Cost and Management Accounting 5

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Objective Questions and Answers of MBA: Cost and Management Accounting 5

Subject: Objective Questions and Answers of MBA: Cost and Management Accounting 5

Part 5: Objective questions and answers of Cost and Management Accounting


Q1. Blanket overhead rate is:

a) One single overhead absorption rate for the whole factory

b) Rate which is blank or nil rate

c) Rate in which multiple overhead rates are calculated for each production department, service department etc.

d) Always a machine hour rate


Q2. In process costing, a joint product is

a) A product which is later divided into many parts

b) A product which is produced simultaneously with other products and is of similar value to at least one of the other products.

c) A product which is produced simultaneously with other products but which is of a greater value than any of the other products.

d) A product produced jointly with another organization


Q3. In 'make or buy' decision, it is profitable to buy from outside only when the supplier's price is below the firm's own ______________.

a) Fixed Cost

b) Variable Cost

c) Total Cost

d) Prime Cost


Q4. In element-wise classification of overheads, which one of the following is not included –

a) Fixed overheads

b) Indirect labour

c) Indirect materials

d) Indirect expenditure.


Q5. Conversion cost includes cost of converting ______________ into ______________

a) Raw material, WIP

b) Raw material, Finished goods

c) WIP, Finished goods

d) Finished goods, Saleable goods


Q6. Calculate the value of closing stock from the following according to LIFO method:

1st January, 2014: Opening balance: 50 units @ Rs. 4


5th January, 2014: 100 units @ Rs. 5

12th January, 2014: 200 units @ Rs. 4.50


2nd January, 2014: 30 units

18th January, 2014: 150 units

a) Rs. 765

b) Rs. 805

c) Rs. 786

d) Rs. 700


Q7. Process B had no opening inventory. 13,500 units of raw material were transferred in at Rs 4.50 per unit. Additional material at Rs1.25per unit was added in process. Labour and overheads were Rs 6.25 per completed unit and Rs 2.50 per unit incomplete. If 11,750completed units were transferred out, what was the closing inventory in Process B?

a) Rs. 6562.50

b) Rs. 12,250.00

c) Rs. 14,437.50

d) Rs. 25,375.00


Q8. A budget which is prepared in a manner so as to give the budgeted cost for any level of activity is known as:

a) Master budget

b) Zero base budget

c) Functional budget

d) Flexible budget


Q9. Uncontrollable costs are the costs which be influenced by the action of a specified member of an undertaking.

a) Can not

b) Can

c) May or may not

d) Must


Q10. Budgeted sales of X for March are 18000 units. At the end of the production process for X, 10% of production units are scrapped as defective. Opening inventories of X for March are budgeted to be 15000 units and closing inventories will be 11,400 units. All inventories of finished goods must have successfully passed the quality control check. The production budget for X for March, in units is:

a) 12,960

b) 14,400

c) 15,840

d) 16,000


Q11. Which of the following organizations should not be advised to use service costing?

a) Distribution service

b) Hospital

c) Maintenance division of a manufacturing company

d) A light engineering company


Q12. A company manufactures a single product for which cost and selling price data are as follows:

Selling price per unit – Rs. 12

Variable cost per unit – Rs. 8

Fixed cost for a period – Rs. 98,000

Budgeted sales for a period – 30,000 units

The margin of safety, expressed as a percentage of budgeted sales, is:

a) 20%

b) 25%

c) 73%

d) 125%


Q13. For the financial year ended as on March 31, 2013 the figures extracted from the balance sheet of Xerox Limited as under: Opening Stock Rs. 29,000; Purchases Rs. 2,42,000;

Sales Rs. 3,20,000; Gross Profit 25% of Sales. Stock Turnover Ratio will be :-

a) 8 times

b) 6 times

c) 9 times

d) 10 times


Q14. Cost Unit is defined as:

a) Unit of quantity of product, service or time in relation to which costs may be ascertained or expressed

b) A location, person or an item of equipment or a group of these for which costs are ascertained and used for cost control.

c) Centres having the responsibility of generating and maximising profits

d) Centres concerned with earning an adequate return on investment


Q15. Fixed cost is a cost:

a) Which changes in total in proportion to changes in output

b) Which is partly fixed and partly variable in relation to output

c) Which do not change in total during a given period despise changes in output

d) Which remains same for each unit of output


Q16. Stores Ledger is a:

a) Quantitative as well as value wise records of material received, issued and balance;

b) Quantitative record of material received, issued and balance

c) Value wise records of material received, issued and balance

d) A record of labour attendance


Q17. If overtime is resorted to at the desire of the customer, then the overtime premium:

a) Should be charged to costing profit and loss account;

b) Should not be charged at all

c) Should be charged to the job directly

d) Should be charged to the highest profit making department


Q18. Which of the following is not a method of cost absorption?

a) Percentage of direct material cost

b) Machine hour rate

c) Labour hour rate

d) Repeated distribution method


Q19. Calculate the most appropriate unit cost for a distribution division of a multinational company using the following information.

Miles travelled 636,500

Tonnes carried 2,479

Number of drivers 20

Hours worked by drivers 35,520

Tonnes miles carried 375,200

Cost incurred 562,800

a) Rs .88

b) Rs 1.50

c) Rs 15.84

d) Rs28, 140


Q20. The summarized balance sheet of Rakesh udyog Limited shows the balances of previous and current year of provision for taxation Rs. 50,000 and Rs. 65,000. If taxed paid during the current year amounted to Rs. 70,000 then amount charge from Profit and Loss Account will be:

a) Rs. 55,000

b) Rs. 85,000

c) Rs. 45,000

d) Rs. 1,85,000


Part 5: Objective questions and answers of Cost and Management Accounting


Q1. Answer a


Q2. Answer b


Q3. Answer b


Q4. Answer a


Q5. Answer b


Q6. Answer b


Q7. Answer c


Q8. Answer d


Q9. Answer a


Q10. Answer d


Q11. Answer d


Q12. Answer a


Q13. Answer a


Q14. Answer a


Q15. Answer c


Q16. Answer a


Q17. Answer c


Q18. Answer d


Q19. Answer b


Q20. Answer b

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