Cost and Management Accounting 1

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Objective Questions and Answers of MBA: Cost and Management Accounting 1

Subject: Objective Questions and Answers of MBA: Cost and Management Accounting 1

Part 1: Objective questions and answers of Cost and Management Accounting


Q1. Which of the following statement measures the financial position of the entity on particular time?

a) Income Statement

b) Balance Sheet

c) Cash Flow Statement

d) Statement of Retained Earning


Q2. Fixed cost per unit decreases when ______________

a) Production volume increases.

b) Production volume decreases.

c) Variable cost per unit decreases.

d) Variable cost per unit increases.


Q3. The difference between total revenues and total variable costs is known as _______

a) Contribution margin

b) Gross margin

c) Operating income

d) Fixed costs


Q4. For which one of the following industry would you recommend a Process Costing system?

a) Grain dealer

b) Television repair shop

c) Law office

d) Auditor


Q5. Jan 1; finished goods inventory of Manuel Company was Rs.3, 00,000. During the year

Manuel’s cost of goods sold was Rs. 19, 00,000, sales were Rs. 2, 000,000 with a 20% gross profit. Calculate cost assigned to the December 31; finished goods inventory.

a) Rs. 4,00,000

b) Rs. 6,00,000

c) Rs. 16,00,000

d) None of the given options


Q6. Which of the following manufacturers is most likely to use a job order cost accounting system?

a) A soft drink producer

b) A flour mill

c) A textile mill

d) A builder of offshore oil rigs


Q7. ______________ Method assumes that the goods received most recently in the stores or produced recently are the first ones to be delivered to the requisitioning department.


b) Weighted average method

c) Most recent price method



Q8. If 120 units produced, 100 units were sold @ Rs. 200 per unit. Variable cost related to production & selling is Rs. 150 per unit and fixed cost is Rs. 5,000. If the management wants to decrease sales price by 10%, what will be the effect of decreasing unit sales price on profitability of company? (Cost & volume profit analysis keep in your mind while solving it)

a) Remains constant

b) Profits will increased

c) Company will have to face losses

d) None of the given options


Q9. A typical factory overhead cost is ______________

a) Audit

b) Compensation of plant manager

c) Design distribution

d) Internal


Q10. Production volume of 1,200 units cost incurred Rs. 10,000 and production volume of 1,400 units cost incurred Rs.20, 000. The variable cost per unit would be?

a) Rs. 50.00 per unit (May not be correct)

b) Rs. 8.33 per unit

c) Rs. 14.20 per unit

d) Rs. 100 per unit


Q11. For which one of the following industry would you recommend a Job Order Costing system?

a) Oil Refining

b) Grain dealing

c) Beverage production

d) Law Cases


Q12. 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


Q13. Who When prices are rising over time, which of the following inventory costing methods will result in the lowest gross margin/profits?



c) Weighted Average

d) Cannot be determined


Q14. Prime cost + Factory overhead cost is ______________

a) Conversion cost.

b) Production cost.

c) Total cost.

d) None of given option.


Q15. In the case of plant, the limiting factor may be:

a) Insufficient capacity

b) Shortage of experienced salesmen

c) General shortage of power

d) Shortage of materials


Q16. The main purpose of cost accounting is to ______________

a) Maximize profits

b) Help in inventory valuation

c) Provide information to management for decision making

d) Aid in the fixation of selling price


Q17. Period costs are ______________

a) Expensed when the product is sold

b) Included in the cost of goods sold

c) Related to specific Period

d) Not expensed


Q18. Annual requirement is 7800 units; consumption per week is 150 units. Unit price Rs 5, order cost Rs 10 per order. Carrying cost Rs 1 per unit and lead time is 3 week, The Economic order quantity would be ______________

a) 365 units

b) 300 units

c) 250 units

d) 150 units


Q19. Which of these is not an objective of Cost Accounting?

a) Ascertainment of Cost

b) Determination of Selling Price

c) Cost Control and Cost reduction

d) Assisting Shareholders in decision making


Q20. Which of these is not a Material control technique?

a) ABC Analysis

b) Fixation of raw material levels

c) Maintaining stores ledger

d) Control over slow moving and non-moving items


Part 1: Objective questions and answers of Cost and Management Accounting


Q1. Answer b


Q2. Answer a


Q3. Answer a


Q4. Answer a


Q5. Answer d


Q6. Answer d


Q7. Answer d


Q8. Answer c


Q9. Answer b


Q10. Answer a


Q11. Answer d


Q12. Answer c


Q13. Answer b


Q14. Answer b


Q15. Answer a


Q16. Answer c


Q17. Answer c


Q18. Answer a


Q19. Answer d


Q20. Answer c

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