Cost and Management Accounting 20

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Objective Questions and Answers of MBA: Cost and Management Accounting 20

Subject: Objective Questions and Answers of MBA: Cost and Management Accounting 20

Part 20: Objective questions and answers of Cost and Management Accounting


Q1. Which of the following methods of depreciation results in fixed per unit cost of depreciation?

a) Straight line

b) Reducing balance

c) Sinking fund

d) Production unit


Q2. Avoidable causes of labour turnover include the following except:

a) Redundancy

b) Low wages

c) Bad working conditions

d) Marriage


Q3. Ratios which may be used for comparing labour cost over time include the following except:

a) Gross profit ratio

b) Efficiency ratio

c) Illness ratio

d) Absenteeism ratio


Q4. The factors to be taken into consideration in formulating incentive schemes include:

a) Quantity and quality of output

b) Incidence of overhead, and effect upon workers

c) Simplicity and legal provisions

d) All of the above


Q5. The authorized heads of deduction from wages payable include the following except:

a) Car allowance

b) Income tax

c) Provident fund

d) Employees'state insurance


Q6. Which of the following does not match? Item of cost basis of cost allocation

a) Power h.p. of machine

b) Supervision of building value of materials consumed

c) Insurance of building area occupied

d) Time-keeping number of employees


Q7. The process of cost apportionment is carried out so that:

a) Costs may be controlled

b) Cost units gather overheads as they pass through cost centres

c) Whole items of cost can be charged to cost centres

d) Common costs are shared among cost centres


Q8. What will be the impact of normal loss on the overall per unit cost?

a) Per unit cost will increase

b) Per unit cost will decrease

c) Per unit cost remain unchanged

d) Normal loss has no relation to unit cost


Q9. The components of factory overhead are as follows:

a) Direct material + indirect material + direct expenses

b) Indirect material + indirect labor + others indirect cost

c) Direct material + indirect expenses + indirect labor

d) Direct labor + indirect labor + indirect expenses


Q10. Generally, the danger level of stock is fixed ______________ the minimum level

a) Below

b) Above

c) Equal

d) Danger level has no relation to minimum level


Q11. The treatment of idle time in cost includes the following

a) Cost of normal and controllable idle time is charged to factory overheads

b) Cost of normal but uncontrollable idle time is treated as prime cost

c) Cost of abnormal and uncontrollable idle time is charged to costing profit and loss account

d) All of the above


Q12. Replacement costs of labour turnover include the following except:

a) Loss of output

b) Cost of personnel administration

c) Cost of tool and machine breakage

d) Cost of scrap and defective work


Q13. Which of the following is not a reason for carrying inventory?

a) To maintain independence of operations

b) To take advantage of economic purchase-order size

c) To make the system less productive

d) To meet variation in product dem


Q14. In a profit sharing scheme the available surplus is shared by the following except:

a) Government

b) Shareholders

c) Employees

d) Firm


Q15. Suppose a firm sells its product at a price lower than the opportunity cost of the inputs used to produce it. Which is true?

a) The firm will earn accounting and economic profits.

b) The firm will face accounting and economic losses.

c) The firm will face an accounting loss, but earn economic prfits.

d) The firm may earn accounting profits, but will face economic losses.


Q16. Which of the following costs is not a factory overhead expense?

a) Depreciation of equipment used in the research department

b) Salary of quality control inspector

c) Overtime premium paid to direct labour

d) Machine maintenance labour cost


Q17. Idle capacity of a plant is defined as the difference between:

a) Practical capacity and normal capacity

b) Practical capacity and capacity based on sale expectancy

c) Maximum capacity and actual capacity

d) Maximum capacity and practical capacity


Q18. Under perpetual inventory system at the end of the year:

a) No closing entry passed

b) Closing entry passed

c) Closing value find through closing entry only

d) None of the above.


Q19. A firm uses its own capital or uses its owner's time and/or financial resources both are examples of

a) Implicit cost

b) Explicit cost

c) Sunk cost

d) Relevant cost


Q20. Sales are 450,000. Beginning finished goods were 23,000. Ending finished goods are 30,000. The cost of goods sold is 300,000. What is the cost of goods manufactured?

a) 323,000

b) 330,000

c) 293,000

d) None of the given options


Part 20: Objective questions and answers of Cost and Management Accounting


Q1. Answer d


Q2. Answer d


Q3. Answer a


Q4. Answer d


Q5. Answer a


Q6. Answer b


Q7. Answer d


Q8. Answer a


Q9. Answer b


Q10. Answer b


Q11. Answer d


Q12. Answer b


Q13. Answer c


Q14. Answer a


Q15. Answer d


Q16. Answer a


Q17. Answer b


Q18. Answer a


Q19. Answer a


Q20. Answer d

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