# MCQ on Management Accounting 3

Objective Questions and Answers of MBA: MCQ on Management Accounting 3

Subject: MCQ on Management Accounting 3

Part 3: List for questions and answers of Management Accountings

Q1. The formula to estimate Labour Mix variance is

a) Total standard labour cost of actual output – Total actual cost of actual output

b) (Standard rate per hour – Actual rate per hour) * Actual Hours

c) (Revised standard time – Actual time) * Standard rate

d) Abnormal idle hours * Standard hourly rate

Q2. As per Cash flow method, the amount of expected net operating cash profit during the fiscal is

a) Added to the opening balance of cash

b) Deducted from the opening balance of cash

c) Not included in cash budget

d) None of the above

Q3. Which of the following method is based on technique of cash flow statement?

a) Cash Accounting Period

b) Projected Balance Sheet Method

c) Project forecast method

d) None of the above

Q4. When standard costs are used, the amount of detailed record keeping will normally

a) Reduce

b) Increase

c) Stay the same

d) None of the above

Q5. Calculate B.E.P capacity if Fixed cost is Rs 50,000, percentage of variable cost is 66 2/3% and capacity is Rs 3,00,000

a) 25%

b) 30%

c) 50%

d) None of the above

Q6. Estimate amount of profit if Sales is 10,000 units Fixed cost is Rs 50,000, Variable cost per unit is Rs 12 and selling price per unit is Rs 20

a) Rs 12,000

b) Rs 5,000

c) Rs 30,000

d) None of the above

Q7. 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

a) Rs 40 per unit, Rs 2,00,000

b) Rs 50 per unit, Rs 10,00,000

c) Rs 20 per unit, Rs 1,00,000

d) None of the above

Q8. Given fixed expenses Rs 20,000 and variable expenses of 10,000 units and 15,000 units are Rs 30,000 and Rs 45,000 respectively. Determine Differential cost, Differential cost p.u

a) Rs 15,000, Rs 3

b) Rs 10,000, Rs 1

c) Rs 50,000, Rs 2

d) None of the above

Q9. When the temporary closure is warranted by the off-season, shut-down point is calculated as

a) Non-escapable expenses / Contribution per unit of raw materials

b) Avoidable expenses / Contribution per unit of raw materials

c) Special costs / Contribution per unit of raw materials

d) None of the above

Q10. A decision regarding temporary closure should be made on

a) Cost data

b) Economic factors

c) Social factors

d) All of the above

Q11. While taking shut-down decisions, the amount of contribution should be compared with

a) Escapable fixed costs

b) Special costs

c) Net escapable fixed costs

d) None of the above

Q12. The few items of fixed costs which can be saved or eliminated by suspending the trading activities are

a) Escapable fixed costs

b) Special fixed costs

c) Suspension fixed costs

d) None of the above

Q13. ABC Ltd manufactures a single product and sales for Rs 30 per unit. There is increased demand of the product. The Direct Material is Rs 8, Direct labour (2 hours) is Rs 4 and Variable overheads is Rs 4. The labour force is working at full capacity and no extra time is available. Mr. X has approached ABC Ltd with a request for manufacture special order at Rs 8,000. Also, 600 hours labour will be required and cost of the order will be Rs 3000 for Direct Material. Variable overhead per hour will be Rs 2. Should the order be accepted? Why?

a) Yes, Net Profit Rs 1,600

b) No, Net loss Rs 1,600

c) No, Net loss Rs 2,000

d) Yes Net Profit Rs 2,000

Q14. While making a pricing decision under Special price, if price is greater than marginal cost

a) Acceptance and rejection depends on product type

b) Order should be rejected

c) Order should be accepted

d) None of the above

Q15. ___________ is not suitable where selling price is determined on the basis of cost-plus method

a) Absorption costing

b) Marginal costing

c) Both a and b

d) None of the above

Q16. When a fixed asset is bought as hire purchase, interest element is classified under ______ and loan element is classified under

a) Operating activities, financing activities

b) Financing activities, investing activities

c) Investing activities, operating activities

d) None of the above

Q17. Issue of bonus shares and conversion of debentures into equity are shown as a footnote to the Cash Flow Statement

a) True

b) False

c) NA

d) NA

Q18. In case of other enterprises cash flow arising from interest paid should be classified as cash flow from ________ while dividends and interest received should be stated as cash flow from

a) Operating activities, financing activities

b) Financing activities, investing activities

c) Investing activities, operating activities

d) None of the above

Q19. Which of the following are treated as long term investments?

a) Non-current investments

c) Sinking fund investments

d) All of the above

Q20. Which of the following are applications of funds?

a) Payment of dividend on share capital

b) Payment of tax

c) Increase in working capital

d) All of the above

Part 3: List for questions and answers of Management Accountings