 and sales Rs. 60,000, the P/V ratio will be
a. 25%
b. 20%
c. 16.67%
d. 8.33%
Q.22 If a company has a positive contribution margin but net- income is low or negative, there are some
ways of increasing net income
a. Increase sales price
b. Increase sales volume
c. Decrease variable costs
d. All of the above
Q.23 When total fixed cost is Rs. 25,000 and variable cost to sales is 60%, the break even sales will be
a. Rs. 37,500
b. Rs. 50,000
c. Rs. 62,500
d. Rs. 41,667
Q.24 The material price variance in slandered costing is obtained by multiplying the
a. Difference between standard price and actual price by the actual quantity of material consumed
b. Standard price by the difference between standard……….and standard quantity allowed.
c. Actual price by me difference between actual quality purchased and standard quantity allowed
d. Standard quantity by the difference between actual price and standard price.
Q.25 If for an actual output of 150 units the standard material required is 900 kg. @ Rs. 6 per kg. and the
actual quantity of material used is 1,050 kgs. @ Rs. 7 per kg., then the material cost variance is
a. Rs. 900 (adv)
b. Rs. 1,050 (adv)
c. Rs. 1,950 (adv)
d. Rs. 1,590 (adv)
Q.26 Which of the following variance arises when more then one material is used in the manufacture of a
product
a. Material price variance
b. Material usage variance
c. Material yield variance
d. Material mix variance
e. All of the above
Q.27 If material price variance is Rs. 400 (adv), material mix variance is Rs. 150 (adv) and material sub-
usage variance is Rs. 250 (Fav) the material cost variance is
a. Rs. 300 (Fav)
b. Rs. 450 (adv)
c. Rs. 150 (adv)
d. Rs. 300 (adv)
Q.28 If a company wishes to establish a factory overhead budget system in which estimated costs can be
derived directly from estimates of activity levels, if should prepare a
a. Master budget
b. Cash budget
c. Flexible budget
d. Fixed budget
Q.29 The budget control organization is usually headed by a top executive who is known as ‘---’.
a. General manager
b. Budget director/budget controller
c. Accountant of the organization
d. None of the above
Q.30 In order to prepare flexible budget, items of anticipated expenditure are classified into“---”.
a. Direct and Indirect costs
b. Fixed, variable and semi-variable costs
c. Controllable and uncontrollable costs
d. None of the above
Answers
Question No. Answer
1. C
2. B
3. D
4. A
5. C
6. A
7. D
8. A
9. A
10. A
11. A
12. C
13. B
14. C
15. C
16. C
17. D
18. B
19. C
20. A
21. A
22. D
23. C
24. A
25. C
26. E
27. D
28. C
29. B
30. B
Reasoning
Q.4 Efficiency =
Q.21 P/V ratio =
Q.23 Break Even Sales =
Q.25 Material costs variance = (Standard Quantity x Standard Price) – (Actual Quantity x Actual Price)
Q.27 Material costs variance = Material Price Variance + Material Mix Variance + Material Sub Usage Variance