Part: 1

1. Opening Material: Rs. 15,000, Materials used: Rs.2,00,000, Ending material: Rs.25,000, Material Purchased.
A. Rs. 2,40,000
B. Rs. 1,90,000
C. Rs. 2,10,000
D. Rs. 40,000
ANSWER: C

2. Factory Overheads can also be expressed as.

A. Overheads
B. Manufacturing Overheads
C. Manufacturing Expenses
D. All of the above
ANSWER: D

3. Direct Materials used: Rs.20,000, FOH: Rs.40,000, Total Factory Cost: Rs.77,000. What would be the amount of
Direct Labor.
A. Rs.17,000
B. Rs.57,000
C. Rs. 137,000
D. Rs.37,000
ANSWER: A

4. Direct materials used: Rs.10,000, FOH: Rs.20,000, Direct Labor: Rs. 9,000. What would be Total Manufacturing
Cost.
A. Rs.19,000
B. Rs.29,000
C. Rs.39,000
D. Rs.30,000
ANSWER: C

5. Opening Materials: Rs.25,000, Material Purchased: Rs. 45,000, Ending Material: Rs.18,000. What is the cost of
material used.
A. Rs.38,000
B. Rs.88,000
C. Rs. 2,000
D. Rs.52,000
ANSWER: D

6. The cost of material that is not completely processed, would be found in which of the following inventory account
on the Balance Sheet.
A. Direct material inventory
B. Supplies inventory
C. Finished Goods inventory
D. Work in process inventory
ANSWER: D

7. The cost of goods that is completely processed, would be found in which of the following inventory account on
the Balance Sheet.
A. Direct material inventory
B. Supplies inventory
C. Finished Goods inventory
D. Work in process inventory
ANSWER: C

8. At the end of the period, the cost of material that is not used, would be found in which of the following inventory
account on the Balance Sheet.
A. Direct Material inventory
B. Supplies inventory
C. Finished Goods inventory
D. Work-in-process inventory
ANSWER: A

9. While preparing CGS statement, Decrease in WIP inventory will be.

A. Subtracted from Total Factory Cost
B. Added in Total Factory Cost
C. Subtracted from Total Factory Cost
D. Added in Prime Cost
ANSWER: B

10. While preparing CGS statement, Increase in WIP inventory will be.
A. Subtracted from Prime Cost
B. Added in Total Factory Cost
C. Added in Prime Cost
D. Subtracted from Total Factory Cost
ANSWER: D

11. The predetermined overhead rate is Rs.6.10 per direct labor hour. Job required 210 Direct Labor hours of which
150 hours were incurred during the period. How much overhead should be applied to Job during the period.
A. Rs. 915
B. Rs. 366
C. Rs.31,500
D. Rs.1,281
ANSWER: A

12. The companies that produce many different products or services usually use.
A. Process Costing
B. Project Costing
C. Both of the above
D. Job Order Costing
ANSWER: D

13. Which of the following costs is recorded on the job cost sheet.
A. Direct Material Cost
B. Direct Labour Cost
C. Manufacturing Overhead cost
D. All of the above
ANSWER: D

14. The wages paid to maintenance department workers who do repair work principally for production departments
but also on the vehicles in the distribution department should be charged as.
A. Production costs
B. Distribution costs
C. Service Cost
D. General Cost
ANSWER: C

15. Which of the following is a valid classification of the salary paid to the in-charge of the packing department.
A. Indirect Departmental cost
B. Direct Product cost
C. Service Department cost.
D. Direct Departmental cost
ANSWER: D

16. Maximum Consumption multiplied by Time Required for Receipt of Material, it gives.
A. Order Level
B. Maximum Level
C. Minimum Level
D. Danger Level
ANSWER: A

17. In basic EOQ model, when ordering cost doubles and all other values remain constant, EOQ will.
A. increase by 100%
B. increase by about 41%
C. increase by about 141%
D. either increase or decrease
ANSWER: B

18. Cost of Material Consumed divided by Cost of average Material Inventory, it gives.
A. Average Material
B. Material Turnover Ratio
C. Average Inventory level
D. Both A & C
ANSWER: B

19. When Maximum Consumption is multiplied to Lead Time, it gives.

A. Order level
B. Maximum level
C. Minimum level
D. Danger level
ANSWER: A

20. A Stock Allowance to cover errors in forecasting the Lead Time is called.
A. Minimum Stok
B. Safety Stock
C. Buffer Stock
D. Both B & C
ANSWER: D

21. LIFO stands for.

A. Last In First Out
B. Lower Inventory First Out
C. Listed Inventory First Out
D. Both B & C
ANSWER: A

22. Materials are issued in the order of their receipts in.

A. LIFO Method
B. FIFO Method
C. Weighted Average Cost Method
D. Most Recent Purchase Price
ANSWER: B

23. Materials are issued in the latest price paid in.

A. Weighted Average Cost Method
B. Most Recent Purchase Price
C. LIFO Method
D. FIFO Method
ANSWER: C

24. _________________________does not charge materials at cost.

A. Simple Average Method

B. Most Recent Purchase Price
C. LIFO Method
D. FIFO Method
ANSWER: A

25. Which of the following inventory valuation methods shows HIGHER profits during the period of RISING prices.
A. LIFO Method
B. FIFO Method
C. Weighted Average Method
D. Simple Average Method
ANSWER: B

26. Material returned to SUPPLIER will be placed as (NEGATIVE) in________ column of Store Ledger Cards.
A. Receipts
B. Issued
C. Balance
D. Both A & C
ANSWER: A

27. Material returned to STORE will be placed as (NEGATIVE) in________ column of Store Ledger Cards.
A. Receipts
B. Issued
C. Balance
D. Both A & C
ANSWER: B

28. When Material is returned to SUPPLIER, there will be___________ in inventory balance.
A. Decrease
B. Increase
C. No change
D. None of Above
ANSWER: A

29. When Material is returned to STORE, there will be___________ in inventory balance.
A. Decrease
B. Increase
C. No change
D. None of Above
ANSWER: B

30. When Material is sent to SCRAP, there will be___________ in inventory balance.
A. Decrease
B. Increase
C. No change
D. None of Above
ANSWER: A

31. Material declared as scrap and was sent to scrap dealer will.
A. Reduce the issuance of material
B. Reduce the inventory balance
C. Reduce the receipts of material
D. Both A & C
ANSWER: B

32. Unit produced that do not meet customer specification but after minor alteration, same can be sold to other
customers as finished goods are classified as.
A. Reduced work
B. Spoilage
C. Scrap
D. Rework
ANSWER: D

33. Partial or completed units of manufactured goods, that do not meet customer specifications and get sold at reduced
price or simply discarded, are called.
A. Rework
B. Scrap
C. Spoilage
D. Equivalence
ANSWER: C

34. Which one of following is an example of spoilage.

A. Short lengths from woodwork
B. Defective units sold at reduced price
C. Detection of defective pieces before shipment
D. All of above
ANSWER: B

35. Residual material which results from manufacturing products is called.

A. Reduced work
B. Rework
C. Spoilage
D. Scrap
ANSWER: D

36. An example of rework is.

A. Detection of defective pieces before shipment
B. Short lengths from woodwork
C. Defective aluminum cans recycled by manufacturer
D. None of above
ANSWER: A

37. An example of scrap is.

A. Short lengths from woodwork
B. Detection of defective pieces before shipment
C. Units to be disposed of by manufacturer
E. None of above
ANSWER: C

38. Completed units of manufactured goods, that partially meet customer specifications and need additional cost are
called.
A. Rework
B. Scrap
C. Spoilage
D. Defective
ANSWER: D

39. Spoiled inventory will be entered at_______________ price in journal.

A. Marginal
B. Cost
C. Sale
D. None of above
ANSWER: C

40. While passing the entries, NORMAL spoiled loss is charged to.
A. Overall production
B. WIP
C. Job
D. Both B & C
ANSWER: A

41. Spending Variance is also called.

A. Budgeted Variance
B. Over variance
C. Actual Variance.
D. Applied Variance
ANSWER: A
42. Budgeted Variance can be calculated as.
A. Actual FOH minus Budgeted Allowance
B. Budgeted Allowance minus Actual FOH
C. Actual Variance minus Budgeted Variance
D. Both B & C
ANSWER: A

43. Capacity Variance is also called.

A. Direct Variance
B. Over variance
C. Volume Variance.
D. Applied Variance
ANSWER: C

44. Volume Variance is calculated as.

A. Budgeted Allowance minus Applied FOH
B. Applied FOH minus Budgeted Allowance
C. Actual FOH minus Applied FOH
D. Budgeted Allowance minus Actual FOH
ANSWER: B

45. Applied FOH minus Actual FOH is a formula used for.

A. Idle Capacity Variance
B. Total Variance
C. Under/Over Applied FOH
D. Both B & C
ANSWER: D

46. Actual Fixed Overhead minus Budgeted Fixed Overhead equals the.
A. Fixed overhead volume variance
B. Fixed overhead spending variance
C. Un-controllable variance
D. Controllable variance.
ANSWER: B

47. Variable FOH are those which.

A. Do not change with the change in production volume
B. Change with change in production volume
C. Do not depend on production volume
D. None of the Above
ANSWER: B

48. Total Variance is found when.

A. Actual Overhead exceeds Applied Overhead
B. Applied Overhead exceeds Budgeted Overhead
C. Applied Overhead are equal to Actual Overhead
D. Both B & C
ANSWER: A

49. If Total Variance is Rs. 2,000 (Over applied), then following will be true.
A. Actual Overhead exceeds Applied Overhead by Rs. 2,000
B. Applied Overhead: Rs.7,000 and Budgeted Overhead: Rs. 9,000
C. Applied Overhead: Rs. 9,000 and Actual Overhead: Rs.7,000
D. Both A & B
ANSWER: C

50. If FOH are Under applied by Rs. 3,000, then following statement will be true.
A. Actual Overhead exceeds Applied Overhead by Rs. 3,000
B. Applied Overhead: Rs.9,000 and Budgeted Overhead: Rs. 12,000
C. Budgeted Allowance: Rs. 9,000 and Actual Overhead: Rs.4,000
D. Applied Overhead exceeds Actual Overhead by Rs. 3,000
ANSWER: A

Part: 2
1. Cost Accounting deals with.
A. Manufacturing
B. Internal Operations
C. Marketing
D. Both A & B
ANSWER: D

2. Cost Accounting is responsible for.

A. Costs of Products
B. Manufacturing Processes
C. Internal Planning
D. All of above
E. ANSWER: D

3. Cost Accounting includes.

A. Collection and Analysis of expenses
B. Measurement of Productions at different stages
C. None of Above
D. Both A & B
ANSWER: D

4. Cost Accounting provides information to.

A. Management of a firm
B. Shareholders
C. General Public
D. Both B & C
ANSWER: A

5. Cost Accounting is a part of______________________________ to disclose profit or loss.

A. Financial Accounting
B. Financial Management
C. Operations Management
D. Both B & C
ANSWER: A

6. Under-applied Manufacturing overhead are found when.

A. Actual overhead exceeds applied overhead
B. Applied overhead exceeds actual overhead
C. Applied overhead are equal to actual overhead
D. Both B & C
ANSWER: A

7. Over-applied Manufacturing overhead are found when.

A. Applied overhead exceeds fixed overhead
B. Applied overhead exceeds actual overhead
C. Applied overhead are equal to actual overhead
D. Both B & C
ANSWER: B

8. Total Manufacturing Cost includes.

A. Prime Cost + FOH
B. Direct material + Direct labor + Conversion cost
C. Direct material + Direct Labor + Variable FOH
D. Both B & C
ANSWER: A

9. Prime Cost includes.

A. Total Factory Cost + FOH Applied
B. Direct material + Direct labor + Conversion cost
C. Direct material + Direct Labor + FOH Applied
D. Total Factory Cost - FOH Applied
ANSWER: D

10. Conversion Cost consists of.

A. Total Factory Cost + FOH Applied
B. Direct material + Direct labor + FOH
C. Direct Labor + FOH
D. Total Factory Cost - FOH Applied
ANSWER: C

11. While preparing CGS statement, Increase in Finished Goods inventory will be.
A. Subtracted from Cost of Goods Sold
B. Added in Cost of Goods Sold
C. Subtracted from Cost of Goods Manufactured
D. Added in Total Manufacturing Cost
ANSWER: C

12. While preparing CGS statement, Decrease in Finished Goods inventory will be.
A. Added in Cost of Goods Manufactured
B. Added in Cost of Goods Sold
C. Subtracted from Cost of Goods Sold
D. Subtracted from Cost of Goods Manufactured
ANSWER: A

13. Opening Balance of Fuel: Rs. 2,000, Fuel Purchased: Rs. 5,200, Ending Balance of Fuel: Rs. 3,400; Cost of Fuel
consumed is.
A. Rs. 6,600
B. Rs. 200
C. Rs. 3,800
D. Rs. 10,600
ANSWER: C

14. Following expense(s) is/are not a part of FOH.

A. Indirect Labour
B. Office Building Repair charges
C. Indirect Material
D. Plant & Machinery Depreciation
ANSWER: B

15. Per unit cost of goods manufactured is calculated as.

A. Total Manufacturing Cost divided by No. of units manufactured
B. Cost of Goods Manufactured divided by Total Factory Cost
C. Cost of Goods Sold divided by No. of units manufactured
D. Cost of Goods Manufactured divided by No. of units manufactured
ANSWER: D

16. Sales: Rs. 2,50,000, Selling Expenses: Rs. 50,000, CGS: Rs. 1,50,750, Net Profit: Rs.
A. Rs. 49,250
B. Rs. 99,250
C. Rs. 3,50,750
D. 1,49,250
ANSWER: A

17. Sales: Rs. 2,50,000, Gross Profit: Rs. 99,250, CGS: Rs.
A. Rs. 50,750
B. Rs. 1,50,750
C. Rs. 2,49,250
D. Rs. 1,49,250
ANSWER: B

18. Sales: Rs. 2,50,000, CGS: 60% of Sales, Gross Profit.

A. Rs. 1,50,000
B. Rs. 1,00,000
C. Rs. 4,00,000
D. Rs. 50,000
ANSWER: B

19. CGS: Rs. 150,000, Gross Profit: Rs. 50,000, Sales.

A. Rs. 1,50,000
B. Rs. 1,00,000
C. Rs. 2,00,000
D. Rs. 50,000
ANSWER: C

20. Gross Profit: Rs. 50,000, General expense: Rs. 4,000, Admn. Expense: Rs. 2,000, Net Profit.
A. Rs. 52,000
B. Rs. 48,000
C. Rs. 46,000
D. Rs. 44,000
ANSWER: D

21. Job required:210 direct labor hours. Hours incurred:150, Applied Overhead: Rs. 1281, What will be the Overhead
rate per hour.
A. Rs. 9.15
B. Rs. 8.54
C. Rs.18.54
D. Rs.12.81
ANSWER: B

22. Re-order Level can also be called.

A. Ordering Level
B. Ordering Point
C. Danger Level
D. Both A & B
ANSWER: D

23. Formula of Max. Stock Level is.

A. Ordering Level x Lead Time
B. Ordering Level + EOQ
C. Ordering Level + EOQ – (Min. Requirement x Lead Time)
D. Both A & B
ANSWER: C

24. Ordering Level: 16,200, EOQ: 15,000, Min. Requirement: 13,000, Lead Time: 1 month, Max. Level will be.
A. 18,200 units
B. 31,200 units
C. 28,000 units
D. Both B & C
ANSWER: A

25. EOQ stands for.

A. Equal Ordering Quantity
B. Economic Order Quantity
C. Economic Output Quantity
D. Both A & B
ANSWER: B

26. AR: 6,400, OC: 75, CC: 1.50, EOQ will be.
A. 8,200 units
B. 850 units
C. 800 units
D. 9,600
ANSWER: C

27. AR: 6,400, EOQ: 800, No. of Orders in a year.

A. 8
B. 5,600
C. 80
D. 7,400
ANSWER: A

28. Max. Requirement: 50 units, Lead Time: 2 days, Order Level.

A. 25 units
B. 100 units
C. 48 units
D. 52 units
ANSWER: B

29. Min. Level: 200, Max. Level: 536, Average Stock Level.
A. 936 units
B. 736 units
C. 636 units
D. 368 units
ANSWER: D

30. No. of Orders needed per year: 12, AR: 7,200, EOQ.
A. 700 units
B. 600 units
C. 800 units
D. 7,212 units
ANSWER: B

31. Opening Stock: 25,000, Closing Stock: 15,000, Average Stock.

A. Rs. 20,000
B. Rs. 10,000
C. Rs. 40,000
D. Both B & C
ANSWER: A

32. Average daily Requirement: 6 units, Time to get emergency supply: 2 days, Danger Level.
A. 4 units
B. 12 units
C. 3 units
D. 8 units
ANSWER: B

33. Which of the following inventory valuation method shows LOWER profits during the period of RISING prices.
A. LIFO Method
B. Weighted Average Method
C. FIFO Method
D. Simple Average Method
ANSWER: A

34. Which of the following inventory valuation method shows HIGHER profits during the period of DECREASING
prices.
A. LIFO Method
B. Weighted Average Method
C. FIFO Method
D. Simple Average Method
ANSWER: A

35. Which of the following inventory valuation method shows LOWER profits during the period of DECREASING
prices.
A. LIFO Method
B. Weighted Average Method
C. FIFO Method
D. Simple Average Method
ANSWER: C

36. The inventory method where the cost per unit is Re-Computed after every change in the inventory is known as.
A. FIFO Method
B. Most Recent Purchase Price
C. LIFO Method
D. None of the Above
ANSWER: D

37. The inventory method where the cost per unit is Re-Computed after every addition in the inventory is known as.
A. Specific Identification Method.
B. Moving Average Method.
C. LIFO Method
D. FIFO Method
ANSWER: B

38. Material sent to scrap would be treated same as treated when material issued to manufacturing unit by using.
A. LIFO Method
B. FIFO Method
C. Weighted Average Cost Method
D. All of Above
ANSWER: D

39. If there is an INCREASING trend in material price, the value of closing stock will be HIGHER if applying.
A. LIFO Method
B. FIFO Method
C. Weighted Average Cost Method
D. Both A & C
ANSWER: B

40. If there is a DECREASING trend in material price, the value of closing stock will be HIGHER if applying.
A. LIFO Method
B. FIFO Method
C. Weighted Average Cost Method
D. Both B & C
ANSWER: A

41. If there is an INCREASING trend in material price, the value of closing stock will be LOWER if applying.
A. LIFO Method
B. FIFO Method
C. Weighted Average Cost Method
D. Both B & C
ANSWER: A
42. If there is a DECREASING trend in material prices, the value of closing stock will be LOWER if applying.
A. LIFO Method
B. FIFO Method
C. Weighted Average Cost Method
D. Both A & C
ANSWER: B

43. While passing the entries, ABNORMAL loss of spoiled goods is charged to.
A. Overall production
B. FOH
C. Job
D. Both A & B
ANSWER: C

44. While passing the entries, additional cost of defective goods at NORMAL is charged to.
A. Overall production
B. WIP
C. Job
D. Both B & C
ANSWER: A

45. While passing the entries, additional cost of defective goods at ABNORMAL is charged to.
A. Overall production
B. FOH
C. Job
D. Both A & B
ANSWER: C

46. Entry for Sale of Goods.

Cash/Accounts Receivable Dr.
_____________________ Cr.
A. Sales
B. Finished Goods
C. Cost of Goods Sold
D. Both B & C
ANSWER: A

47. Entry to record the cost of Spoilage is.

_____________________ Dr.
Work in Process Cr.
A. Sales
B. Finished Goods
C. Cost of Goods Sold
D. Spoiled Goods
ANSWER: D

48. Entry for Sale of Spoiled Goods.

Cash/Accounts Receivable Dr.
_____________________ Cr.
A. Sales
B. Finished Goods
C. Cost of Goods Sold
D. Spoiled Goods
ANSWER: D

49. Entry to record the Cost of Finished Goods is.

_____________________ Dr.
Work in Process Cr.
A. Sales
B. Finished Goods
C. Cost of Goods Sold
D. Spoiled Goods
ANSWER: B

50. Entry to record the Cost of Goods Sold is.

_____________________ Dr.
Finished Goods Cr.
A. Sales
B. Work in Process
C. Cost of Goods Sold
D. Spoiled Goods
ANSWER: C
51. Cost Accounting is responsible for:
F. Costs of Products
G. Manufacturing Processes
H. Internal Planning
I. All of above
ANSWER: D
52. Cost Accounting deals with.
A. Manufacturing
B. Sales Operations
C. Marketing
D. Both A & B
ANSWER: A
53. Factory Overheads can also be expressed as:
A. Overheads
B. Manufacturing Overheads
C. Manufacturing Expenses
D. All of the above
ANSWER: D
54. The cost of material that is not completely processed is called:
A. Direct material inventory
B. Supplies inventory
C. Finished Goods inventory
D. Work in process inventory
ANSWER: D
55. The cost of goods that is completely processed is called:
A. Direct material inventory
B. Supplies inventory
C. Finished Goods inventory
D. Work in process inventory
ANSWER: C
56. Maximum Consumption X Time Required for Receipt of Material gives:
A. Order Level
B. Maximum Level
C. Minimum Level
D. Danger Level
ANSWER: A
57. A Stock Allowance to cover errors in forecasting the Lead Time is called.
A. Minimum Stok
B. Safety Stock
C. Buffer Stock
D. Both B & C
ANSWER: D
58. LIFO stands for.
A. Last In First Out
B. Lower Inventory First Out
C. Listed Inventory First Out
D. Both B & C
ANSWER: A
 59. Materials are issued in the order of their purchase in.
A. LIFO Method
B. FIFO Method
C. Weighted Average Cost Method
D. Most Recent Purchase Price
ANSWER: B
60. Materials are issued in the latest price paid in.
A. Weighted Average Cost Method
B. Most Recent Purchase Price
C. LIFO Method
D. FIFO Method
ANSWER: C
61. When Material is returned to STORE, there will be___________ in inventory balance.
A. Decrease
B. Increase
C. No change
D. None of Above
ANSWER: B
62. When Material is sent to SCRAP, there will be___________ in inventory balance.
A. Decrease
B. Increase
C. No change
D. None of Above
ANSWER: A
63. Re-order Level can also be called.
A. Ordering Level
B. Ordering Point
C. Danger Level
D. Both A & B
ANSWER: D
64. EOQ stands for.
A. Equal Ordering Quantity
B. Economic Order Quantity
C. Economic Output Quantity
D. Both A & B
ANSWER: B
65. AR: 6,400, OC: 75, CC: 1.50, EOQ will be.
A. 8,200 units
B. 850 units
C. 800 units
D. 9,600
ANSWER: C
66. AR: 6,400, EOQ: 800, No. of Orders in a year.
A. 8
B. 5,600
C. 80
D. 7,400
ANSWER: A
67. Quantity Schedule is a part of:
A. Store Ledger Cards
B. Cost of Production Report
C. Profit & Loss Account
D. None of the above
ANSWER: B
68. In process costing, CPR stands for:
A. Cost of Production Review
B. Cost and Production Research
C. Cost of Production Report
D. None of the above
ANSWER: C
69. While calculating the product cost, addition of units will:
A. Reduce per unit cost
B. Increase per unit cost
C. Have no effect
D. None of the above
ANSWER: A
70. A separate Head office maintains:
A. General Ledger
B. Factory Ledger
C. Both A & B
D. None of the above
ANSWER: A