MCQ

CMA INTER
GROUP-1
COST ACCOUNTING

CA SATISH JALAN
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 Cost Accounting
MCQ

For CMA - Inter

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 Our Aim
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Contents

Sl.
Module Name Page No. Weight
No.

1. ICMAI Study Material Objectives 1

a. Introduction to Cost Accounting 1

b. Cost Ascertainment - Elements of Cost 6

c. Cost Accounting Standards [CAS 1 to 24] 17

d. Cost Book Keeping 22

e. Methods of Costing 31

f. Cost Accounting Techniques 42

2. BIT Questions 53

3. MCQ Bank 111

4. MQP Objectives 175

5. Termwise Objectives 197

6. Postal Test Papers Objectives 211

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ICMAI Study
Material
Objectives

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 Introduction to Cost Accounting


Chapter 1
Introduction to Cost Accounting

1. Multiple Choice Questions:

(1) Prime cost is _____

(a) all costs incurred in manufacturing a product
(b) the total of direct costs
(c) the material cost of a product
(d) the cost of operating a department
(2) A company employs three drivers to deliver goods to its customers. The salaries paid to
these drivers are:
(a) a part of prime cost
(b) a direct production expense
(c) a production overhead
(d) a selling and distribution overhead
(3) A company has to pay a ₹ 1 per unit royalty to the designer of a product which it manufac-
tures and The royalty charge would be classified in the company’s accounts as a _____
(a) Direct expense
(b) Production overhead
(c) Administrative overhead
(d) Selling overhead
(4) _____ is a method of dealing with overheads which involves spreading common costs
over cost centers on the basis of benefit received.
(a) overhead absorption
(b) overhead apportionment
(c) overhead allocation
(d) overhead analysis

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 Introduction to Cost Accounting


(5) Which of the following classification is meant for distinction between direct cost and
indirect cost?
(a) Function
(b) Element
(c) Variability
(d) Controllability
(6) Which of the following is applicable for Cost Control?
(a) It is related with the future
(b) It is a corrective function
(c) It ends when the targets are achieved
(d) It challenges the standards set
(7) _____ is anything for which a separate measurement of cost is required.
(a) Cost driver
(b) Cost centre
(c) Cost unit
(d) Cost object
(8) Ticket counter in a Metro Station is an example of
(a) Profit centre
(b) Investment centre
(c) Cost centre
(d) Revenue centre
(9) Which of the following is an example of functional classification of cost?
(a) Direct labour cost
(b) Direct material cost
(c) Factory overhead
(d) Indirect material cost
(10) Absorption costing is also referred as _____
(a) Historical costing
(b) Traditional costing
(c) Full costing
(d) All of the above terms
(11) What is the primary objective of cost accounting?
(a) Maximize profits

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 Introduction to Cost Accounting


(b) Record financial transactions

(c) Provide financial statements
(d) Facilitate cost control and decision-making
(12) What does the term “opportunity cost” refer to in cost accounting?
(a) Actual monetary expenditure
(b) Cost of the next best alternative foregone
(c) Fixed manufacturing costs
(d) Variable selling expenses
(13) In the context of cost elements, which category includes the cost of raw materials, direct
labour, and direct expenses?
(a) Prime Cost
(b) Conversion Cost
(c) Overhead Cost
(d) Indirect Cost
(14) What type of cost is incurred to support multiple cost objects but cannot be directly
traced to any specific one?
(a) Direct Cost
(b) Indirect Cost
(c) Variable Cost
(d) Fixed Cost
(15) What is the formula for calculating the cost of production in a manufacturing entity?
(a) Total Cost - Opening Stock
(b) Opening Stock + Purchases - Closing Stock
(c) Direct Materials + Direct Labour + Factory Overhead
(d) Selling Price - Gross Profit
(16) Which of the following is deducted from the total cost to calculate the net profit?
(a) Selling Expenses
(b) Opening Stock
(c) Direct Materials
(d) Indirect Labour
(17) If a business has an opportunity cost of ₹10,000 for choosing one project over another,
what is the economic cost?
(a) ₹ 10,000

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 Introduction to Cost Accounting


(b) ₹ 0
(c) The same as opportunity cost
(d) Cannot be determined
(18) If direct materials cost ₹ 20,000, direct labour is ₹ 15,000, and direct expenses are ₹ 5,000,
what is the prime cost?
(a) ₹ 40,000
(b) ₹ 35,000
(c) ₹ 20,000
(d) ₹ 15,000
(19) If fixed manufacturing costs are ₹ 50,000 and the number of units produced is 5,000, what
is the fixed cost per unit?
(a) ₹10
(b) ₹ 5
(c) ₹ 50
(d) ₹ 0.1
(20) If the direct materials consumed are ₹ 30,000, direct labour is ₹ 20,000, and factory
overhead is ₹15,000, what is the total manufacturing cost?
(a) ₹ 50,000
(b) ₹ 65,000
(c) ₹ 30,000
(d) ₹ 20,000
(21) If the gross profit is ₹ 40,000, selling expenses are ₹ 10,000, and administrative expenses
are ₹ 5,000, what is the net profit?
(a) ₹ 40,000
(b) ₹ 35,000
(c) ₹ 25,000
(d) ₹ 15,000
Answer:

1 2 3 4 5 6 7 8 9 10
b d a b b c d d c d
11 12 13 14 15 16 17 18 19 20
d b a b c a a a a b
21
c

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 Introduction to Cost Accounting


2. Fill in the blanks

(1) Historical costs that cannot be recovered by any decision made now or in the future are
called _____
(2) Factory overhead costs are all manufacturing costs incurred in the factory except for
_____ and _____ and _____
(3) The sum of direct labour and factory overhead is termed _____
(4) Product costs are _____ costs, that is, they are until they are sold; whereas period costs are
matched immediately against the _____ in the period in which it is earned.
(5) Variable costs change _____ in direct proportion to changes in output.
(6) The net revenue forgone as a result of the rejection of an alternative is called an _____
(7) Three inventory accounts are commonly used in manufacturing firms. They are raw
materials, _____ , and finished goods.
(8) The beginning finished goods inventory plus the _____ , minus the ending finished goods
inventory equals the cost of goods sold for a manufacturer.
(9) The cost of direct materials used is the _____ plus _____ minus the ending inventory of
direct materials.
(10) A variable cost is _____ per unit
Answer:
(1) sunk costs
(2) direct materials, direct labour, direct expenses
(3) conversion cost
(4) inventoriable, assets, revenue
(5) in total
(6) opportunity cost
(7) work-in-process
(8) cost of goods manufactured
(9) beginning inventory of direct materials, purchases
(10) constant

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 Cost Ascertainment - Elements of Cost


Chapter 2
Cost Ascertainment - Elements of Cost

1. Multiple Choice Questions

(1) Which of the following is considered as normal loss of material?

(a) Pilferage
(b) Loss due to accident
(c) Loss due to careless handling of material
(d) None of these
(2) The most important element of cost is
(a) Material
(b) Labour
(c) Overheads
(d) All of these
(3) Direct Material is a
(a) Administration Cost
(b) Selling and Distribution Cost
(c) All of these
(d) None of these
(4) Which of the following is considered as accounting record?
(a) Bind Card
(b) Bill of Material
(c) Store Ledger
(d) None of these
(5) Direct Material can be classified as
(a) Fixed Cost
(b) Semi-Variable Cost
(c) Variable Cost
(d) Prime Cost

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 Cost Ascertainment - Elements of Cost


(6) In which of the following methods of pricing, costs lag behind the current economic
values?
(a) Replacement price method
(b) Last in first out price method
(c) First in first out price method
(d) Weighted average price method
(7) In which of the following methods, issues of materials are priced at pre-determined rate?
(a) Replacement price method
(b) Inflated price method
(c) Specific price method
(d) Standard price method
(8) Which of the following methods smoothes out the effect of fluctuations when material
prices fluctuate widely?
(a) FIFO
(b) Simple Average
(c) LIFO
(d) Weighted average
(9) In which of the following incentive plan of payment, wages on time basis are not
Guaranteed?
(a) Halsey Plan
(b) Rowan Plan
(c) Taylor’s differential piece rate system
(d) Gantt’s task and bonus system
(10) Cost of idle time arising due to non availability of raw material is
(a) Charged to costing profit and loss account
(b) Charged to factory overheads
(c) Recovered by inflating the wage rate
(d) Ignored
(11) When overtime is required for meeting urgent order, overtime premium should be
(a) Charged to costing profit and loss account
(b) Charged to overhead costs
(c) Charged to respective jobs
(d) Ignored

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 Cost Ascertainment - Elements of Cost


(12) Labour turnover is measured by

(a) Number of workers replaced / average number of workers
(b) Number of workers left / number in the beginning plus number at the end
(c) Number of workers joining / number in the beginning of the period
(d) All of these
(13) Idle time is
(a) Time spent by workers in factory
(b) Time spent by workers in office
(c) Time spent by workers off their work
(d) Time spent by workers on their job
(14) Overtime is
(a) Actual hours being more than normal time
(b) Actual hours being more than standard time
(c) Standard hours being more than actual hours
(d) Actual hours being less than standard time
(15) Labour productivity is measured by comparing
(a) Total output with total man-hours
(b) Added value for the product with total wage cost
(c) Actual time and standard time
(d) All of the above
(16) If the time saved is less than 50% of the standard time, then the wages under Rowan and
Halsey premium plan on comparison gives:
(a) Equal wages under two plans
(b) More wages to workers under Halsey Plan than Rowan Plan
(c) More wages to workers under Rowan Plan than Halsey Plan
(d) None of the above
(17) Under Taylor’s differential piece rate scheme, if a worker fails to complete the task within
the standard time, then he is paid
(a) 83% of the piece work rate
(b) 175% of the piece work rate
(c) 67% of the piece work rate
(d) 125% of the piece work rate

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 Cost Ascertainment - Elements of Cost


(18) Direct Expenses _____ includes imputed cost.

(a) Shall
(b) Shall not
(c) Shall be
(d) None of these
(19) Direct expenses do not meet the test of materiality can be _____ part of overhead.
(a) Treated
(b) Not treated
(c) All of these
(d) None of these
(20) Example of Direct Expenses.
(a) Rent
(b) Royalty charged on production
(c) Bonus to employee
(d) None of these
(21) The allotment of whole items of cost of centres or cost unit is called
(a) Cost Allocation
(b) Cost Apportionment
(c) Overhead Absorption
(d) None of the above
(22) Directors’ remuneration and expenses form a part of
(a) Production Overhead
(b) Administration Overhead
(c) Selling Overhead
(d) Distribution Overhead
(23) Charging to a cost centre those overheads that result solely for the existence of that cost
centre is known as
(a) Allocation
(b) Apportionment
(c) Absorption
(d) Allotment
(24) Absorption means
(a) Charging of overheads to cost centres

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 Cost Ascertainment - Elements of Cost


(b) Charging of overhead to cost units

(c) Charging of overheads to cost centres or cost units
(d) None of the above
(25) When the amount of under or over absorption is significant, it should be disposed of by
(a) Transferring to costing profit and loss account
(b) The use of supplementary rates
(c) Carrying over as a deferred charge to the next accounting year
(d) None of the above
(26) When the amount of overhead absorbed is less than the amount of overhead incurred, it
is called
(a) Under absorption of overhead
(b) Over absorption of overhead
(c) Proper absorption of overhead
(d) None of the above
(27) Selling and Distribution overhead are absorbed on the basis of
(a) Rate per unit
(b) Percentage on works cost
(c) Percentage on selling price of each unit
(d) Any of these
(28) Primary packing cost is a part of
(a) Direct material cost
(b) Distribution overhead
(c) Selling overhead
(d) Production cost
(29) Normal capacity of a plant refers to the difference between:
(a) Maximum capacity and practical capacity
(b) Maximum capacity and actual capacity
(c) Practical capacity and estimated idle capacity as revealed by long term sales trend
(d) Practical capacity and normal capacity
(30) Find out from the following scientific and accurate method of factory overhead absorption:
(a) Percentage of prime cost method
(b) Machine hour rate method
(c) Percentage of direct material cost method

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 Cost Ascertainment - Elements of Cost


(d) Percentage of direct labour cost method

(31) The allotment of whole items of cost of centres or cost unit is called
(a) Cost Allocation
(b) Cost Apportionment
(c) Overhead Absorption
(d) None of the above
(32) Packing cost is a
(a) Production Cost
(b) Selling Cost
(c) Distribution Cost
(d) It may be any of the above
(33) Directors’ remuneration and expenses form a part of
(a) Production Overhead
(b) Administration Overhead
(c) Selling Overhead
(d) Distribution Overhead
(34) Charging to a cost centre those overheads that result solely for the existence of that cost
centre is known as
(a) Allocation
(b) Apportionment
(c) Absorption
(d) Allotment
(35) Absorption means
(a) Charging of overheads to cost centres
(b) Charging of overhead to cost units
(c) Charging of overheads to cost centres or cost units
(d) None of the above
(36) Which method of absorption of factory overheads do you suggest in a concern which
produces only one uniform type of product?
(a) Percentage of direct wages basis
(b) Direct labour rate
(c) Machine hour rate
(d) A rate per units of output

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 Cost Ascertainment - Elements of Cost


(37) When the amount of under or over absorption is significant, it should be disposed of by
(a) Transferring to costing profit and loss account
(b) The use of supplementary rates
(c) Carrying over as a deferred charge to the next accounting year
(d) None of the above
(38) When the amount of overhead absorbed is less than the amount of overhead incurred, it
is called
(a) Under absorption of overhead
(b) Over absorption of overhead
(c) Proper absorption of overhead
(d) None of the above
(39) Warehouse expense is an example of
(a) Production overhead
(b) Selling overhead
(c) Distribution overhead
(d) None of the above
(40) Selling and Distribution overhead are absorbed on the basis of
(a) Rate per unit
(b) Percentage on works cost
(c) Percentage on selling price of each unit
(d) Any of these
(41) Primary packing cost is a part of
(a) Direct material cost
(b) Distribution overhead
(c) Selling overhead
(d) Production cost
(42) Chairman’s remuneration and expenses form part of
(a) Administration overhead
(b) Production overhead
(c) Distribution overhead
(d) Selling overhead
(43) Normal capacity of a plant refers to the difference between:
(a) Maximum capacity and practical capacity

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 Cost Ascertainment - Elements of Cost


(b) Maximum capacity and actual capacity

(c) Practical capacity and estimated idle capacity as revealed by long term sales trend
(d) Practical capacity and normal capacity
(44) Find out from the following scientific and accurate method of factory overhead absorption:
(a) Percentage of prime cost method
(b) Machine hour rate method
(c) Percentage of direct material cost method
(d) Percentage of direct labour cost method
Answer:

1 C 2 A 3 D 4 C 5 C 6 C 7 D 8 D
9 C 10 A 11 B 12 A 13 C 14 A 15 D 16 C
17 A 18 B 19 A 20 B 21 A 22 B 23 A 24 B
25 B 26 A 27 D 28 D 29 C 30 B 31 A 32 D
33 B 34 A 35 B 36 D 37 B 38 A 39 C 40 D
41 D 42 A 43 C 44 B

2. State True or False:

(1) Perpetual inventory system enables management to ascertain stock at any time without
physical inventory being taken.
(2) Continuous stock taking is not an essential feature to the perpetual inventory system.
(3) Stores ledger is maintained in the stores department.
(4) Purchase requisition is usually prepared by the storekeeper.
(5) In centralized purchasing all purchases are made by the purchasing department.
(6) Weighted average method of pricing issue of materials involves adding all the different
prices and dividing by the number of such prices.
(7) Material returned note is prepared to keep a record of return of surplus materials to stores.
(8) Waste and Scrap of material have small realization value.
(9) Bin card are not the part of accounting records.
(10) Store Ledger is maintained inside the stores of store keeper.
(11) Direct employee cost shall be presented as a separate cost head in the financial statement.
(12) As per the Payment of Bonus Act, 1965 the maximum limit of bonus is 20% of gross
earning.
(13) Flux method means for measurement of labour turnover
(14) Is overtime premium is directly assigned to cost object?

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 Cost Ascertainment - Elements of Cost


(15) Time recording clocks can be successfully used for recording time of workers in large
undertakings.
(16) Idle time arises only when workers are paid on time basis.
(17) Personnel department is concerned with proper recruitment, placement and training of
workers.
(18) Wages paid for abnormal idle time are added to wages for calculating prime cost.
(19) The two principal systems of wage payment are payment on the basis of time and
payment on the basis of work done.
(20) The piece rate system of wage payment cannot be successfully applied where quantity of
output can be measured.
(21) If an expense can be identified with a specific cost unit, it is treated as direct expense.
(22) Travelling expenses to site is a direct expense.
(23) Identification of direct expenses shall be based on traceability in an economically feasible
manner.
(24) CAS – 9 is for Direct Expenses as issued by the cost accounting standard board (CASB) of
the Institute of Cost Accountants of India
(25) Finance cost shall form part of direct expenses.
(26) Departments that assist producing department indirectly are called service departments.
(27) Factory overhead cost applied to a job is usually based on a predetermined rate.
(28) When actual overheads are more than absorbed overheads, it is known as over absorption.
(29) A blanket overhead rate is a single overhead rate computed for the entire factory.
(30) Under absorption of overheads means that actual overheads are more than absorbed
overhead
(31) Departments that assist producing department indirectly are called service departments.
(32) Factory overhead cost applied to a job is usually based on a predetermined rate.
(33) Variable overhead varies with time.
(34) When actual overheads are more than absorbed overheads, it is known as over absorption.
(35) Cash discounts are generally excluded completely from the costs.
(36) Cost of indirect materials is apportioned to various departments.
(37) A blanket overhead rate is a single overhead rate computed for the entire factory.
(38) Under absorption of overheads means that actual overheads are more than absorbed
overhead
(39) The principal base used for applying factory overhead are: units of production, material
cost, direct wages, direct labour hours and machine hours.

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 Cost Ascertainment - Elements of Cost


(40) Allocation for overheads implies the identification of overhead cost centres to which they
relate.
Answer:

1 T 2 F 3 F 4 T 5 T 6 F 7 T 8 F
9 T 10 F 11 F 12 T 13 T 14 T 15 T 16 T
17 T 18 T 19 T 20 F 21 T 22 T 23 T 24 F
25 F 26 T 27 T 28 F 29 F 30 T 31 T 32 T
33 F 34 F 35 T 36 F 37 F 38 T 39 F 40 T

3. Fill in the Blanks:

(1) In _____ systems, two piece rates are set for each job.
(2) In Halsey plan, a worker gets bonus equal to _____ of the time saved.
(3) Under Gantt Task and Bonus Plan, no bonus is payable to a worker, if his efficiency is less
than _____ .
(4) Cost of normal idle time is charged to _____ .
(5) Idle time arises only when workers are paid on _____ basis.
(6) Direct Expenses relating to _____ or _____ .
(7) Penalties / damages paid to statutory authorities _____ be form part of direct expenses.
(8) A direct expense related to a _____ form part of Prime Cost.
(9) Direct expenses incurred for bought out resources shall be determined at _____ .
(10) Direct expenses incurred lump – sum shall be _____ .
(11) Example of after sales service are _____ and _____ .
(12) The difference between actual and absorbed factory overhead is called _____ .
(13) The difference between practical capacity and the capacity based on sales expectancy is
known as _____ .
(14) Under or over absorption of overheads arises only when overheads are absorbed by
_____ .
(15) In Absorption Costing _____ cost is added to inventory.
(16) Overheads are an aggregate of _____ and _____ and _____ .
(17) Example of after sales service are _____ and _____ .
(18) Administration overheads are usually absorbed as a percentage of _____ .
(19) The difference between actual and absorbed factory overhead is called _____ .
(20) The term used for charging of overheads to cost units is known as _____ .

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 Cost Ascertainment - Elements of Cost


(21) The _____ rate is computed by dividing the overheads by the aggregate of the productive
hours of direct workers.
(22) Overhead incurred ₹ 16,000 and overhead absorbed ₹ 15,300. There is under absorption
of ₹ _____ .
Answer:
(1) Taylor’s differential piece rate
(2) 50%
(3) 100%
(4) factory overhead
(5) time
(6) Manufacture of a product or rendering of service
(7) Shall not
(8) Product
(9) Invoice Price
(10) Amortized
(11) Repair and Maintenance, Replacement of Components.
(12) Under or over absorbed overheads.
(13) Idle Capacity
(14) Predetermined overheads rates
(15) Fixed
(16) Indirect Material, Indirect Labour, Indirect Expense
(17) Repair and Maintenance, Replacement of Components
(18) Works Cost
(19) Under or over absorbed overheads
(20) Absorptions
(21) Direct Labour Hour
(22) 700

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 Cost Accounting Standards [CAS 1 to 24]


Chapter 3
Cost Accounting Standards
[CAS 1 to 24]

1. Multiple Choice Questions

(1) What is the primary objective of Cost Accounting Standards (CAS)?

(a) Ensure profitability
(b) Ensure consistency and standardization in cost accounting practices
(c) Minimize costs
(d) Maximize revenue
(2) Who formulates Cost Accounting Standards in India?
(a) Ministry of Corporate Affairs
(b) Institute of Chartered Accountants of India (ICAI)
(c) Institute of Cost Accountants of India (ICAI)
(d) Securities and Exchange Board of India (SEBI)
(3) In which section of the Companies Act, 2013, is the provision related to the maintenance
of cost records and cost audit found?
(a) Section 142
(b) Section 148
(c) Section 164
(d) Section 176
(4) What is the primary focus of CAS-11?
(a) Determining principles for sales and distribution overheads
(b) Outlining principles for administrative overheads
(c) Establishing guidelines for financial reporting
(d) Addressing manufacturing costs
(5) CAS 6 focuses on
(a) Material Cost
(b) Employee Cost

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 Cost Accounting Standards [CAS 1 to 24]


(c) Activity-Based Costing

(d) Repairs and Maintenance Cost
(6) Which CAS deals with the classification, measurement, and assignment of administrative
overheads?
(a) CAS 3
(b) CAS 8
(c) CAS 11
(d) CAS 15
(7) What does CAS 16 cover?
(a) Borrowing Costs
(b) Selling and Distribution Overheads
(c) Cost of Transportation
(d) Standard Costing
(8) Which CAS deals with the classification, measurement, and assignment of selling and
distribution over- heads?
(a) CAS 3
(b) CAS 8
(c) CAS 11
(d) CAS 15
(9) Which term is defined by CAS-15: Definitions as the cost incurred due to unforeseen
circumstances and not part of normal business operations?
(a) Absorption of Overheads
(b) Abnormal Cost
(c) Imputed Costs
(d) Selling Overheads
(10) Which section of the Companies Act, 2013, deals with the adoption and adherence to
Cost Accounting Standards (CAS)?
(a) Section 135
(b) Section 148
(c) Section 170
(d) Section 184
(11) CAS 9 specifically deals with:
(a) Employee Cost
(b) Packing Material Cost

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 Cost Accounting Standards [CAS 1 to 24]


(c) Direct Expenses

(d) Repairs and Maintenance Cost
(12) What principle is encouraged by CAS-15 for transparency in the disclosure of changes in
cost account- ing principles?
(a) Confidentiality
(b) Consistency
(c) Transparency
(d) Secrecy
(13) CAS 17: Cost of Transportation primarily focuses on:
(a) Classification of transportation costs
(b) Measurement of transportation costs
(c) Assignment of transportation costs
(d) Determination of total transportation costs
(14) What does CAS 22: Intangible Assets primarily cover?
(a) Classification of intangible assets
(b) Measurement of intangible assets
(c) Assignment of intangible assets costs
(d) Determination of total intangible assets
(15) CAS 23: Overheads for Intermediary Services deals with:
(a) Classification of intermediary service costs
(b) Measurement of intermediary service costs
(c) Assignment of intermediary service costs
(d) Determination of total intermediary service costs
(16) What does CAS-11 emphasize regarding the treatment of abnormal administrative costs?
(a) Inclusion in cost calculations
(b) Exclusion from cost calculations
(c) Separate disclosure in footnotes
(d) Attestation by external auditors
(17) Which of the following is a key significance of CAS in cost accounting practices?
(a) Increasing the subjectivity of cost information
(b) Reducing transparency in financial reporting
(c) Enhancing the reliability, comparability, and relevance of cost information
(d) Limiting the scope of cost management

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 Cost Accounting Standards [CAS 1 to 24]


(18) What does CAS contribute to in terms of transparency?

(a) Complexity in cost structures
(b) Ambiguity in cost reporting
(c) Clear and understandable disclosure of relevant cost information
(d) Hiding cost details from stakeholders
(19) How does CAS promote improved decision-making within organizations?
(a) By introducing ambiguity in cost information
(b) By providing inaccurate cost data
(c) By ensuring accurate and reliable cost information
(d) By limiting the availability of cost data
(20) Which of the following classifies cost as direct and indirect cost as per CAS 1
(a) By nature of expenses.
(b) By nature of traceability.
(c) By function.
(d) By nature of behavior.
Answer:

1 B 2 C 3 B 4 B 5 A 6 C 7 A 8 D
9 B 10 B 11 B 12 C 13 C 14 C 15 C 16 B
17 C 18 C 19 C 20 B

2. State True or False

(1) CAS 19 stands for Joint Cost.

(2) Cost Accounting Standard Board should have minimum three eminant practicing
members of the Insititute of Cost Accounts of India.
(3) The function of CASB is to issue the framework for the Cost Accounting Standard.
(4) CAS 2 stands for classification of cost.
(5) The objective of CAS 10 is to bring uniformity and consistency in the period and methods
of determining the direct expenses with reasonable accuracy.
Answer

1 True 2 False 3 True 4 False 5 True

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 Cost Accounting Standards [CAS 1 to 24]


3. Fill in the Blanks

(1) CAS 9 stands for _____ .

(2) The _____ of the CASB will be nominated by the council of The Institute of Cost Account-
ants of India.
(3) _____ nominee from the regulate like CAG, RBI to the CASB Board.
(4) CAS _____ stands for cost of service cost centre.
(5) The function of CASB is to assists the members in preparations of uniform _____ under
various statue.
Answer
(1) Predetermined
(2) chairman
(3) four
(4) 13
(5) cost statement

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 Cost Book Keeping


Chapter 4
Cost Book Keeping

1. Multiple Choice Questions

(1) Which of the following items is not included in preparation of cost sheet?
(a) Carriage inward
(b) Purchase returns
(c) Sales commission
(d) Interest paid
(2) Which of the following items is not excluded while preparing a cost sheet?
(a) Goodwill written off
(b) Provision for taxation
(c) Property tax on factory building
(d) Transfer to reserves
(3) Which of the following are direct expenses?
(a) The cost of special designs, drawings or layouts
(b) The hire of tools or equipment for a particular job
(c) Salesman’s wages
(d) Rent, rates and insurance of a factory
(e) (i) and (ii)
(f ) (i) and (iii)
(g) (i) and (iv)
(h) (iii) and (iv)
(4) What is prime cost?
(a) Total direct cost only
(b) Total indirect costs only
(c) Total non-production csots
(d) Total production costs

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 Cost Book Keeping


(5) Which of the following is not an element of works overhead?

(a) Sales manager’s salary
(b) Plant manager’s salary
(c) Factory repairman’s wages
(d) Product inspector’s salary
(6) For the purpose of Cost Sheet preparation, costs are classified based on:
(a) Functions
(b) Relevance
(c) Variability
(d) Nature
(7) Salary paid to an office supervisor is a part of:
(a) Direct expenses
(b) Administration cost
(c) Quality control cost
(d) Factory overheads
(8) Audit fees paid to cost auditors is part of:
(a) Selling and distribution cost
(b) Production cost
(c) Administration cost
(d) Not recorded in the cost sheet
(9) A company has set up a laboratory for testing of products for compliance with standards.
Salary of this laboratory stuffs are part of:
(a) Direct expenses
(b) Quality control cost
(c) Works overheads
(d) Research and development cost
(10) Canteen expenses for factory workers are part of:
(a) Administration cost
(b) Factory overhead
(c) Marketing cost
(d) None of the above
(11) Which of the following does not form part of prime cost?
(a) GST paid on raw materials (input credit can be claimed)

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 Cost Book Keeping


(b) Cost of transportation paid to bring materials to factory

(c) Cost of packing
(d) Overtime premium paid to workers
(12) A company pays royalty to State Government on the basis of production, it is treated as:
(a) Direct expenses
(b) Factory overheads
(c) Direct Material Cost
(d) Administration Cost
(13) In Reconciliation Statements, expenses shown only in financial accounts are:
(a) Added to financial profit
(b) Deducted from financial profit
(c) Ignored
(d) Added to costing profit
(14) In Reconciliation Statement, expenses shown only in cost accounts are:
(a) Added to financial profit
(b) Deducted from financial profit
(c) Ignored
(d) Deducted from costing profit
(15) In Reconciliation Statement, transfers to reserves are:
(a) Added to financial profit
(b) Deducted from financial profit
(c) Ignored
(d) Added to costing profit
(16) In Reconciliation Statement, incomes shown only in financial accounts are:
(a) Added to financial profit
(b) Deducted from financial profit
(c) Ignored
(d) Deducted from costing profit
(17) In Reconciliation Statement, Closing Stock undervalued in Financial Accounts is
(a) Added to financial profit
(b) Deducted from financial profit
(c) Ignored
(d) Added to costing profit

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 Cost Book Keeping


(18) Under non-integrated accounting system:

(a) Separate ledgers are maintained for cost and financial accounts
(b) Same ledger is maintained for cost and financial accounts by accountants
(c) (A) and (B) both
(d) None of the above
(19) Under non-integrated accounting system, the account made to complete double entry is:
(a) Finished goods control account
(b) Work in progress control account
(c) Stores ledger control account
(d) General ledger adjustment account
(20) Under non-integrated system of accounting, purchase of raw material is debited to
(a) Purchase account
(b) Material control account / stores ledger control account
(c) General ledger adjustment account
(d) None of the above
(21) When costing loss is ₹ 5,600, administrative overhead under-absorbed being ₹ 600, the
loss as per financial accounts should be _____ .
(a) ₹ 5,000
(b) ₹ 5,600
(c) ₹ 6,200
(d) None of the above
(22) Which of the following items should be added to costing profit to arrive at financial profit?
(a) Income tax paid
(b) Over absorption of works overhead
(c) Interest paid on debentures
(d) All of the above
(23) Integral accounts eliminate the necessity of operating _____ .
(a) Cost ledger control account
(b) Store ledger control account
(c) Overhead adjustment account
(d) None of the above
(24) What is the primary goal of introducing integrated accounting?
(a) Maintaining separate records

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 Cost Book Keeping


(b) Streamlining cost analysis

(c) Increasing clerical efforts
(d) Reconciling accounts annually
(25) Why is reconciliation important in accounting?
(a) To complicate financial reporting
(b) To identify differences in profits
(c) To avoid integration
(d) To discourage cost analysis
(26) What characterizes a non-integrated cost accounting system?
(a) Unified ledger system
(b) Separate cost and financial accounts
(c) Sole reliance on cost principles
(d) Complex reconciliation processes
(27) In a non-integrated system, what ledger is used for recording indirect costs?
(a) Cost ledger control account
(b) Overhead ledger
(c) Financial ledger
(d) General ledger
(28) Which ledger records direct costs in a non-integrated system?
(a) General ledger
(b) Cost ledger control account
(c) Prime cost ledger
(d) Financial ledger
(29) What is the primary purpose of the overhead ledger in a non-integrated system?
(a) Recording direct costs
(b) Managing general ledger entries
(c) Controlling indirect costs
(d) Maintaining financial transactions
(30) How is the purchase of raw materials typically recorded in a non-integrated system?
(a) Credit to cash account
(b) Debit to general ledger
(c) Debit to stores control account
(d) Credit to sundry creditors

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(31) What entry is made to record wages paid in a non-integrated system?

(a) Credit entry
(b) Debit entry
(c) Contra entry
(d) No entry is made
(32) What is a significant benefit of reconciling cost accounting records with financial accounts?
(a) Increased clerical efforts
(b) Improved transparency
(c) Limited financial reporting
(d) Reduced reconciliation complexity
(33) When is the reconciliation of cost accounting records and financial accounts particularly
important?
(a) Only in integrated systems
(b) During tax season
(c) At the end of the financial year
(d) In non-integrated systems
(34) What defines an integrated accounting system?
(a) Separation of cost and financial records
(b) Streamlining reconciliation
(c) Sole reliance on financial principles
(d) Consolidation of cost and financial information
(35) Why is an integrated accounting system considered cost-effective?
(a) Increased clerical workload
(b) Centralization of accounting functions
(c) Complexity of financial reporting
(d) Limited coordination between staff
(36) A firm operates an integrated cost and financial accounting system.
The accounting entries for an issue of direct materials to production would be
(a) DR work in progress control account; CR stores control account
(b) DR finished goods account; CR stores control account
(c) DR stores control account; CR work in progress control account
(d) DR cost of sales account; CR work in progress control account

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 Cost Book Keeping


(37) A firm operates an integrated cost and financial accounting system. The accounting
entries for direct wages transferred to WIP A/c would be:
(a) Debit Wages control account, Credit Work in progress account
(b) Debit Work in progress account, Credit Wages control account
(c) Debit Cost of sales account, Credit Work in progress account
(d) Debit Finished goods account, Credit Work in progress account
(38) A firm operates an integrated cost and financial accounting system. The accounting
entries for indirect wages incurred would be:
(a) Debit Wages control account Credit Overhead control account
(b) Debit Work in progress account Credit Wages control account
(c) Debit Overhead control account Credit Wages control account
(d) Debit Wages control account Credit Work in progress account
Answer:

1 D 2 C 3 A 4 A 5 A 6 A 7 B 8 C
9 B 10 B 11 D 12 A 13 A 14 B 15 A 16 B
17 A 18 A 19 D 20 B 21 C 22 B 23 A 24 B
25 B 26 B 27 A 28 C 29 C 30 C 31 B 32 B
33 C 34 D 35 B 36 A 37 B 38 C

2. State True or False:

(1) Total cost = Prime cost + All indirect costs.

(2) Closing of work in progress should be valued on the basis of prime cost.
(3) Closing stock of finished goods should be valued on the basis of cost of sales.
(4) Production cost includes only direct costs related to the production.
(5) Primary packaging cost is included in distribution cost.
(6) Notional interest on owner’s capital appears only in financial profit and loss account.
(7) Goodwill written off appears only in cost accounts.
(8) Overheads are taken on estimated basis in financial accounts.
(9) Expenses which appear only in financial accounts and not in cost accounts, are generally
notional items.
(10) Need for Reconciliation arise in case of integrated system of accounts.
(11) Cost ledger control account makes the cost ledger self-balancing.
(12) Stock ledger contains the accounts of all items of finished goods.
(13) The purpose of cost control accounts is to control the cost.

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(14) Cost control accounts are prepared on the basis of double entry system.
(15) The balancing in costing profit and loss account represents under or over absorption of
overheads.
Answer:

1 T 2 F 3 F 4 F 5 F 6 F 7 F 8 F
9 F 10 F 11 T 12 T 13 F 14 T 15 F

3. Fill in the Blanks

(1) Prime cost + Overheads = _____

(2) Total cost + Profit = _____
(3) _____ + Profit = Sales
(4) Direct Material + _____ + Direct Expenses = Prime Cost
(5) Salary paid to factory manager is an item of _____ .
(6) In Reconciliation Statements, income shown only in Financial Accounts are _____ .
(7) In Reconciliation Statements, expenses shown only in cost accounts are _____ .
(8) In Reconciliations Statements, overheads Over-Recovered in cost accounts are _____ .
(9) In Reconciliation Statements, overheads Under Recovered in cost accounts are _____ .
(10) Notional remuneration to owner is expense debited only in _____ .
(11) All the transactions relating to materials are recorded through _____ .
(12) The net balance of _____ represents net profit or net loss.
(13) WIP ledger contains the accounts of all the _____ which are under _____ .
(14) The two traditional systems of accounting for integration of cost and financial accounts
are the _____ and _____ .
(15) Under integrated accounting system, the accounting entry for payment of wages is to
debit _____ and to credit cash
Answer:
(1) Total Cost
(2) Selling price
(3) Cost of sales
(4) Direct Wages
(5) Factory Overhead
(6) Added to Costing Profit.
(7) Deducted from Financial Profit / Added to Costing Profit

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 Cost Book Keeping


(8) Deducted from financial profit / added to costing profit

(9) Added to financial profit / deducted from costing profit.
(10) Cost Accounts
(11) Stores ledger control account
(12) Costing Profit and Loss
(13) Jobs or works in process, several job accounts
(14) Double entry method, third entry method
(15) Wages Control Accounts

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 Methods of Costing


Chapter 5
Methods of Costing

1. Multiple Choice Questions

(1) Job Costing is used in:

(a) Furniture making
(b) Repair shops
(c) Printing press
(d) All of the above
(2) In a job cost system, costs are accumulated _____.
(a) On a monthly basis
(b) By specific job
(c) By department or process
(d) By kind of material used
(3) The most suitable cost system where the products differ in type of material and work
performed is _____.
(a) Operating Costing
(b) Job Costing
(c) Process Costing
(d) All of these
(4) Cost Price is not fixed in case of _____.
(a) Cost plus contracts
(b) Escalation clause
(c) De-escalation clause
(d) All of the above
(5) Most of the expenses are direct in _____.
(a) Job Costing
(b) Batch Costing
(c) Contract Costing

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 Methods of Costing


(d) None of the above

(6) Cost plus contract is usually entered into those cases where _____.
(a) Cost can be easily estimated
(b) Cost of certified and uncertified work
(c) Cost of certified work, cost of uncertified work and amount of profit transferred to
Profit and Loss Account
(d) Determination of contract cost with reasonable accuracy is not possible
(7) In order to determine cost of the products or services, different business firms follow:
(a) Different techniques of costing
(b) Uniform costing
(c) Different methods of costing
(d) None of the above
(8) In case product produced or jobs undertaken are of diverse system, the system of costing
to be used should be:
(a) Operating Costing
(b) Process Costing
(c) Job Costing
(d) None of the above
(9) Job Costing is:
(a) Suitable where similar products are produced on mass scale
(b) Methods of costing used for non-standard and non-repetitive products
(c) Technique of costing
(d) Applicable to all industries regardless of the products or services provided
(10) Batch costing is a type of:
(a) Direct Costing
(b) Process Costing
(c) Job Costing
(d) Differential Costing
(11) Batch costing is similar to that under job costing except with the difference that:
(a) Process becomes a cost unit
(b) Job becomes a cost unit
(c) Batch become the cost unit instead of a job
(d) None of the above

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(12) Economic batch quantity is that size of the batch of production where:
(a) Carrying cost is minimum
(b) Set-up cost of machine is minimum
(c) Average cost is minimum
(d) Both A. and B.
(13) Which of the following documents are used in job costing to record the issue of direct
materials to a job:
(a) Purchase order
(b) Purchase requisition
(c) Goods received note
(d) Material requisition
(14) Which of the following statements is true:
(a) Batch costing is a variant of jobs costing
(b) Job cost sheet may be used for estimating profit of jobs
(c) Job costing cannot be used in conjunction with marginal costing
(d) In cost plus contracts, the contractor runs a risk of incurring a loss
(15) Which of the following statement is true:
(a) Job costing can be suitably used for concerns producing any specific product
uniformly
(b) Job costing cannot be used in companies applying standard costing
(c) Job cost sheet may be prepared to facilitate routing and scheduling of the job
(d) Neither A. nor B. nor C.
(16) The type of process loss that should not be allowed to affect the cost of good units is
called:
(a) Standard Loss
(b) Normal Loss
(c) Abnormal Loss
(d) Seasonal Loss
(17) Spoilage that occurs under inefficient operating conditions and is generally controllable
is called _____ .
(a) Normal defectives
(b) Abnormal spoilage
(c) Normal spoilage
(d) None of the above

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 Methods of Costing


(18) In which of the following situations an abnormal gain in a process occurs:

(a) When normal loss is equal to actual loss
(b) When the actual output is greater than the planned output
(c) When actual loss is more than the expected
(d) When actual loss is less than the expected loss
(19) The value of abnormal loss is equal to:
(a) Total cost of materials
(b) Total process cost less cost of scrap
(c) Total process cost less realisable value of normal loss less value of transferred out
goods.
(d) Total process cost less realisable value of normal loss
(20) A process account is debited by abnormal gain, the value is determined as:
(a) Equal to the value of good units less closing stock
(b) Equal to the value of normal loss
(c) Cost of good units less realisable value of normal loss
(d) Cost of good unit less realisable value of actual loss
(21) In sugar manufacturing industry molasses is also produced along with sugar. Molasses
may be of small value as compared with the value of sugar and is known as:
(a) Joint product
(b) Common product
(c) By-product
(d) None of them
(22) Method of apportioning joint costs on the basis of output of each joint product at the
point of split-offs is known as:
(a) Physical unit method
(b) Sales value method
(c) Average cost method
(d) Marginal cost and contribution method
(23) The main purposes of accounting of joint products and by-products is to:
(a) Determine the replacement cost
(b) Determine the opportunity cost
(c) Determine profit or loss on each product line
(d) None of the above

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(24) Under net realisable value method of apportioning joint costs to joint products, the
selling & distribution cost is:
(a) Ignored
(b) Deducted from sales value
(c) Deducted from further processing cost
(d) Added to joint cost
(25) Which of the following is an example of by-product:
(a) Mustard seeds and mustard oil
(b) Diesel and Petrol in an oil refinery
(c) Edible oils and oil cakes
(d) Curd and butter in a diary
(26) Which of following methods can be used when the joint products are of unequal quantity
and used for captive consumption:
(a) Physical units method
(b) Net realisable value method
(c) Technical estimates, using market value of similar goods
(d) Market value at spit-off method
(27) Cost of a particular service under operating costing is ascertained by preparing:
(a) Cost sheet
(b) Process account
(c) Job cost sheet
(d) Production account
(28) Operating costing is applicable to:
(a) Hospitals
(b) Cinemas
(c) Transport undertaking
(d) All of the above
(29) Composite cost unit for a hospital is:
(a) Per day
(b) Per bed
(c) Per patient day
(d) Per patient
(30) Cost units used in power sector is called:

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(a) Number of hours

(b) Number of electric points
(c) Kilowatt-hour (KWH)
(d) Kilo meter (K.M.)
(31) Absolute Tonne-Km is an example of:
(a) Composite unit for bus operation
(b) Composite unit of transport sector
(c) Composite unit for oil and natural gas
(d) Composite unit in power sector
(32) A company does job work for customers. Job 947 has direct materials costs of ₹ 125,
direct labour costs of ₹80 and direct expenses of ₹ 25. Direct labour is paid ₹ 20 per
hour. Production overheads are charged at the rate of ₹ 35 per hour and non-production
overheads are charged as 60% of prime cost. What is the cost for Job 947?
(a) ₹ 493
(b) ₹ 508
(c) ₹ 514
(d) ₹ 592
(33) A road haulage company transports goods. It operates two trucks. During a particular
period, the two trucks travelled a total of 80,000 kilometers carrying goods. The average
load was 3 tonnes per journey. In total they made 200 journeys. Total costs were ₹ 7,20,000.
What is the average cost per tonne-kilometer transported?
(a) ₹ 3
(b) ₹ 4.50
(c) ₹ 6
(d) ₹ 12
(34) A hotel has 80 standard twin-bedded rooms. The hotel is fully-occupied for each of the
350 days in each year that it is open. The total costs of running the hotel each year are ₹
3,360,000. Calculate the cost per room/day
(a) ₹ 120
(b) ₹ 240
(c) ₹ 360
(d) None of the above
(35) A company operates a job costing system. Job number 6789 will require ₹ 345 of direct
materials and ₹ 210 of direct labour, which is paid ₹ 14 per hour. Production overheads
are absorbed at the rate of ₹ 30 per direct labour hour and non-production overheads are
absorbed at the rate of 40% of prime cost. Required What is the total expected cost of the

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job?
(a) ₹ 7,221
(b) ₹ 1,272
(c) ₹ 2,127
(d) ₹ 1,227
(36) A road building company has the following data concerning one of its contracts.
Contract price ₹11,200,000
Cost of work certified to date ₹ 3,763,200
Estimated costs to completion ₹ 2,956,800
No difficulties are foreseen on the contract.
The profit to be recognised on the contract to date is ₹ _____
(a) ₹ 25,88,000
(b) ₹ 25,80,800
(c) ₹ 20,58,800
(d) ₹ 25,08,800
(37) ASA LLP operates a job costing system. The company’s standard net profit margin is 20
per cent of sales value. The estimated costs for job B124 are as follows.
Direct materials 3 kg @ ₹ 5 per kg Direct labour 4 hours @ ₹ 9 per hour
Production overheads are budgeted to be ₹ 2,40,000 for the period, to be recovered on
the basis of a total of 30,000 labour hours.
Other overheads, related to selling, distribution and administration, are budgeted to be
₹ 1,50,000 for the period. They are to be recovered on the basis of the total budgeted
production cost of ₹ 7,50,000 for the period.
The price to be quoted for job B124 is ₹ _____
(a) ₹ 153.50
(b) ₹ 124.50
(c) ₹ 145.50
(d) ₹ 142.50
(38) A company calculates the prices of jobs by adding overheads to the prime cost and adding
30% to total costs as a profit margin. Job number Y256 was sold for ₹ 1,690 and incurred
overheads of ₹ 694. What was the prime cost of the job?
(a) ₹ 489
(b) ₹ 606
(c) ₹ 996

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(d) ₹ 1,300
(39) 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
Tonne-miles carried 375,200
Costs incurred ₹ 562,800
(a) ₹ 0.88
(b) ₹ 1.50
(c) ₹ 15.84
(d) ₹ 28,140
(40) Process B had no opening inventory. 13,500 units of raw material were transferred in at
₹ 4.50 per unit. Additional material at ₹ 1.25 per unit was added in process. Labour and
overheads were ₹ 6.25 per completed unit and ₹ 2.50 per unit incomplete.
If 11,750 completed units were transferred out, what was the closing inventory in Process
B?
(a) ₹ 6,562.50
(b) ₹ 12,250.00
(c) ₹ 14,437.50
(d) ₹ 25,375.00
(41) A company makes a product, which passes through a single process.
Details of the process for the last period are as follows.
Materials 10,000 kg at 50 paisa per kg
Labour ₹ 1,000
Production overheads 200% of labour
Normal losses are 10% of input in the process, and without further processing any losses
can be sold as scrap for 20 paisa per kg.
The output for the period was 8,400 kg from the process. There was no work in progress
at the beginning or end of the period.
The value of the abnormal loss for the period is _____
(a) ₹ 200
(b) ₹ 220

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(c) ₹ 80
(d) None of the above
Answer:

1 D 2 B 3 B 4 A 5 C 6 D 7 C 8 C 9 B
10 C 11 C 12 D 13 B 14 D 15 B 16 D 17 C 18 B
19 D 20 C 21 C 22 C 23 A 24 C 25 B 26 C 27 C
28 C 29 D 30 C 31 C 32 B 33 B 34 A 35 A 36 D
37 D 38 B 39 B 40 B 41 C 42 A
Hint
MCQ 37 - calculate percentage completion which will come as 56%.
Then,
Since the contract is 56% complete and no difficulties are foreseen, a profit can reasonably be
taken.
Profit to be taken = 56% × final contract profit = 56% × ₹ (11200,000 – 6720,000) = ₹ 25,08,800
MCQ 38 - Production overhead absorption rate = ₹ 240,000/30,000 = ₹ 8 per labour hour
Other overhead absorption rate = (₹ 150,000/₹ 750,000) × 100% = 20% of total production cost
Then,
Do per unit cost sheet.
MCQ 39 - The most appropriate cost unit is the tonne-mile. Therefore, the cost per unit =
562800/35520 = ₹1.50
MCQ 40 - Cost per unit in closing inventory = ₹ (4.50 + 1.25 + 2.50) = ₹ 8.25
Number of units in closing inventory = 13,500 – 11,750 = 1,750 units
∴ Value of closing inventory = 1,750 units × ₹ 8.25 = ₹ 14,437.50 MCQ 42
Normal loss = 10% × input = 10% × 10,000 kg = 1,000 kg
When scrap has a value, normal loss is valued at the value of the scrap i.e., 20 paisa per kg.
Normal loss = ₹ 0.20 × 1,000 kg = ₹ 200
(42) Equivalent production of 1,000 units, 60% complete in all respect, is:
(a) 1,000 units
(b) 1,600 units
(c) 600 units
(d) 1,060 units

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(1000 × 60%)
(43) In a process 8,000 units are introduced during a period. 5% of input is normal loss. Closing
work in progress 60% complete is 1,000 units. 6,600 completed units are transferred to
next process. Equivalent production for the period is:
(a) 9,000 units
(b) 7,440 units
(c) 5,400 units
(d) 7,200 units
(6,600 + 60% × 1,000)
(44) 400 units were introduced in a process in which 40 units is the normal loss. If the actual
output is 300 units, then there is:
(a) No abnormal gain
(b) Abnormal loss of 60 units
(c) No abnormal loss
(d) Abnormal gain of 60 units
{(400 – 40) – 300}
Answer

1 C 2 D 3 B

2. State True or False

(1) Operating costing is applied to ascertain the cost of products.

(2) Cost of operating the service is ascertained by preparing job account.
(3) The problem of equivalent production arises in case of operating costing.
(4) FIFO methods are followed for evaluation of equivalent production when prices are
fluctuating.
(5) Work in progress is the inherent feature of processing industries.
(6) Costs incurred prior to the split off point are known as “Joint Costs”.
(7) No distinction is made between Co products and Joint Products.
(8) Contact costing is variant of job costing.
(9) In contract costing, the unit of cost is a job.
(10) Job costing is applied only in small concerns.

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Answer:

1 F 2 F 3 F 4 F 5 T
6 T 7 F 8 F 9 F 10 F

3. Fill in the Blanks

(1) Cost of _____ loss is not borne by good units.

(2) If the actual loss in a process is less than the normal loss, the difference is known as _____.
(3) _____ Costs are incurred after split off point.
(4) The _____ product generally has a greater sale value than by product.
(5) Statement of cost per unit of equivalent production shows the per unit cost _____ .
(6) Two principal methods of evaluation of equivalent production are _____ and _____ .
(7) In hospital the cost unit is _____ .
(8) In electricity companies, the cost unit is _____ .
(9) The method of costing used in undertaking like gas companies, cinema houses, hospitals
etc is known as _____ .
(10) In motor transport costing two example of fixed cost are _____ and _____ .
Answer:
(1) Abnormal
(2) Abnormal Gain
(3) Subsequent
(4) Main
(5) Element wise,
(6) FIFO and Average Method
(7) per bed / per patient day
(8) kilowatt–hour
(9) Operating Costing
(10) Insurance abd Depreciation.

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 Cost Accounting Techniques


Chapter 6
Cost Accounting Techniques

1. Multiple Choice Questions

(1) The cost of a product under marginal costing system includes

(a) Prime cost plus variable overhead
(b) Prime cost plus fixed overhead
(c) Prime cost plus factory overhead
(d) Only prime cost
(2) The difference between absorption costing and marginal costing is in regard to the
treatment of
(a) Direct materials
(b) Fixed overhead
(c) Prime cost
(d) Variable overhead
(3) Fixed costs are treated as
(a) Overhead costs
(b) Prime costs
(c) Period costs
(d) Conversion costs
(4) When sales and production (in units) are same then profits under
(a) Marginal costing is lower than that of absorption costing
(b) Marginal costing is higher than that of absorption costing
(c) Marginal costing is equal to that of absorption costing
(d) None of the above
(5) When sales exceed production (in units) then profit under
(a) Marginal costing is higher than that of absorption costing
(b) Marginal costing is equal to that of absorption costing
(c) Marginal costing is lower than that of absorption costing

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(d) None of the above

(6) Which of the following factors responsible for change in the break-even point?
(a) Change in selling price
(b) Change in variable cost
(c) Change in fixed cost
(d) All of the above
(7) Variable cost
(a) Remains fixed in total
(b) Remains fixed per unit
(c) Varies per unit
(d) Nor increase or decrease
(8) Marginal Costing technique follows the following basic of classification
(a) Element wise
(b) Function Wise
(c) Behaviour wise
(d) Identifiability wise
(9) P/V ratio will increase if the
(a) There is a decrease in fixed cost
(b) There is an increase in fixed cost
(c) There is a decrease in selling price per unit.
(d) There is a decrease in variable cost per unit.
(10) The technique of differential cost is adopted when
(a) To ascertain P/V ratio
(b) To ascertain marginal cost
(c) To ascertain cost per unit
(d) To make choice between two or more alternative courses of action
(11) Which of the following would not be used to estimate standard direct material prices?
(a) The availability of bulk purchase discounts
(b) Purchase contracts already agreed
(c) The forecast movement of prices in the market
(d) Performance standards in operation

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(12) What is an attainable standard?

(a) A standard which includes no allowance for losses, waste and inefficiencies. It
represents the level of performance which is attainable under perfect operating
conditions
(b) A standard which includes some allowance for losses, waste and inefficiencies. It
represents the level of performance which is attainable under efficient operating
conditions
(c) A standard which is based on currently attainable operating conditions
(d) A standard which is kept unchanged, to show the trend in costs
(13) Budgets are shown in-Terms
(a) Qualitative
(b) Quantitative
(c) Materialistic
(d) both (b) and (c)
(14) Which of the following is not an element of master budget?
(a) Capital Expenditure Budget
(b) Production Schedule
(c) Operating Expenses Budget
(d) All above
(15) Which of the following is not a potential benefit of using a budget?
(a) Enhanced coordination of firm activities
(b) More motivated managers
(c) Improved inter-departmental communication
(d) More accurate external financial statements
(16) Which of the following is a long-term budget?
(a) Master Budget
(b) Flexible Budget
(c) Cash Budget
(d) Capital Budget
(17) Materials become key factor, if
(a) quota restrictions exist
(b) insufficient advertisement prevails
(c) there is low demand
(d) there is no problem with supplies of materials

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(18) The difference between fixed cost and variable cost assumes significance in the prepara-
tion of the following budget
(a) Master Budget
(b) Flexible Budget
(c) Cash Budget
(d) Capital Budget
(19) The budget that is prepared first of all is _____.
(a) Master budget
(b) Sales budget assuming that it is the key factor
(c) Cash Budget
(d) Capital expenditure budget
(20) Sales budget is a _____ .
(a) expenditure budget
(b) functional budget
(c) master budget
(d) None of these
(21) When a company wants to prepare a factory overhead budget in which the estimated
costs are directly derived from the estimates of activity levels, which of the following
budget should be prepared by the company?
(a) Flexible budget
(b) Fixed budget
(c) Master budget
(d) R & D budget
(22) Which of the following budgets facilitates classification of fixed and variable costs:
(a) Capital expenditure budget
(b) Flexible budget
(c) Cash budget
(d) Raw materials budget
(23) The entire budget organisation is controlled and headed by a senior executive known as:
(a) General Manager
(b) Accountant
(c) Budget Controller
(d) None of the above

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(24) Which of the following is generally a long term budget:

(a) Cash budget
(b) Sales budget
(c) Research and Development budget
(d) Capital expenditure budget
(25) A flexible budget requires a careful study of
(a) Fixed, semi-fixed and variable expenses
(b) Past and current expenses
(c) Overheads, selling and administrative expenses.
(d) None of these.
(26) The basic difference between a fixed budget and flexible budget is that a fixed budget
_____
(a) is concerned with a single level of activity, while flexible budget is prepared for
different levels of activity
(b) Is concerned with fixed costs, while flexible budget is concerned with variable costs.
(c) is fixed while flexible budget changes
(d) None of these.
Answer:

1 A 2 B 3 C 4 C 5 A 6 D 7 B 8 C
9 D 10 D 11 D 12 B 13 D 14 B 15 D 16 D
17 A 18 B 19 B 20 B 21 A 22 B 23 C 24 D
25 A 26 A

2. State True or False

(1) Excess of Actual cost over Standards Cost is treated as unfavourable variance.
(2) Variances are calculated for both material and labour.
(3) While fixing standards, normal losses and wastages are taken into account.
(4) Standard costing is an ideal name given to the estimate making.
(5) Pre-determined standards provide a yardstick for the measurement of efficiency.
(6) Material cost variance and labour cost variance are always equal.
(7) Fixing standards is the work of industrial engineer or the production people and not of
cost accountant.
(8) Standards costing are more profitability employed in job order industries than in process
type industries.

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(9) Budget is a means and budgetary control is the end result.

(10) To achieve the anticipated targets, Planning, Co-ordination and Control are the important
main tasks of management, achieved through budgeting and budgetary control.
(11) A key factor or principal factor does not influence the preparation of all other budgets.
(12) Budgetary control does not facilitate introduction of ‘Management by Exception’.
(13) Generally, budgets are prepared to coincide with the financial year so that comparison of
the actual performance with budgeted estimates would facilitate better interpretation
and understanding.
(14) A flexible budget is one, which changes from year to year.
(15) A flexible budget recognises the difference between fixed, semi-fixed and variable cost
and is designed to change in relation to the change in level of activity.
(16) Sales budget, normally, is the most important budget among all budgets.
(17) The principal factor is the starting point for the preparation of various budgets.
(18) A budget manual is the summary of all functional budgets.
Answer:

1 T 2 T 3 T 4 F 5 T 6 F 7 F 8 F
9 T 10 T 11 F 12 F 13 T 14 F 15 T 16 T
17 T 18 F

3. Fill in the Blanks

(1) _____ are not assigned to the product but are recognized as expenses in the period
incurred. All nonmanufacturing costs are period costs
(2) Only difference between variable costing and absorption costing is the classification of
_____
(3) Under marginal costing the difference in the magnitude of _____ does not affect the unit
cost of production.
(4) _____ compare favourably with the economist’s definition of marginal cost, viz. that
marginal cost is the amount which at any given volume of output is changed if output is
increased or decreased by one unit.
(5) Historical costing uses post period costs while standards costing uses _____ costs.
(6) Three types of standards are _____ , _____ , _____ .
(7) The _____ is usually the co-ordinator of the standards committee.
(8) Basically there are two types of standards viz; _____ and _____ .
(9) When actual cost is less than the standards cost, it is known as _____ variance.
(10) A flexible budget is geared toward _____ rather than a single level of activity.

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(11) is a system for reporting revenue and cost information to the individual responsible for
the revenue-causing and/or cost-incurring function.
(12) Budgets are useful for _____ the operating activities and _____ of a business enterprise.
(13) The _____ is the starting point in preparing the master budget (given that sales are the
principal budget factor.
(14) Responsibility Accounting is a system of accounting that recognizes various _____
throughout the organisation.
Answer:
(1) Period Cost
(2) fixed factory overhead
(3) opening stock and closing stock
(4) Differential Costs
(5) Predetermined
(6) Basic Ideal and Current
(7) Cost Accountants
(8) ideal standard attainable standard
(9) Favourable
(10) A range of activity
(11) Responsibility accounting
(12) forecasting, financial position
(13) Sales Budget
(14) responsibility centres

4. Numericals Multiple Choice Questions

(1) If sales are ₹ 90,000 and variable cost to sales is 75%, contribution is
(a) ₹ 21,500
(b) ₹ 22,500
(c) ₹ 23,500
(d) ₹ 67,500
(2) If sales are ₹ 1,50,000 and variable cost are ₹ 50,000. Compute P/V ratio.
(a) 66.66%
(b) 100%
(c) 133.33%

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(d) 65.66%
(3) Contribution is ₹ 3,00,000 and sales is ₹ 15,00,000. Compute P/V ratio.
(a) 15%
(b) 20%
(c) 22%
(d) 17.5%
(4) Variable cost to sales ratio is 40%. Compute P/V ratio.
(a) 60%
(b) 40%
(c) 100%
(d) None of the these
(5) Fixed cost is ₹ 30,000 and P/V ratio is 20%. Compute breakeven point.
(a) ₹ 1,60,000
(b) ₹ 1,50,000
(c) ₹ 1,55,000
(d) ₹ 1,45,000
(6) Standard price of material per kg ₹ 20, standards consumption per unit of production is 5
kg. Standard material cost for producing 100 units is
(a) ₹ 20,000
(b) ₹ 12,000
(c) ₹ 8,000
(d) ₹ 10,000
(7) Standard cost of material for a given quantity of output is ₹ 15,000 while the actual cost
of material used is ₹ 16,200. The material cost variance is:
(a) ₹ 1,200 (A)
(b) ₹ 16,200 (A)
(c) ₹ 15,000 (F)
(d) ₹ 31,200 (A)
(8) Standard price of material per kg is ₹ 20, standard usage per unit of production is 5 kg.
Actual usage of production 100 units is 520 kgs, all of which was purchase at the rate of ₹
22 per kg. Material usage variance is
(a) ₹ 400 (F)
(b) ₹ 400 (A)
(c) ₹ 1,040 (F)

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(d) ₹ 1,040 (A)

(9) Standard price of material per kg is ₹ 20, standard usage per unit of production is 5 kg.
Actual usage of production 100 units is 520 kgs, all of which was purchase at the rate of ₹
22 per kg. Material cost variance is
(a) ₹ 2,440 (A)
(b) ₹ 1,440 (A)
(c) ₹ 1,440 (F)
(d) ₹ 2,300 (F)
(10) Standard quantity of material for one unit of output is 10 kgs. @ ₹ 8 per kg. Actual output
during a given period is 800 units. The standards quantity of raw material
(a) 8,000 kgs
(b) 6,400 kgs
(c) 64,000 kgs
(d) None of these
(11) What is the labour rate variance if standard hours for 100 units of output are 400 @ ₹ 2 per
hour and actual hours taken are 380 @ ₹ 2.25 per hour?
(a) ₹ 120 (adverse)
(b) ₹ 100 (adverse)
(c) ₹ 95 (adverse)
(d) ₹ 25 (favourable)
(12) In a period, 11280 kilograms of material were used at a total standard cost of ₹ 46,248.
The material usage variance was ₹ 492 adverse. What was the standard allowed weight of
material for the period?
(a) 11600 kg
(b) 11160 kg
(c) 12190 kg
(d) 10590 kg
(13) The operations to produce a unit of product L require 9 active hours. Budgeted idle time
of 10% of total hours paid for is to be incorporated into the standard times for all products.
The wage rate is ₹ 4 per hour. The standard labour cost of one unit of product L is:
(a) ₹ 10.00
(b) ₹ 36.00
(c) ₹ 39.60
(d) ₹ 40.00

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Answer:

1 B 2 A 3 B 4 A 5 B 6 D 7 A 8 B
9 B 10 A 11 C 12 B 13 D

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NOTES

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BIT
Questions

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1. Choose the correct answer from the given alternatives:

(1) In process, conversion cost means

(a) Cost of direct materials, direct labour, direct expenses
(b) Direct labour, direct expenses, indirect material, indirect labour, indirect expenses
(c) Prime cost plus factory overheads
(d) All costs up to the product reaching the consumer, less direct material costs
(2) At the economic ordering quantity level, the following is true:
(a) The ordering cost is minimum
(b) The carrying cost is minimum
(c) The ordering cost is equal to the carrying cost
(d) The purchase price is minimum
(3) When a direct worker is paid on a monthly fixed salary basis, the following is true:
(a) There is no idle time lost.
(b) There is no idle time cost.
(c) Idle time cost is separated and treated as overhead.
(d) The salary is fully treated as factory overhead cost.
(4) The following is an example of direct expenses as per CAS-10:
(a) Special raw material which is a substantial part of the prime cost.
(b) Travelling expenses to site.
(c) Overtime charges paid to direct worker to complete work before time.
(d) Catalogue of prices of finished products.
(5) The following is not treated as a manufacturing overhead:
(a) Lubricants
(b) Cotton waste
(c) Apportioned administration overheads
(d) Night shift allowance paid to a factory worker due to general work pressure.
(6) When you attempt a reconciliation of profits as per Financial Accounts and Cost Accounts,
the following is done:
(a) Add the under absorption of overheads in Cost Accounts if you start from the profits
as per Financial Accounts.
(b) Add the under absorption of overheads in Cost Accounts if you start from the profits
as per Cost Accounts.

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(c) Add the over absorption of overheads in Cost Accounts if you start from the profits
as per Financial Accounts.
(d) Add the over absorption of overheads in Cost Accounts if you start from the profits
as per Cost Accounts.
(7) Batch Costing is applied effectively in the following situation:
(a) paper manufacturing
(b) drug manufacturing
(c) designer clothes manufacturing
(d) oil refining
(8) In the context of Contract a/c, work completed and not yet certified will beshown
(a) at cost plus + 2/3rd of the notional profit under ‘Completed Work’.
(b) at cost plus notional profit less retention money under ‘Completed Work’.
(c) at cost under ‘Completed Work’.
(d) at cost under WIP a/c.
(9) A certain process needed standard labour of 24 skilled labour hours and 30 unskilled
labour hours at ₹ 60 and ₹ 40 respectively as the standard labour rates. Actually, 20 and 25
labour hours were used at ₹ 50 and ₹ 50 respectively. Then, the labour mix variance will be
(a) Adverse
(b) Favourable
(c) Zero
(d) Favourable for skilled and unfavourable for unskilled
(10) If an organization has all the resources it needs for production, then the principal budget
factor is most likely to be
(a) non-existing
(b) sales demand
(c) raw materials
(d) labour supply
(11) Cost Unit of Hospital Industry is
(a) Tonne
(b) Student per year
(c) Kilowatt Hour
(d) Patient Day
(12) Which of the following is considered as normal loss of material?
(a) Pilferage

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(b) Loss due to accident

(c) Loss due to careless handling of material
(d) None of these
(13) Idle time is
(a) Time spent by workers in factory
(b) Time spent by workers in office
(c) Time spent by workers off their work
(d) Time spent by workers on their job
(14) Warehouse expense is an example of
(a) Production overhead
(b) Selling overhead
(c) Distribution overhead
(d) None of above
(15) Which of the following items is not included in preparation of cost sheet?
(a) Carriage inward
(b) Purchase returns
(c) Sales Commission
(d) Interest paid
(16) Operating costing is applicable to:
(a) Hospitals
(b) Cinemas
(c) Transport undertaking
(d) All of the above
(17) If sales are ₹ 90,000 and variable cost to sales is 75%. Contribution is
(a) ₹ 21,500
(b) ₹ 22,500
(c) ₹ 23,500
(d) ₹ 67,500
(18) P/V Ratio will increase if the
(a) There is a decrease in fixed cost
(b) There is an increase in fixed cost
(c) There is a decrease in selling price per unit
(d) There is a decrease in variable cost per unit.

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(19) Difference between standard cost and actual cost is called as

(a) Wastage
(b) Loss
(c) Variance
(d) Profit
(20) Sales Budget is a-
(a) Expenditure budget
(b) Functional budget
(c) Master budget
(d) None of the above
(21) Depreciation is a example of-
(a) Fixed Cost
(b) Variable Cost
(c) Semi Variable Cost
(d) None
(22) Continuous stock taking is a part of-
(a) ABC analysis
(b) Annual stock taking
(c) Perpetual Inventory
(d) None of these
(23) Cost of idle time arising due to non-availability of raw material is
(a) Charged to costing profit and loss A/c
(b) Charged to factory overheads
(c) Recovered by inflating the wage rate
(d) Ignored
(24) Over time is
(a) Actual hours being more than normal time
(b) Actual hours being more than standard time
(c) Standard hours being more than actual hours
(d) Actual hours being less than standard time
(25) The allotment of whole items of cost centres or cost unit is called
(a) Cost allocation
(b) Cost apportionment

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(c) Overhead absorption

(d) None of the above
(26) In Reconciliations Statements Expenses shown only in financial accounts are.
(a) Added to financial profit
(b) Deducted from financial profit
(c) Ignored
(d) Added to costing profit
(27) Job costing is used in
(a) Furniture making
(b) Repair shops
(c) Printing press
(d) All of the above
(28) In a process 8000 units are introduced during a period. 5% of input is normal loss. Closing
work in progress 60% complete is 1000 units. 6600 completed units are transferred to
next process. Equivalent production for the period is:
(a) 9000 units
(b) 7440 units
(c) 5400 units
(d) 7200 units
(29) If sales are ₹ 150,000 and variable cost are ₹ 50,000. Compute P/V ratio. (a) 66.66%
(a) 100%
(b) 133.33%
(c) 65.66%
(30) Standard cost of material for a given quantity of output is ₹ 15,000 while the actual cost
of material used is ₹ 16,200. The material cost variance is:
(a) ₹ 1,200 (A)
(b) ₹ 16,200 (A)
(c) ₹ 15,000 (F)
(d) ₹ 31,200 (A)
(31) Selling and distribution overheads are absorbed on the basis of
(a) rate per unit.
(b) percentage on works cost.
(c) percentage on selling price of each unit.

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(d) Any of the above

(32) What entry will be passed under integrated system for purchase of stores on credit?
(a) Dr. Stores
Cr. Creditors
(b) Dr. Purchases
Cr. Creditors
(c) Dr. Stores Ledger Control A/c
Cr. Creditors
(d) Dr. Stores Ledger Control A/c
Cr. General Ledger Adjustment A/c
(33) In a process 800 units are introduced during 2016-17. 5% of input is normal loss. Closing
work-in-progress 60% complete is 100 units. 660 completed units are transferred to next
process. Equivalent production for the period is
(a) 760 units
(b) 744 units
(c) 540 units
(d) 720 units
(34) deals with the principles and methods of determining the production or operation
overheads.
(a) CAS-3
(b) CAS-5
(c) CAS-9
(d) CAS-16
(35) There is a loss as per financial accounts ₹ 10,600, donations not shown in cost accounts ₹
6,000. What would be the profit or loss as per cost accounts?
(a) Loss ₹ 16,600
(b) Profit ₹ 16,600
(c) Loss ₹ 4,600
(d) Profit ₹ 4,600
(36) A hotel having 100 rooms of which 80% are normally occupied in summer and 25% in
winter. Period of summer and winter be taken as 6 months each and normal days in a
month be assumed to be 30. The total occupied room days will be
(a) 1525 Room days
(b) 18900 Room days

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(c) 36000 Room days

(d) None of the above
(37) A firm has fixed expenses ₹ 90,000, sales ₹ 3,00,000 and profit ₹ 60,000. The P/V ratio of
the firm is
(a) 10%
(b) 20%
(c) 30%
(d) 50%
(38) Marginal costing technique follows the following basis of classification:
(a) Element wise
(b) Function-wise
(c) Behavior-wise
(d) Identifiability-wise
(39) Which of the following is not a potential benefitsof using a budget?
(a) More motivated managers
(b) Enhanced co-ordination of firm activities
(c) Improved inter-departmental communication
(d) More accurate external financial statements
(40) Joint Cost is suitable for-
(a) Infrastructure Industry
(b) Ornament Industry.
(c) Oil Industry
(d) Fertilizer Industry
(41) Which of the following is considered as accounting record?
(a) Bin Card
(b) Bill of material
(c) Store Ledger
(d) None of these
(42) Time and motion study is conducted by the
(a) Time –keeping department
(b) Personnel department
(c) Payroll department
(d) Engineering department

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(43) Time keeping refers to

(a) Time spent by workers on their job
(b) Time spent by workers in factory
(c) Time spent by workers without work
(d) Time spent by workers on their job
(44) Royalty paid on sales ₹ 89,000 and Software development charges related to product is ₹
22,000. Calculate Direct Expenses.
(a) 1,11,100
(b) 1,11,000
(c) 1,11,110
(d) 1,10,000
(45) Direct Expenses that does not meet the test of materiality can be _____ part of overhead.
(a) Treated
(b) Not treated
(c) All of the these
(d) None of these
(46) When the amount of under-or-over-absorption is significant, it should be disposed of by
(a) Transferring to costing profit and loss A/c
(b) The use of supplementary rates
(c) Carrying over as a deferred charge to the next accounting year
(d) None of above
(47) Charging to a cost center those overheads that result solely for the existence of that cost
Center is known as
(a) Allocation
(b) Apportionment
(c) Absorption
(d) Allotment
(48) CAS 21 stands for
(a) Capacity Determination
(b) Joint Cost
(c) Direct Expenses
(d) None of these.

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(49) Standards deals with determination of averages/equalized transportation cost –

(a) CAS 6
(b) CAS 22
(c) CAS 9
(d) CAS 5
(50) Standards deals with the principles and methods of determining depreciation and
amortization cost-
(a) CAS 9
(b) CAS 12
(c) CAS 15
(d) CAS 16
(51) Integral accounts eliminate the necessity of operating
(a) Cost Ledger control account
(b) Store Ledger control account
(c) Overhead adjustment account
(d) None of the above
(52) Equivalent production of 1,000 units, 60% complete in all respects, is:
(a) 1000 units
(b) 1600 units
(c) 600 units
(d) 1060 units
(53) Standard price of material per kg is ₹ 20, standard usage per unit of production is 5 kg.
Actual usage of production 100 units is 520 kgs, all of which was purchased at the rate of
₹ 22 per kg. Material cost variance is
(a) 2,440 (A)
(b) 1,440 (A)
(c) 1,440 (F)
(d) 2,300 (F)
(54) Standard cost of material for a given quantity of output is ₹ 15,000 while the actual cost
of material used is ₹ 16,200. The material cost variance is:
(a) ₹ 1,200 (A)
(b) ₹ 16,200 (A)
(c) ₹ 15,000 (F)
(d) ₹ 31,200 (A)

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(55) The basic difference between a fixed budget and flexible budget is that a fixed budget -
(a) is concerned with a single level of activity, while flexible budget is prepared for
different levels of activity
(b) Is concerned with fixed costs, while flexible budget is concerned with variable costs.
(c) is fixed while flexible budget changes
(d) None of these.
(56) Batch Costing is suitable for-
(a) Sugar Industry
(b) Chemical Industry
(c) Pharma Industry
(d) Oil Industry
(57) Cost units of Hospital Industry is-
(a) Tonne
(b) Student per year
(c) Kilowatt Hour
(d) Patient Day
(58) Cost units of Automobile Industry is-
(a) Cubic meter
(b) Bed Night
(c) Number of Call
(d) Number of vehicle
(59) Depreciation is a example of-
(a) Fixed Cost
(b) Variable Cost
(c) Semi Variable Cost
(d) None of these
(60) The most important element of cost is-
(a) Material
(b) Labour
(c) Overheads
(d) All of these
(61) Direct material is a –
(a) Adiministration Cost

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(b) Selling and Distribution cost

(c) All of these
(d) None of these
(62) Continuous stock taking is a part of-
(a) ABC analysis
(b) Annual stock taking
(c) Perpetual Inventory
(d) None of these
(63) Which of the following is considered as accounting record?
(a) Bin Card
(b) Bill of material
(c) Store Ledger
(d) None of these
(64) In which of the following incentive plan of payment, wages on time basis are not
Guaranteed?
(a) Halsey plan
(b) Rowan plan
(c) Taylor’s differential piece rate system
(d) Gantt’s task and bonus system
(65) Under the high wage plan, a worker is paid
(a) At a time rate higher than the usual rate
(b) According to his efficiency
(c) At a double rate for overtime
(d) Normal wages plus bonus
(66) When overtime is required for meeting urgent orders, overtime premium should be
(a) Charged to costing profit and loss A/c
(b) Charged to overhead costs
(c) Charged to respective jobs
(d) Ignored
(67) Wages sheet is prepared by
(a) Time –keeping department
(b) Personnel department
(c) Payroll department

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(d) Engineering department

(68) Labour turnover is measured by
(a) Number of workers replaced average number of workers
(b) Number of workers left / number in the beginning plus number at the end
(c) Number of workers joining / number in the beginning of the period
(d) All of these
(69) Over time is
(a) Actual hours being more than normal time
(b) Actual hours being more than standard time
(c) Standard hours being more than actual hours
(d) Actual hours being less than standard time
(70) Direct Expenses _____ include imputed cost.
(a) Shall
(b) Shall not
(c) None of these
(71) Example of Direct Expenses.
(a) Rent
(b) Royalty charged on production
(c) Bonus to employee
(d) None of these
(72) A manufacturing Industry produces product P, Royalty paid on sales is ₹ 23,500 and design
charges paid for the product is ₹ 1,500. Compute the Direct Expenses.
(a) 25,000
(b) 22,000
(c) 26,500
(d) None of these
(73) Packing cost is a
(a) Production of cost
(b) Selling cost
(c) Distribution cost
(d) It may be any or the above
(74) Directors remuneration and expenses form a part of
(a) Production overhead

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(b) Administration overhead

(c) Selling overhead
(d) Distribution overhead
(75) Charging to a cost center those overheads that result solely for the existence of that cost
Center is known as
(a) Allocation
(b) Apportionment
(c) Absorption
(d) Allotment
(76) Absorption means
(a) Charging or overheads to cost centers
(b) Charging or overheads to cost units
(c) Charging or overheads to cost centers or cost units
(77) Which method of absorption of factory overheads do you suggest in a concern which
produces only one uniform type of product :
(a) Percentage of direct wages basis
(b) Direct labour rate
(c) Machine hour rate
(d) A rate per units of output
(78) When the amount of under-or-over-absorption is significant, it should be disposed of by
(a) Transferring to costing profit and loss A/c
(b) The use of supplementary rates
(c) Carrying over as a deferred charge to the next accounting year
(d) None of above
(79) When the amount of overhead absorbed is less than the amount of overhead incurred, It
is called
(a) Under- absorption of overhead
(b) Over-absorption of overhead
(c) Proper absorption of overhead
(80) Warehouse expense is an example of
(a) Production overhead
(b) Selling overhead
(c) Distribution overhead

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(d) None of above

(81) Selling and Distribution overhead are absorbed on the basis of
(a) Rate per unit
(b) Percentage on works cost
(c) Percentage on selling price of each unit
(d) Any of these
(82) CAS 21 stands for
(a) Capacity Determination
(b) Joint Cost
(c) Direct Expenses
(d) None of these.
(83) CAS 13 stands for
(a) Joint Cost
(b) Interest and financing charges
(c) Employee Cost
(d) Cost of Service cost centre
(84) Standard deals with the principles and methods of determining the manufacturing Cost
of excisable goods-
(a) CAS 12
(b) CAS 15
(c) CAS 22
(d) CAS 2
(85) Standards deals with determination of averages/ equalized transportation cost-
(a) CAS 6
(b) CAS 22
(c) CAS 9
(d) CAS 5
(86) Which of the following items is not included in preparation of cost sheet?
(a) Carriage inward
(b) Purchase returns
(c) Sales commission
(d) Interest paid
(87) Which of the following items is not excluded while preparing a cost sheet?

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(a) Goodwill written off

(b) Provision for taxation
(c) Property tax on Factory building
(d) Transfer to reserves
(e) Interest paid
(88) Which of the following are direct expenses?
(1) The cost of special designs, drawings or layouts
(2) The hire of tools or equipment for a particular job
(3) Salesman’s wages
(4) Rent, rates and insurance of a factory
(a) (1) and (2)
(b) (1) and (3)
(c) (1) and (4)
(d) (3) and (4)
(89) What is prime cost
(a) Total direct costs only
(b) Total indirect costs only
(c) Total non-production costs
(d) Total production costs
(90) Which of the following is not an element of works overhead?
(a) Sales manager’s salary
(b) Plant manager’s salary
(c) Factory repairman’s wages
(d) Product inspector’s salary
(91) In Reconciliations Statements Expenses shown only in financial accounts are.
(a) Added to financial profit
(b) Deducted from financial profit
(c) Ignored
(d) Added to costing profit
(92) In Reconciliations Statements Expenses shown only in cost accounts are.
(a) Added to financial profit
(b) Deducted from financial profit
(c) Ignored

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(d) Deducted from costing profit

(93) In Reconciliations Statements, transfers to reserves are.
(a) Added to financial profit
(b) Deducted from financial profit
(c) Ignored
(d) Added to costing profit
(94) In Reconciliations Statements, Incomes shown only in financial accounts are.
(a) Added to financial profit
(b) Deducted from financial profit
(c) Ignored
(d) Deducted from costing profit
(95) In Reconciliations Statements, Closing Stock Undervalued in Financial accounts is
(a) Added to financial profit
(b) Deducted from financial profit
(c) Ignored
(d) Added to costing profit
(96) Integral accounts eliminate the necessity of operating
(a) Cost Ledger control account
(b) Store Ledger control account
(c) Overhead adjustment account
(d) None of the above
(97) What entry will be passed under integrated system for payment to creditors for supplies
made?
(a) Dr. Creditors
Cr. Cash
(b) Dr. Creditors
Cr. Stores Ledger Control A/c
(c) No entry
(98) The accounting entry in integrated accounts for recording sales will be:
(a) Dr. Cost ledger control account
Cr. Profit and loss account
(b) Dr. Sales account
Cr. Profit and Loss A/c

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(c) Dr. Cash A/c

Cr. Sales A/c
(99) What will be the accounting entry for absorption of factory overhead?
(a) Dr. Works in progress control A/c
Cr Factory overhead control A/c
(b) Dr. Factory overhead
Cr. Factory overhead control A/c
(c) No entry is required
(100) Job costing is used in
(a) Furniture making
(b) Repair shops
(c) Printing press
(d) All of the above
(101) In a job cost system, costs are accumulated
(a) On a monthly basis
(b) By specific job
(c) By department or process
(d) By kind of material used
(102) The most suitable cost system where the products differ in type of material and work
performed is
(a) Operating Costing
(b) Job costing
(c) Process costing
(d) All of these.
(103) Cost Price is not fixed in case of
(a) Cost plus contracts
(b) Escalation clause
(c) De escalation clause
(d) All of the above
(104) Most of the expenses are direct in
(a) Job costing
(b) Batch costing
(c) Contact costing

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(d) None of the above

(105) Cost plus contact is usually entered into those cases where
(a) Cost can be easily estimated
(b) Cost of certified and uncertified work
(c) Cost of certified work, cost of uncertified work and amount of profit transferred to
Profit and Loss Accounts.
(106) Cost of service under operating costing is ascertained by preparing:
(a) Cost sheet
(b) Process account
(c) Job cost sheet
(d) Production account
(107) Operating costing is applicable to:
(a) Hospitals
(b) Cinemas
(c) Transport undertaking
(d) Allof the above
(108) If sales are ₹ 90,000 and variable cost to sales is 75%, contribution is (a) ₹ 21,500
(a) ₹ 22,500
(b) ₹ 23,500
(c) ₹ 67,500
(109) Variable cost
(a) Remains fixed in total
(b) Remains fixed per unit
(c) Varies per unit
(d) Nor increase or decrease
(110) If sales are ₹ 150,000 and variable cost are ₹ 50,000. Compute P/V ratio. (a) 66.66%
(a) 100%
(b) 133.33%
(c) 65.66%
(111) Marginal Costing technique follows the following basis of classification
(a) Element wise
(b) Function Wise
(c) Behaviour wise

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(d) Identifiability wise

(112) P/V ratio will increase if the
(a) There is an decrease in fixed cost
(b) There is an increase in fixed cost
(c) There is a decrease in selling price per unit.
(d) There is a decrease in variable cost per unit.
(113) The technique of differential cost is adopted when
(a) To ascertain P/V ratio
(b) To ascertain marginal cost
(c) To ascertain cost per unit
(d) To make choice between two or more alternative courses of action
(114) Difference between the costs of two alternative is known as the
(a) Variable cost
(b) Opportunity cost
(c) Marginal cost
(d) Differential cost
(115) Contribution is ₹ 300,000 and sales is ₹ 1,500,000. Compute P/V ratio.
(a) 15%
(b) 20%
(c) 22% (d) 17.5%
(116) Variable cost to sales ratio is 40%. Compute P/V ratio.
(a) 60%
(b) 40% (c) 100%
(c) None of the these
(117) Fixed cost is 30,000 and P/V ratio is 20%. Compute breakeven point. (a) ₹ 160,000
(a) ₹ 150,000
(b) ₹ 155,000
(c) ₹ 145,000
(118) Excess of actual cost over standard cost is known as
(a) Abnormal effectiveness
(b) Unfavourable variance
(c) Favourable variance
(d) None of these.

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(119) Difference between standard cost and actual cost is called as

(a) Wastage
(b) Loss
(c) Variance
(d) Profit
(120) Standards cost is used
(a) To ascertain the breakeven point
(b) To establish cost-volume profit relationship
(c) As a basis for price fixation and cost control through variance analysis.
(121) Standard price of material per kg ₹ 20, standards consumption per unit of production is 5
kg. Standard material cost for producing 100 units is
(a) ₹ 20,000
(b) ₹ 12,000
(c) ₹ 8,000
(d) ₹ 10,000
(122) Standard cost of material for a given quantity of output is ₹ 15,000 while the actual cost
of material used is ₹ 16,200. The material cost variance is:
(a) ₹ 1,200 (A)
(b) ₹ 16,200 (A)
(c) ₹ 15,000 (F)
(d) ₹ 31,200 (A)
(123) For the purpose of Proof, Material Cost Variance is equal to:
(a) Material Usage Variance + Material Mix variance
(b) Material Price Variance + Material Usage Variance
(c) Material Price Variance + Material yield variance
(d) Material Mix Variance + Material Yield Variance
(124) Cost variance is the difference between
(a) The standard cost and marginal cost
(b) The standards cost and budgeted cost
(c) The standards cost and the actual cost
(d) None of these
(125) Standard price of material per kg is ₹ 20, standard usage per unit of production is 5 kg.
Actual usage of production 100 units is 520 kgs, all of which was purchase at the rate of ₹
22 per kg. Material usage variance is

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(a) ₹ 400 (F)

(b) ₹ 400 (A)
(c) ₹ 1,040 (F)
(d) ₹ 1,040 (A)
(126) Standard price of material per kg is ₹ 20, standard usage per unit of production is 5 kg.
Actual usage of production 100 units is 520 kgs, all of which was purchase at the rate of ₹
22 per kg. Material cost variance is
(a) 2,440 (A)
(b) 1,440 (A)
(c) 1,440 (F)
(d) 2,300 (F)
(127) Standard quantity of material for one unit of output is 10 kgs. @ ₹ 8 per kg. Actual output
during a given period is 800 units. The standardquantity of raw material
(a) 8,000 kgs
(b) 6,400 Kgs
(c) 64,000 Kgs
(d) None of these.
(128) Budgets are shown in _____ Terms
(a) Qualitative
(b) Quantitative
(c) Materialistic
(d) both (b) and (c)
(129) Which of the following is not an element of master budget?
(a) Capital Expenditure Budget
(b) Production Schedule
(c) Operating Expenses Budget
(d) All above
(130) Which of the following is not a potential benefit of using a budget?
(a) Enhanced coordination of firm activities
(b) More motivated managers
(c) Improved interdepartmental communication
(d) More accurate external financial statements
(131) Which of the following is a long-term budget?

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(a) Master Budget

(b) Flexible Budget
(c) Cash Budget
(d) Capital Budget
(132) Materials become key factor, if
(a) quota restrictions exist
(b) insufficient advertisement prevails
(c) there is low demand
(d) there is no problem with supplies of materials
(133) The difference between fixed cost and variable cost assumes significance in the prepara-
tion of the following budget.
(a) Master Budget
(b) Flexible Budget
(c) Cash Budget
(d) Capital Budget
(134) The budget that is prepared first of all is
(a) Master budget
(b) Budget, with key factor
(c) Cash Budget
(d) Capital expenditure budget
(135) Sales budget is a _____
(a) expenditure budget
(b) functional budget
(c) Master budget
(d) None of these
(136) A flexible budget requires a careful study of
(a) Fixed, semi-fixed and variable expenses
(b) Past and current expenses
(c) Overheads, selling and administrative expenses.
(d) None of these.
(137) In a process 6,000 units are introduced during a period. 5% of input is normal loss. Closing
work-in-process 60% complete is 800 units. 4,900 completed units are transferred to next
process. Equivalent production for the period is

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(a) 6,800 units

(b) 5,700 units
(c) 5,680 units
(d) 5,380 units
(138) Which of the following best describes a fixed cost?
(a) It may change in total where such change is unrelated to changes in production.
(b) It may change in total where such change is related to changes in production.
(c) It is constant per unit of change in production.
(d) It may change in total where such change depends on production within the relevant
range.
(139) Z Ltd. is planning to sell 1,00,000 units of product A for ₹ 12.00 per unit. The fixed costs
are ₹ 2,80,000. In order to realize a profit of ₹ 2,00,000, what would the variable costs be?
(a) ₹ 4,80,000
(b) ₹ 7,20,000
(c) ₹ 9,00,000
(d) ₹ 9,20,000
(140) Standard deals with the cost of service cost center is
(a) CAS-9
(b) CAS-13
(c) CAS-16
(d) CAS-22
(141) The most suitable cost system where the products differ in type of material and work
performed is
(a) Process Costing
(b) Batch Costing
(c) Job Costing
(d) Operating Costing
(142) In a process 10000 units are introduced during a period. 10% of input is normal loss. Closing
work-in-process 70% complete is 1500 units. 7500 completed units are transferred to next
process. Equivalent production for the period is
(a) 9550 units
(b) 9000 units
(c) 8550 units
(d) 8500 units

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(143) The sales and profit of a firm for the year 2016 are ₹1,50,000 and ₹20,000 and for the year
2017 are ₹1,70,000 and ₹25,000 respectively. The P/V Ratio of the firm is
(a) 15%
(b) 20%
(c) 25%
(d) 30%
(144) Standard quantity of material for one unit output is 10 kg @ ₹8 per kg. Actual output
during a given period is 600 units. The standard quantity of material for actual output is
(a) 1200 kg
(b) 6000 kg
(c) 4800 kg
(d) 48000 kg
(145) Which of the following is a long-term Budget?
(a) Master Budget
(b) Production Budget
(c) Flexible Budget
(d) Capital Budget
(146) The main purpose of Cost Accounting is
(a) to maximise profit.
(b) to help in inventory valuation.
(c) to help in the fixation of selling price.
(d) to provide information to management for decision making.
(147) In Reconciliation Statement expenses shown only in financial accounts are
(a) added to financial profit.
(b) added to costing profit.
(c) ignored.
(d) deducted from financial profit.
(148) Which of the following is a service department?
(a) Refining department
(b) Machining department
(c) Receiving department
(d) Finishing department

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(149) Which of the following items is not included in preparation of cost sheet?
(a) Purchase returns
(b) Carriage inwards
(c) Sales commission
(d) Interest paid
(150) In job costing to record the issue of direct materials to a job which of the following
document is used?
(a) Purchase order
(b) Goods receipt note
(c) Material requisition
(d) Purchase requisition
(151) In a process 4000 units are introduced during a period. 5% of input is normal loss. Closing
work-in-progress 60% complete is 500 units. 3300 completed units are transferred to next
process. Equivalent production for the period is
(a) 3550 units
(b) 3600 units
(c) 3800 units
(d) 3950 units
(152) Product A generates a contribution to sales ratio of 40%. Fixed cost directly attributable to
A amount ₹ 60,000. The sales revenue required to achieve a profit of ₹15,000 is
(a) ₹ 2,00,000
(b) ₹ 1,85,000
(c) ₹ 1,87,500
(d) ₹ 2,10,000
(153) During a period 13600 labour hours were worked at a standard rate of ₹ 8 per hour.
The direct labour efficiency variance was ₹ 8,800 (Adv). How many standard hours were
produced?
(a) 12000 hours
(b) 12500 hours
(c) 13000 hours
(d) 13500 hours
(154) Cash Budget of ABC Ltd. forewarns of a short-term surplus. Which of the following would
be appropriate action to be taken in such a situation?
(a) Purchase new fixed assets
(b) Repay long-term loans

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(c) Write off preliminary expenses

(d) Pay creditors early to obtain a cash discount
(155) Costs which are ascertained after they have been incurred are known as
(a) Sunk Costs
(b) Imputed Costs
(c) Historical Costs
(d) Opportunity Costs
(156) Prime cost plus variable overheads is known as
(a) Factory Cost
(b) Marginal Cost
(c) Cost of Production
(d) Total Cost
(157) In which of thefollowing methods, issue of materials are priced atpre-determined rate?
(a) Specific price method
(b) Standard price method
(c) Inflated price method
(d) Replacement price method
(158) For reducing the labour cost per unit, which of the following factors is the most important?
(a) Low wage rates
(b) Longer hours of work
(c) Higher input-output ratio
(d) Strict control and supervision
(159) Maximum possible productive capacity of a plant when no operating time is lost is its
(a) Normal capacity
(b) Practical capacity
(c) Theoretical capacity
(d) Capacity based on sales expectancy
(160) In job costing, which of the following documents is used to record the issue of direct
materials to a job?
(a) Goods Receipt Note
(b) Purchase Order
(c) Purchase Requisition Note
(d) Material Requisition Note

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(161) The main purpose of accounting of joint products and by-products is to

(a) determine the profit/loss on each product line.
(b) determine the selling price.
(c) comply with the statutory requirements.
(d) identify the cost and load it on the main product.
(162) During a period 2560 labour hours were worked at a standard rate of ₹ 7.50 per hour. The
direct labour efficiency variance was ₹ 825 (A). How many standard hours were produced?
(a) 2400
(b) 2450
(c) 2500
(d) 2550
(163) PQR Ltd. manufactures a single product which it sells for₹40per unit. Fixed cost is ₹ 60,000
per year. The contribution to sales ratio is 40%. PQR Ltd.’s Break Even Point in units is
(a) 3500
(b) 3700
(c) 3750
(d) 4000
(164) The fixed-variable cost classification has a special significance in the preparation of
(a) Cash budget
(b) Master budget
(c) Flexible budget
(d) Capital budget
Answer Key:
(1) (b) Direct labour, direct expenses, indirect material, indirect labour, indirect expenses
(2) (c) The ordering cost is equal to the carrying cost
(3) (b) There is no idle time cost.
(4) (b) Travelling expenses to site
(5) (d) Night shift allowance paid to a factory worker due to general work pressure
(6) (a) Add the under absorption of overheads in Cost Accounts if you start from the profits
as per Financial Accounts
(7) (b) drug manufacturing
(8) (d) at cost under WIP a/c
(9) (c) Zero

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(10) (b) sales demand

(11) (d) Patient Day
(12) (d) None of these
(13) (c) Time spent by workers off their work
(14) (c) Distribution overhead
(15) (d) Interest paid
(16) (d) All of the above
(17) (b) ₹ 22,500
(18) (d) There is a decrease in variable cost per unit
(19) (c) Variance
(20) (b) Functional budget
(21) (a) Fixed Cost
(22) (c) Perpetual Inventory
(23) (a) Charged to costing profit and loss A/c
(24) (a) Actual hours being more than normal time
(25) (a) Cost allocation
(26) (a) Added to financial profit
(27) (d) All of the above
(28) (d) 7200 units
(29) (a) 66.66%
(30) (a) ₹ 1,200 (A)
(31) (d) Any of the above
(32) (c) Dr. Stores Ledger Control A/c
Cr. Creditors
(33) (d) 720 units
(34) (a) CAS-3
(35) (c) Loss ₹ 4,600
(36) (b) 18900 Room days
(37) (d) 50%
(38) (c) Behavior-wise
(39) (d) More accurate external financial statements
(40) (c) Oil Industry
(41) (c) Store Ledger

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(42) (d) Engineering department

(43) (b) Time spent by workers in factory
(44) (b) 1,11,000
(45) (a) Treated
(46) (b) The use of supplementary rates
(47) (a) Allocation
(48) (d) None of these.
(49) (d) CAS 5
(50) (d) CAS 16
(51) (a) Cost Ledger control account
(52) (c) 600 units
(53) (b) 1,440 (A)
(54) (a) ₹ 1,200 (A)
(55) (a) is concerned with a single level of activity, while flexible budget is prepared for
different levels of activity
(56) (c) Pharma Industry
(57) (d) Patient Day
(58) (d) Number of vehicle
(59) (a) Fixed Cost
(60) (a) Material
(61) (d) None of these
(62) (c) Perpetual Inventory
(63) (c) Store Ledger
(64) (c) Taylor’s differential piece rate system
(65) (a) At a time rate higher than the usual rate
(66) (b) Charged to overhead costs
(67) (c) Payroll department
(68) (a) Number of workers replaced average number of workers
(69) (a) Actual hours being more than normal time
(70) (b) Shall not
(71) (b) Royalty charged on production
(72) (a) 25,000
(73) (d) It may be any or the above

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(74) (b) Administration overhead

(75) (a) Allocation
(76) (b) Charging or overheads to cost units
(77) (d) A rate per units of output
(78) (b) The use of supplementary rates
(79) (a) Under- absorption of overhead
(80) (c) Distribution overhead
(81) (d) Any of these
(82) (d) None of these
(83) (d) Cost of Service cost centre
(84) (c) CAS 22
(85) (d) CAS 5
(86) (d) Interest paid
(87) (c) Property tax on Factory building
(88) (a) (1) and (2)
(89) (a) Total direct costs only
(90) (a) Sales manager’s salary
(91) (a) Added to financial profit
(92) (b) Deducted from financial profit
(93) (a) Added to financial profit
(94) (b) Deducted from financial profit
(95) (a) Added to financial profit
(96) (a) Cost Ledger control account
(97) (a) Dr. Creditors
Cr. Cash
(98) (c) Dr. Cash A/c
Cr. Sales A/c
(99) (a) Dr. Works in progress control A/c
Cr. Factory overhead control A/c
(100) (d) All of the above
(101) (b) By specific job
(102) (b) Job costing
(103) (a) Cost plus contracts

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(104) (c) Contact costing

(105) (b) Cost of certified and uncertified work
(106) (a) Cost sheet
(107) (d) All of the above
(108) (b) ₹ 22,500
(109) (b) Remains fixed per unit
(110) (a) 66.66%
(111) (c) Behaviour wise
(112) (d) There is a decrease in variable cost per unit
(113) (d) To make choice between two or more alternative courses of action
(114) (d) Differential cost
(115) (b) 20%
(116) (a) 60%
(117) (b) ₹ 150,000
(118) (b) Unfavourable variance
(119) (c) Variance
(120) (c) As a basis for price fixation and cost control through variance analysis.
(121) (d) ₹ 10,000
(122) (a) ₹ 1,200 (A)
(123) (b) Material Price Variance + Material Usage Variance
(124) (c) The standards cost and the actual cost
(125) (b) ₹ 400 (A)
(126) (b) 1,440 (A
(127) (a) 8,000 kgs
(128) (d) both (b) and (c)
(129) (b) Production Schedule
(130) (d) More accurate external financial statements
(131) (d) Capital Budget
(132) (a) quota restrictions exist
(133) (b) Flexible Budget
(134) (b) Budget, with key factor
(135) (b) functional budget
(136) (a) Fixed, semi-fixed and variable expenses

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(137) (d) 5,380 units

(138) (a) It may change in total where such change is unrelated to changes in production
(139) (b) ₹ 7,20,000
(140) (b) CAS-13
(141) (c) Job Costing
(142) (c) 8550 units
(143) (c) 25%
(144) (b) 6000 kg
(145) (d) Capital Budget
(146) (d) to provide information to management for decision making
(147) (a) added to financial profit
(148) (c) Receiving department
(149) (d) Interest paid
(150) (c) Material requisition
(151) (b) 3600 units
(152) (c) ₹ 1,87,500
(153) (b) 12500 hours
(154) (d) Pay creditors early to obtain a cash discount
(155) (c) Historical Costs
(156) (b) Marginal Cost
(157) (b) Standard price method
(158) (c) Higher input-output ratio
(159) (c) Theoretical capacity
(160) (d) Material Requisition Note
(161) (a) determine the profit/loss on each product line
(162) (b) 2450
(163) (c) 3750
(164) (c) Flexible budget

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2. Match the following in Column I with the appropriate in Column II:

1. Match the following:

Column I Column II
i. High Inventory Turnover Ratio A Works overhead
ii. Job evaluation B Opportunity Cost
iii. Salary of Product designers C Co-Product
iv. By product value D Sales and Production Budget
v. Master Budget E Administrative Overhead
F P & L Budget
G Rationality in wage structure
H Efficient use of stock
I Purchase cost / Average inventory
J Evaluationof employee performance
2. Match the following:
Column I Column II
i. Job Ticket A A technique of Inventory Control
ii. Escalation Clause B BEP Chart
iii. VED Analysis C Contract Costing
iv. Angle of Incidence D Labour Cost Plus Factory overhead
v. Conversion Cost E A method of time booking
3. Match the following:
Column I Column II
i. Prime Cost A CAS 19
ii. Angle of Incidence B Passenger / Kilometer
iii. Operating Cost C Direct Cost
iv. Joint Cost D Constant
v. Variable Cost per unit E Profitability Rate
4. Match the following:
Column I Column II
i. Sunk Cost A Costs affected by Decision Making
ii. VED Analysis B Inventory Classification and Control
iii. Relevant Cost C Not Relevant for Decision Making
iv. FSN Analysis D Labour Incentive Method
v. F.W. Taylor E Inventory Control Technique

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5. Match the following:

Column I Column II
i. Rowan A Single Rate of Overhead
ii. JIT System B Labour Turnover
iii. Blanker Overhead C Capital Structure
iv. Traditional Approach D Bonus Plan
v. Separation Method E Inventory Control
6. Match the following:
Column I Column II
i. Point Rating System A Absorbed in cost of production
ii. JIT System B Job Evaluation
iii. Normal Waste C EBIT
iv. Operating Income D Profitability Index
v. Benefit Cost Ratio E Inventory Control
7. Match the following:
Column I Column II
i. Salaries of Directors A CAS – 11
ii. Halsey Plan B Dividend Discount Model
iii. John Burr Williams C Waste Reduction Incentive
iv. Group Bonus Plan D Based on 33 1/3 % of time saved
v. Rowan Plan E Indirect labour cost
vi. Cost of new spare net cost of recondi- F Based on time saved
tioning old spare.
G Based on proportion of time saved to
time allowed.
H CAS – 12
8. Match the following:
Column I Column II
i. EOQ A Direct labour
ii. Sunk Cost B Inventory Management
iii. Direct worker’s contribution to PF C Profitability rate
iv. Time and Motion Study D Direct Material Cost
v. Primary Packing Material E Excluded from Cost
vi. Telephones F Labour Incentive Scheme
vii. Angle of Incidence G No. of extensions in a department

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9. Match the following:

Column I Column II
i. Direct Expenses A Overhead
ii. Job Ticket B CAS 10
iii. Step Distribution method C A method of time booking
11. Match the following:
Column I Column II
i. Component of cost sheet A High initial costs
ii. Objective of Cost Accounting B Classification of cost
iii. CAS 1 C In terms of completed units
iv. Equivalent Production D Reference to the job
v. De-merit of a centralized purchase E To determine the value of closing
organization inventory
12. Match the following:
Column I Column II
i. Pollution control cost A CAS 18
ii. Joint Cost B CAS 2
iii. Capacity Determination C CAS 10
iv. Direct Expenses D CAS 14
v. Research and Development Cost E CAS 19
13. Match the following:
Column I Column II
i. Pollution Control Cost A CAS 18
ii. Joint Cost B CAS 2
iii. Capacity Determination C CAS 10
iv. Direct Expenses D CAS 14
v. Research and Development cost E CAS 19
vi. Donations F Decision Package
vii. Notional Rent charged to G Difference in fixed cost/Difference in
contribution per unit.
viii. The method which is followed for H Average price method
evaluation of equivalent production
when prices are fluctuating.
ix. Indifference Point (in unit) I Expenses debited only in cost
accounts
x. Zero based budgeting J Appropriations only in financial
accounts

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14. Match the following:

Column I Column II
i. Advertisement A Value of goods in transit
ii. Credit and Collection B Floor area occupied
iii. Ware house Rent C A percentage of cash collection
iv. Royalties D No. of orders
v. Bad Debts E Sales value
vi. Transit Insurance F Direct allocation
15. Match the following:
Column I Column II
i. Primary packing materials consumed A Not shown in cost sheet but debited
to P & L a/c.
ii. Captive power plant expense B Forms part of Office and Administra-
tive expenses
iii. Cash discount allowed C Forms part of selling expenses
iv. Scrap value of abnormal loss of D Treated as part of factory expenses
finished output
v. Cost of free samples of products E Treated as direct expenses
distributed
vi. Depreciation on computer purchased F Not shown in cost sheet but credited
for office to P & L a/c.
vii. Donations G Expenses debited only in the financial
accounts.
viii. Interest paid on loan H Appropriations only in financial
accounts
ix. Notional Rent charged to I Expenses debited only in cost
accounts
x. Notional Interest on Owner’s Capital J Income credited only in cost
accounts
16. Match the following:
Column I Column II
i. The contract which provide for A Average price method
payment of actual cost plus an agreed
percentage of profit
ii. In contract costing, the cost unit is B Kilowatt
iii. Abnormal loss is transferred to C Job Costing
iv. Job costing is used in D Normal Output

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v. Under Job order cost system, each job E Cost Plus

is assigned one identifying job.
vi. Cost of normal loss is borne by F Per bed
vii. Inherent features of process industry G Per contract
viii. The method which is followed for H Automobile garages
evaluation of equivalent production
when prices are fluctuating.
ix. In hospital the cost unit is I Costing Profit and Loss Account
x. In electricity companies, the cost unit J Work in Progress
is
17. Match the following:
Column I Column II
i. Indifference points (in units) A Difference in Fixed Cost / Difference in
PV ratio
ii. Breakeven point (in value) B Fixed Cost / Contribution per unit
iii. Variable cost per unit C Total Sales Less BEP Sales
iv. P/V Ratio D Marginal Cost
v. Prime Cost + Variable Overhead E Fixed Cost / PV Ratio
vi. Breakeven Point (in quantity) F Difference in Fixed Cost / Difference in
Contribution per unit
vii. Indifference point (in value) G Total Contribution / Total Sales x 100
viii. Shut down point (in Quantity) H Avoidable Fixed Cost / PV Ratio
ix. Shut down point (in value) I Fixed
x. Margin of Safety J Avoidable Fixed Cost / Contribution
per unit
18. Match the following:
Column I Column II
i. Direct material yield variance A (Standard hour for actual production
minus Actual hours) x Standard Rate
ii. Direct labour rate variance B (Actual Hours at standard rate of
standard gang) minus (Actual Hours
at standards Rate of Actual Gang)
iii. Material price variance C Management by Exception
iv. Variance Analysis D (Standard Rate minus Actual Rate) x
Actual hour
v. Direct Labour yield variance E (Standard rate x Actual hours paid for)
minus (Standard rate x Actual hours
worked)

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vi. Direct labour efficiency variance F (Standard price minus Actual Price) X
Actual Quantity
vii. Direct material mix variance G (Standard Quantity for actual output
X Standard Price) minus (Standard
price X Actual Quantity)
viii. Gang variance H Standard cost per unit x (Standard
output for actual mix – Actual output)
ix. Ideal time variance I (Standard yield for actual Mix minus
Actual Yield) x Standard yields Price.
x. Direct material usage variance J (Revised Standard Quantity minus
Actual Quantity) X Standard Price
19. Match the following:
Column I Column II
i. Master budget denotes the summary A Financial means
of
ii. A flexible budget takes into the B A specified period
account
iii. A budget is expressed in terms of C Flexible budget
iv. Which budget is prepared for a longer D Master budget
period
v. Budget is generally prepared for how E Fixed, variable and semi variable costs
long
vi. Which budget is prepared for more F Functional budget
than one level of activity
vii. The summary of all functional G Principle key factor
budgets
viii. Which budget is prepared at first H Capital expenditure budget
ix. Which budget shows utilization of I Decision package
liquid cash
x. Zero based budgeting J Cash Budget
20. Match the following:
Column I Column II
i. Imputed costs A Cost control technique
ii. FSN analysis B Treated as part of factory expenses
iii. Captive power plant expenses C Costing Profit and Loss A/c
iv. Abnormal loss is transferred to D Process of classifying material
v. Variance analysis E Direct allocation

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F Not involving cash outlay

G Management by exception
H Decision package
21. Match the following:
Column I Column II
i. Cash discount allowed A Joint Cost
ii. Escalation Clause B Imputed Cost
iii. CAS – 19 C Direct Expenses
iv. Notional Cost D Not shown in cost sheet but debited
to profit and loss account.
v. Zero base budgeting E Sunk cost
F Contract Costing
G Decision package
H Variable Cost
22. Match the following:
Column I Column II
i. Pharma Industry A Opportunity Cost
ii. Management by exception B Direct Allocation
iii. Assessment of employee with respect C Joint Cost
to a job
iv. Royalties D Batch costing
v. CAS – 19 E Merit Rating
F Variance Analysis
G Job Evaluation
H Notional Cost
23. Match the following:
Column I Column II
i. Notional cost A Replacement method
ii. Labour turnover B Cost of utilities
iii. CAS – 10 C Production Strategy
iv. Contract Costing D Direct expenses
v. CAS – 19 E Costing department
F Imputed cost
G Escalation clause
H Decision Package

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Answer Key:

Ans: 1 Ans: 2 Ans: 3 Ans: 4 Ans: 5 Ans: 6 Ans: 7 Ans: 8

i. H i. E i. C i. C i. D i. B i. A i. B
ii. G ii. C ii. E ii. E ii. E ii. E ii. F ii. E
iii. A iii. A iii. B iii. A iii. A iii. A iii. B iii. A
iv. B iv. B iv. A iv. B iv. C iv. C iv. C iv. F
v. F v. D v. D v. D v. B v. D v. G v. D
vi. H vi. G
vii. C

Ans: 9 Ans: 10 Ans: 11 Ans: 12 Ans: 13 Ans: 14 Ans: 15 Ans: 16

i. B i. D i. D i. D i. E i. E i. E i. F
ii. C ii. E ii. E ii. E ii. D ii. D ii. G ii. E
iii. A iii. B iii. B iii. B iii. B iii. A iii. I iii. I
iv. C iv. C iv. C iv. F iv. F iv. H iv. G
v. A v. A v. A v. C v. C v. C v. D
vi. J vi. A vi. B vi. D vi. B
vii. I vii. H vii. J vii. A
viii. H viii. G viii. A viii. J
ix. G ix. J ix. F ix. H
x. F x. I x. B x. C

Ans: 17 Ans: 18 Ans: 19 Ans: 20 Ans: 21 Ans: 22

i. I i. F i. F i. D i. D i. F
ii. D ii. E ii. D ii. F ii. F ii. A
iii. F iii. A iii. B iii. A iii. E iii. D
iv. C iv. H iv. C iv. B iv. B iv. G
v. H v. B v. G v. G v. G v. C
vi. A vi. C
vii. J vii. D
viii. B viii. G
ix. E ix. J
x. G x. I

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3. State whether the following are ‘True’ or ‘False’:

(1) Uniform Costing is a unique method of costing to determine costs accurately.

(2) When overtime wages are incurred due to the general policy of the company arising due
to lack of capacity, normal wages are treated as direct labour cost and the premium on
overtime wages is treated as factory overheads.
(3) In marginal and absorption costing, variable factory overhead is treated as direct cost.
(4) Operation Costing and Operating Costing are interchangeably used for the same
technique of costing.
(5) Standard Costs are costs that are estimated costs that are likely in the future production
period.
(6) A flexible budget is one, which changes from year to year
(7) Variances are calculated for both material and labour.
(8) Multiple Costing is suitable for the banking Industry.
(9) Contact costing is variant of job costing.
(10) Closing stock of finished goods should be valued on the basis of cost of sales.
(11) Fixed budget is also known as rigid budget.
(12) The allocation of joint cost on by-products affects the total profit or loss.
(13) Job costing is applied only in small concerns.
(14) For decision making, absorption costing is more suitable than marginal costing.
(15) Overhead and conversion cost are inter-changeable terms.
(16) Cost Control and Cost Reductions are one and the same.
(17) At EOQ Ordering Cost and Carrying Cost are at Minimum and also equal.
(18) Cost of Concealed Idle Time is charged to Jobs.
(19) Preliminary expenses in the Balance Sheet is included under Fixed Assets.
(20) Under the average price method of valuing material issues, a new issue price is determined
after each purchase.
(21) Wages paid for abnormal idle time are added to wages for calculating prime cost.
(22) Fixed Overheads per unit remains fixed irrespective of volume of output.
(23) Cost Accounting is defined as technique and process of ascertaining costs.
(24) Marginal cost is the Prime cost plus Variable Overheads.
(25) Cost of abnormal idle time is charged to the Product Labour Cost.
(26) Cost Accounting is not a branch of Financial Accounting.
(27) Labour Turnover is the change in labour force during a period of time.
(28) Bincard shows the Quantity of a material at any movement of time.

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(29) Operating Cycle means time required to Produce One Quantity of a Product.
(30) While working out the EOQ, carrying cost has the element of interest cost. Hence it can be
stated that interest cost is treated as part of material cost under CAS—6.
(31) Normal bad debt is considered as a selling overhead and included in the cost.
(32) Carriage and Cartage expenses (inward freight) of fuel for a furnace in a factory is treated
as direct material cost.
(33) When under absorption of overheads is corrected by applying supplementary rates, there
is no impact in the current period profits due to under absorption as it is corrected and all
overheads are charged in the current period.
(34) Marginal cost per unit remains constant irrespective of the number of units produced
within the normal output level.
(35) M Ltd. provides free service for its cars for the first year of purchase. The cost of this service
for M. Ltd. is treated as selling and distribution overhead.
(36) Danger Level of Inventory should be fixed below the minimum level.
(37) When the output level is more than the estimated level in a given production period,
there is an over absorption of overheads.
(38) A firm’s WIP inventory will not have any element of allocated administration overhead.
(39) If a project’s annual cash flows have positive and negative signs, there will certainly be
multiple internal rates of return.
(40) Royalty based on units produced is considered as direct expenses.
(41) Ideal standards are achievable in normal course.
(42) Abnormal Costs are uncontrollable.
(43) By-products may undergo further processing before sale.
(44) Materials which can be identified with the given product unit of cost centre is called as
indirect materials.
(45) Increasing Labour Turnover increases the productivity of labour resulting in low costs.
(46) In case of materials that suffers loss in weight due to evaporation etc. the issue price of the
materials is inflated to cover up the losses.
(47) Penalties and fines are included in cost accounts to determine the cost of production.
(48) The sum of direct material, direct wages, direct expenses and manufacturing overheads
is known as conversion cost.
(49) CAS -13 is related to “Pollution Control Cost”.
(50) Under Halsey–Weir Plan, bonus equals to 331/3 % of wages of the time saved.
(51) ABC analysis is not based on the concept of selection inventory management.
(52) In India, if a worker works for more than 8 hours on any day or for more than 40 hours in
a week, he is treated to be engaged in overtime.

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(53) If an expense can be identified with a specific cost unit, it is treated as direct expense.
(54) CAS 9 is for Direct Expenses as issued by the Cost Accounting Standards Board (CASB) of
the Institute of Cost Accountants of India.
(55) The principal based used for applying factory overhead are: units of production, material
cost, direct wages, direct labour hours and machine hours.
(56) The balancing in costing profit and loss account represents under or over absorption of
overheads.
(57) At breakeven point, contribution available is equal to total fixed cost.
(58) Standards costing are more profitability employed in job order industries than in process
type industries.
(59) To achieve the anticipated targets, Planning, Co-ordination and Control are the important
main tasks of management, achieved through budgeting and budgetary control.
(60) A flexible budget recognises the difference between fixed, semi-fixed and variable cost
and is designed to change in relation to the change in level of activity.
(61) Differential Cost is the change in the cost due to change in activity from one level to
another.
(62) Cost unit of Hotel industry is student per year.
(63) Multiple Costing is suitable for the banking Industry.
(64) Direct Expenses are expenses related to manufacture of a product or rendering of services.
(65) Profit is result of two varying factors–sales and variable cost.
(66) Perpetual inventory system enables management to ascertain stock at any time without
physical inventory being taken.
(67) Continuous stock taking is not an essential feature to the perpetual inventory system.
(68) Bin card is a record of both quantities and value.
(69) VED analysis is used primarily for control of spare parts.
(70) Stores ledger is maintained in the stores department.
(71) Purchase requisition is usually prepared by the storekeeper.
(72) In centralized purchasing all purchases are made by the purchasing department.
(73) Weighted average method of pricing issue of materials involves adding all the different
prices and dividing by the number of such prices.
(74) Material returned note is prepared to keep a record of return of surplus materials to stores.
(75) Under the average price method of valuing material issues, a new issue price is determined
after each purchase.
(76) Waste and Scrap of material have small realization value.
(77) Slow moving materials have a high turnover ratio.

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(78) Bin card are not the part of accounting records.

(79) ABC analysis is based on the principle of management by exception.
(80) Store ledger is maintained inside the stores by store keeper.
(81) Time recording clocks can be successfully used for recording time of workers in large
undertakings.
(82) Outworkers are those who are sent to sites or customer’s premises for performing work.
(83) Idle time arises only when workers are paid on time basis.
(84) Personnel department is concerned with proper recruitment, placement and training of
workers.
(85) Wages paid for abnormal idle time are added to wages for calculating prime cost.
(86) In India, if a worker works for more than 8 hours on any day or for more than 40 hours in
a week, he is treated to be engaged in overtime.
(87) The two principal systems of wage payment are payment on the basis of time and
payment on the basis of work done.
(88) The piece rate system of wage payment cannot be successfully applied where quantity of
output can be measured.
(89) A good system of wage payment should not ensure equal pay for equal work.
(90) If an expense can be identified with a specific cost unit, it is treated as direct expense.
(91) Travelling expenses to site is a direct expense.
(92) Identification of direct expenses shall be based on traceability in an economically feasible
manner.
(93) CAS 9 is for Direct Expenses as issued by the Cost Accounting Standards Board (CASB) of
the Institute of Cost Accountants of India.
(94) Finance Cost shall form part of Direct Expense.
(95) Departments that assist producing Department indirectly are called service departments.
(96) Factory overhead cost applied to a job is usually based on a per-determined rate.
(97) Variable overhead vary with time.
(98) When actual overhead are more than absorbed overheads, it is known as over- absorption.
(99) Cash discounts are generally excluded completely from the costs.
(100) Cost of indirect materials is apportioned to various departments.
(101) A blanket overhead rate is a single overhead rate computed for the entire factory.
(102) Under-absorption of overhead means that actual overhead are more than absorbed
overhead.
(103) The principal based used for applying factory overhead are: units of production, material
cost, direct wages, direct labour hours and machine hours.

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(104) Allocation, for overhead implies the identification of overhead cost centres to which they
relate.
(105) Total cost = prime cost + All indirect costs.
(106) Closing stock of work-in-progress should be valued on the basis of prime cost.
(107) Closing stock of finished goods should be valued on the basis of cost of sales.
(108) Production cost includes only direct costs related to the production.
(109) Primary packaging cost is included in distribution cost.
(110) Notional interest on Owner’s capital appears only in financial profit and loss A/c.
(111) Goodwill written off appears only in cost accounts.
(112) Overheads are taken on estimated basis in financial accounts.
(113) Expenses which appears only in financial accounts and not in cost accounts, are Generally
notional items.
(114) Need for Reconciliation arise in case of integrated system of accounts.
(115) Cost ledger control account makes the cost ledger self balancing.
(116) Stock ledger contains the accounts of all items of finished goods.
(117) The purpose of cost control accounts is to control the cost.
(118) Cost control accounts are prepared on the basis of double entry system.
(119) The balancing in costing profit and loss account represents under or over absorption of
overheads.
(120) Operating costing is applied to ascertain the cost of products.
(121) Cost of operating the service is ascertained by preparing job account.
(122) The problem of equivalent production arises in case of operating costing.
(123) FIFO methods are followed for evaluation of equivalent production when prices are
fluctuating.
(124) Work in progress is the inherent feature of processing industries.
(125) Costs incurred prior to the split off point are known as “Joint Costs”
(126) No distinction is made between Co products and Joint Products.
(127) Contact costing is variant of job costing.
(128) In contact costing, the unit of cost is a job.
(129) Contribution= Sales * P/V ratio.
(130) Margin of Safety = Profit / P/V ratio
(131) P/ V ratio remains constant at all levels of activity.
(132) Marginal Costing follows the behaviour wise classification of costs.
(133) At breakeven point, contribution available is equal to total fixed cost.

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(134) Breakeven point = Profit / P/V ratio.

(135) Marginal cost is aggregate of Prime Cost and Variable cost.
(136) Variable cost remains fixed per unit.
(137) Contribution margin is equal to Sales – Fixed cost.
(138) Variable cost per unit is variable.
(139) Excess of Actual cost over Standards Cost is treated as unfavourable variance.
(140) Variances are calculated for both material and labour.
(141) While fixing standards, normal losses and wastages are taken into account.
(142) Under the system of standard costing, there is no need for variance analysis.
(143) Standard costing is an ideal name given to the estimate making.
(144) Standards cost, once fixed cannot be altered.
(145) Predetermined standards provide a yardstick for the measurement of efficiency.
(146) Material cost variance and labour cost variance are always equal.
(147) Fixing standards is the work of industrial engineer or the production people and not of
cost accountant.
(148) Budget is a means and budgetary control is the end result.
(149) To achieve the anticipated targets, Planning, Co-ordination and Control are the important
main tasks of management, achieved through budgeting and budgetary control.
(150) A key factor or principal factor does not influence the preparation of all other budgets.
(151) Budgetary control does not facilitate introduction of ‘Management by Exception’.
(152) Generally, budgets are prepared to coincide with the financial year so that comparison of
the actual performance with budgeted estimates would facilitate better interpretation
and understanding.
(153) A flexible budget is one, which changes from year to year.
(154) Sales budget, normally, is the most important budget among all budgets.
(155) The principal factor is the starting point for the preparation of various budgets.
(156) A budget manual is the summary of all functional budgets.
(157) Factory overhead cost applied to a job is usually based on a pre-determined rate.
(158) CAS-19 deals with the principles and methods of determining the manufacturing cost of
excisable goods.
(159) Cost ledger control account makes the cost ledger self-balancing.
(160) FIFO method is followed for evaluation of equivalent production when prices are
fluctuating.
(161) Standard costs and budgeted costs are inter-related and inter-dependent.

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(162) Multiple costing is suitable for banking industry.

(163) There is inverse relationship between batch size and carrying costs.
(164) Marginal costing follows the identifiability wise classification of costs.
(165) Bin card is maintained by the costing department.
(166) CAS-8 deal with the principles and methods of determining the direct expenses.
(167) FIFO method is followed for evaluation of equivalent production when prices are
fluctuating.
(168) Profit Volume ratio remains constant at all levels of activity.
(169) The principal factor is the starting point for the preparation of various budgets.
(170) Overtime premium is directly assigned to cost object.
(171) In Reconciliation statements, expenses shown only in financial accounts are added to
financial profit.
Answer Key:

1. False 24. True 47. False 70. False 93. False 116. True
2. False 25. False 48. False 71. True 94. False 117. False
3. False 26. True 49. False 72. True 95. True 118. True
4. False 27. True 50. True 73. False 96. True 119. False
5. False 28. True 51. False 74. True 97. False 120. False
6. False 29. False 52. False 75. True 98. False 121. False
7. True 30. False 53. True 76. False 99. True 122. False
8. False 31. True 54. False 77. False 100. False 123. False
9. True 32. False 55. False 78. True 101. False 124. True
10. False 33. False 56. False 79. True 102. False 125. True
11. True 34. True 57. True 80. False 103. False 126. False
12. False 35. True 58. False 81. True 104. True 127. True
13. False 36. False 59. True 82. True 105. True 128. False
14. False 37. True 60. True 83. True 106. False 129. True
15. False 38. True 61. True 84. True 107. False 130. True
16. False 39. True 62. False 85. False 108. False 131. True
17. True 40. True 63. False 86. False 109. False 132. True
18. True 41. False 64. True 87. True 110. False 133. True
19. False 42. False 65. False 88. False 111. False 134. False
20. True 43. True 66. True 89. False 112. False 135. False
21. False 44. False 67. False 90. True 113. False 136. True
22. False 45. False 68. False 91. True 114. False 137. False
23. False 46. True 69. True 92. True 115. True 138. False

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139. True 145. True 151. False 157. True 163. False 169. True
140. True 146. False 152. True 158. False 164. False 170. True
141. True 147. False 153. False 159. True 165. False 171. True
142. False 148. True 154. True 160. False 166. False
143. False 149. True 155. True 161. False 167. False
144. True 150. False 156. False 162. False 168. True

4. Fill in the blanks:

(1) Profit volume ratio _____ with increase in fixed cost (indicate the nature of change).
(2) In the graph showing the angle of incidence, when the quantity is zero, the total cost line
cuts the costs axis (y axis) at _____ . (indicate the value)
(3) A process account is credited with value for _____ loss when scrap value is zero (indicate
the type of loss).
(4) When special material is purchased for direct use in a job, _____ account is debited in the
Integral Accounts System.
(5) VED analysis is primarily used for control of _____ (indicate type of material).
(6) Administration overheads are usually absorbed as a percentage of _____
(7) Variable cost per unit is _____ .
(8) Bin card shows _____ details of materials.
(9) Sum of material price variance and material usage variance is equalto _____ variance.
(10) Contribution earned on Break-even sales equals to _____ of the firm.
(11) Profit / P/v Ratio = _____
(12) Budget is a quantitative and / or a _____ statement.
(13) Fixed cost per unit _____ varies with the no. of units.
(14) An activity level of 1000 hours cost is ₹ 10,000 and an activity level for 2000 hours the total
cost is ₹ 16,000. The cost at 3000 hours of level of activity is _____
(15) _____ is must for meaningful inter-firm comparison.
(16) Prime Cost is the aggregate of all _____ .
(17) Store Ledger is maintained by _____ department.
(18) Distribution of all items of Overheads to Product or Departments is known as _____.
(19) The Overtime worked at the request of Customer is treated as _____ wages.
(20) The excess of Total Cost of production of an article over the direct material cost is known
as _____ Cost.
(21) Charging of identifiable items of Cost to Cost Centers is known as _____

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(22) The Objective of Wage Incentives is to improve _____

(23) Bin Card is maintained by _____ department.
(24) The total of all Indirect expenditure is called as _____
(25) The abnormal idle time cost is charged to _____ Account.
(26) Stores ledger is maintained by _____ department.
(27) Interest on capital is an example for _____ Cost.
(28) Variable overheads are absorbed by products based on _____ level of capacity utilization.
(29) In a textile factory, yarn is starched before it is made into textile. The cost of starch is _____
(give the element of cost).
(30) The actual capacity of a manufacturing unit based on temporary sales expectancy is
10,000 units due to lack of orders. The practical capacity is 11,500 units. Then, 1500 units
is _____ capacity.
(31) E is an exporter who relinquishes his right to a receivable due at a future date in exchange
for immediate cash payment at an agreed discount, passing on all the risks and responsi-
bilities for collecting the debt to B. This arrangement is called _____.
(32) In a certain factory, normal capacity was 50000 units. Actual capacity utilization was
52000 units. Fixed production overheads should be absorbed based on _____ capacity.
(33) X factory outsources the manufacture of a major component to a contractor. The transpor-
tation of the component of X factory’s premises is borne by X. This transportation cost will
be treated as _____ cost (give the element of cost).
(34) In the _____ method of pricing material issues, where the prices are falling, profits will
rise.
(35) In India, commercial papers can be issued in multiples of ₹ _____
(36) When raw material is accounted at standard cost, variances due to normal reasons will be
treated as _____ cost (give the element of cost).
(37) Cost of idle time (idle hours x hourly rate) incurred by a worker directly working on a
product is treated as _____ (give the element of cost).
(38) Royalty payable based on the right to sell is treated as _____ (give the element of cost).
(39) When time saved is equal to time taken then earnings of a worker under Halsey Plan and
Rowan Plan are the _____
(40) The difference between actual and absorbed factory overhead is called _____ .
(41) Under-absorption of _____ results in higher amount of profit.
(42) Direct Expenses incurred for brought out resources shall be determined at _____.
(43) Total cost + Profit = _____ .
(44) In _____ Systems, basis of wages payment is the quantity of work.
(45) Current Ratio is the ratio of Current Assets to _____ .

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(46) In standard costs, _____ norm is applied as a scale of reference for assessing actual cost to
serve as a basis of cost control.
(47) Material Transfer Note is a _____ for transferring the materials from one job to other job.
(48) One of the disadvantages of overtime working is incurring _____ labour cost.
(49) CAS-2 deals with Cost Accounting Standard on _____ determination.
(50) Where the cost and financial accounts are maintained independently of each other, it is
indispensable to _____ them, as there are differences in the profits of two sets of books.
(51) Maximum Level = ( _____ + Re-order Quantity) – (Minimum Consumption Rate × Minimum
Re-order Period).
(52) CAS-8 deals with the principles and methods of determining the _____ .
(53) Store Ledger is kept and maintained in _____ .
(54) In a company there were 1200 employee on the rolls at the beginning of a year and 1180
at the end. During the year 120 persons left services and 96 replacements were made. The
labour turnover to flux method is _____.
(55) Ideal time arises only when workers are paid on _____ basis.
(56) Normal idle time costs should be charged to _____ while that due to abnormal reasons
should be charged to _____ .
(57) Direct Expenses incurred for brought out resources shall be determined at _____ .
(58) Direct Expenses incurred lump-sum shall be _____ .
(59) Overhead incurred ₹ 16,000 and overhead absorbed ₹ 15,300. There is under absorption
of _____
(60) Under integrated accounting system, the accounting entry for payment of wages is to
debit _____ and to credit cash.
(61) Two principle method of evaluation of equivalent production are _____ and _____ .
(62) When sales are ₹ 300,000 and variable cost is ₹ 180,000, P/V ratio will be _____
(63) Goods Received Note is prepared by the _____ .
(64) Transfer of surplus material from one job or work order is recorded in _____.
(65) _____ is discount allowed to the bulk purchaser.
(66) _____ is a document which records the return of unused materials.
(67) In _____ systems, twopiece rates are set for each job.
(68) The formula for computing wages under time rate is _____ .
(69) In Halsey plan, a worker gets bonus equal to _____ of the time saved.
(70) Under Gantt Task and Bonus Plan, no bonus is payable to a worker, if his efficiency is less
than _____ .
(71) Wages sheet is prepared by _____ department.

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(72) Direct Expenses relate to _____ or _____ .

(73) Penalties/ damages paid to statutory authorities’ _____ be form part of Direct Expenses.
(74) A Direct Expenses related to a _____ form part of the Prime Cost.
(75) Overheads are an aggregate of _____ and _____ and _____ .
(76) Example of after sales services are _____ and _____
(77) Administration overheads are usually absorbed as a percentage of _____ .
(78) The difference between actual and absorbed factory overhead is called _____ .
(79) The term used for charging of overheads to cost units is known as _____
(80) The difference between practical capacity and the capacity based on sales expectancy is
known as .
(81) The _____ rate is computed by dividing the overheads by the aggregate of the productive
hours of direct workers.
(82) Under or over absorption of overheads arises only when overheads are absorbed by
_____ .
(83) Overhead incurred ₹ 16,000 and overhead absorbed ₹ 15,300. There is under absorption
of _____
(84) In Absorption Costing _____ cost is added to inventory.
(85) Prime cost + Overheads = _____
(86) _____ + Profit = Sales.
(87) Direct Material + _____ + Direct Expenses = Prime Cost.
(88) Salary paid to factory manager is an item of _____ .
(89) In Reconciliations Statements, Incomes shown only in Financial accounts are _____ .
(90) In Reconciliations Statements, Expenses shown only in cost accounts are _____.
(91) In Reconciliations Statements, overheads Over-Recovered in cost accounts are _____.
(92) In Reconciliations Statements, overheads Under Recovered in cost accounts are _____.
(93) Notional remuneration to owner is expense debited only in _____.
(94) All the transactions relating to materials are recorded through _____ .
(95) The net balance of _____ represents net profit or net loss.
(96) WIP ledger contains the accounts of all the _____ which are under _____ .
(97) The two traditional systems of accounting for integration of cost and financial accounts
are the _____ and the _____ .
(98) Under integrated accounting system, the accounting entry for payment of wages is to
debit _____ and to credit cash.
(99) Cost of _____ loss is not borne by good units.

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(100) If the actual loss in a process is less than the normal loss, the difference is known as _____.
(101) _____ Costs are incurred after split off point.
(102) The _____ product generally has a greater sale value than by product.
(103) Statement of cost per unit of equivalent production shows the per unit cost _____.
(104) In hospital the cost unit is _____ .
(105) In electricity companies, the cost unit is _____ .
(106) The method of costing used in undertaking like gas companies, cinema houses, hospitals
etc is known as _____ .
(107) In motor transport costing two example of fixed cost are _____ and _____.
(108) Variable cost per unit is _____
(109) Marginal cost is the _____ of sales over contribution.
(110) P/V ratio is the ratio of _____ to sales.
(111) If variable cost to sales ratio is 60%, P/V ratio is _____ .
(112) _____ + Variable overhead = Marginal Cost.
(113) When sales are ₹ 300,000 and variable cost is ₹ 180,000, P/V ratio will be _____ .
(114) Variable cost remains _____ .
(115) Margin of safety is _____ .
(116) Breakeven point is _____ .
(117) Contribution margin equals to _____
(118) Standard cost is a _____ cost.
(119) Standard cost when fixed is recorded on _____ card.
(120) Historical costing uses post period costs while standards costing uses _____ costs.
(121) Three types of standards are _____ .
(122) The _____ is usually the co-ordinator of the standards committee.
(123) Standards cost when fixed are recorded on _____ card.
(124) Basicallythere are two types of standards viz, a) Basic standards, and _____ .
(125) When actual cost is less than the standards cost, it is known as _____ variance.
(126) Standard Costing is one of the _____ techniques.
(127) Standard means a criterion or a yardstick against which actual activity can be compared
to determine the _____ between two.
(128) Budgets are _____ plans.
(129) The key factor in a budget does not remain the _____ every year.
(130) Cash budget is a part of _____ budget.

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(131) _____ budgets are subsidiary to master budget.

(132) _____ leads to budgeting and budgeting leads to budgetary control.
(133) _____ Control involves checking and evaluation of actual performance.
(134) A budget is a _____ to management.
(135) The principle budget factor for consumer goods manufacture is normally _____ .
(136) A budget is a projected plan of action in _____ .
(137) _____ is the process of regulating the action so as to keep the element of cost within the
set parameters.
(138) CAS _____ stands for cost of service cost Centre.
(139) At _____ contribution available is equal to total fixed cost.
(140) The document which describes the budgeting organisation, budgeting procedure etc. is
known as _____ .
(141) _____ is discount allowed to the bulk purchaser.
(142) CAS _____ stands for cost of utilities.
(143) If the actual loss in a process is less than the normal loss, the difference is known as _____ .
(144) The principal budget factor for consumer goods manufacturer is normally _____ .
(145) Differential cost is the change in the cost due to change in _____ from one level to another.
(146) In contract costing, the cost unit is _____ .
(147) _____ costs are historical costs which are incurred in the past.
(148) CAS-2 deals with Cost Accounting Standard on _____ determination.
(149) _____ is the summary of all functional budgets.
(150) Standard costing is one of the _____ techniques.
Answer Key:
(1) is constant (10) Fixed Cost (19) Direct
(2) Fixed Cost Value (11) Margin of Safety (20) Conversion
(3) Abnormal (12) Financial (21) Direct Cost
(4) WIP Control (13) Inversely (22) Productivity
(5) Components or Spare (14) ₹ 22,000 (23) Store Keeper or Stores
Parts (15) Uniform Costing Personnel
(6) Work Cost (16) direct expenses (24) Overheads
(7) Fixed (17) costing (25) Costing Profit and Loss
(8) Quantitative (18) Apportionment/ (26) Costing
(9) material cost Allocation (27) Opportunity/Notional/
Imputed

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(28) Actual (57) Invoice Price (84) Fixed

(29) direct material (58) Amortized (85) Total Cost
(30) Idle (59) ₹ 700 (86) Cost of Sales
(31) Forfeiting (60) Wages Control Account (87) Direct Wages
(32) Actual (61) FIFO, Average Method (88) Factory Overhead
(33) Material (62) 40% (89) Added to Costing Profit.
(34) LIFO (63) Receiving Department (90) Added to Costing Profit
(35) 5 lacs (64) Material Transfer Note (91) Deducted from Costing
(36) Direct Material (65) Quantity Discount Profit.

(37) Factory overheads or (66) Material Return Note (92) Added to financial profit.
works overhead (67) Taylors Differential Piece (93) Cost Accounts
(38) Selling Overheads or Rate (94) Stores Ledger Control
Selling and Distribution (68) Hour worked x Rate per Accounts
Overheads hour (95) Costing Profit and Loss
(39) Same (69) 50% Account
(40) Overheads (70) 100% (96) Jobs, Execution
(41) Overhead (71) Pay Roll (97) Double Entry Method,
(42) invoice price Third Entry Method
(72) manufacturing of a
(43) Selling Price product or rendering of (98) Control Accounts
(44) Piece Rate service (99) Abnormal

(45) Current Liabilities (73) shall not (100) Abnormal Gain

(46) Predetermined (74) product (101) Subsequent

(47) Document (75) Indirect Material, (102) Main

Indirect Labour , Indirect (103) Element wise
(48) excess (or additional or Expenses
more or high) (104) Per Bed
(76) Repair and Maintenance,
(49) capacity Replacement of (105) Kilowatt
(50) reconcile components (106) Operating Cost
(51) Reorder Level (77) Works Cost (107) Insurance and
(52) Cost of utilities (78) Overheads Depreciation

(53) cost office (79) Absorptions (108) Fixed

(54) 9.08 (80) Idle Capacity (109) Excess

(55) Time (81) Direct Labour Hour (110) Contribution

(56) Production overhead, (82) overheads rates (111) 40

Costing P & L A/c (83) ₹ 700 (112) Prime Cost

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(113) 40% (126) Cost Control (140) Budget Manual

(114) fixed per unit (127) Difference (141) Quantity Discount /
(115) Actual sales – Sales at (128) Action Trade Discount / Cash
Break Even Point discount
(129) Same
(116) Total Fixed Cost / PV (142) 8
(130) Financial
Ratio (143) Abnormal gain /
(131) Functional Abnormal profit
(117) Sales – Variable Cost
(132) Forecasting (144) Sales Demand / Market
(118) Predetermined
(133) Budgetary Demand / Lack of
(119) Standard Cost Demand
(134) Aid
(120) Predetermined (145) Activity
(135) Sales, Demand
(121) Current, Basic and (146) per contract
Normal Standard (136) Physical units and
monetary terms (147) Sunk
(122) Cost Accountants
(137) Cost Control (148) Capacity
(123) Standard Cost
(138) 13 (149) Master Budget
(124) Current Standard
(139) Break Even point (150) Cost Control
(125) Favourable

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NOTES

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MCQ
Bank

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(1) Prime Cost is:

(a) All costs incurred in manufacturing a product
(b) the total of direct costs
(c) the material cost of a product
(d) the cost of operating a department
(2) A company employs three drivers to deliver goods to its customers. The salaries paid to
these drivers are:
(a) a part of prime cost
(b) a direct production expense
(c) a production overhead
(d) a selling & distribution overhead
(3) A company has to pay a ₹ 1 per unit royalty to the designer of a product which it manufac-
tures and sells. The royalty charge would be classified in the company’s accounts as a
_____
(a) Direct expense
(b) Production overhead
(c) Administrative overhead
(d) Selling overhead
(4) _____ is a method of dealing with overheads which involves spreading common costs
over cost centers on the basis of benefit received.
(a) overhead absorption
(b) overhead apportionment
(c) overhead allocation
(d) overhead analysis
(5) Which of the following classification is meant for distinction between direct cost and
indirect cost?
(a) Function
(b) Element
(c) Variability
(d) Controllability
(6) Which of the following is applicable for Cost Control?
(a) It is related with the future
(b) It is a corrective function
(c) It ends when the targets are achieved

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(d) It challenges the standards set

(7) _____ is anything for which a separate measurement of cost is required
(a) Cost driver
(b) Cost centre
(c) Cost unit
(d) Cost object
(8) Ticket counter in a Metro Station is an example of
(a) Profit centre
(b) Investment centre
(c) Cost centre
(d) Revenue centre
(9) Which of the following is an example of functional classification of cost?
(a) Direct labour cost
(b) Direct material cost
(c) Factory overhead
(d) Indirect material cost
(10) Absorption costing is also referred as _____
(a) Historical costing
(b) Traditional costing
(c) Full costing
(d) All of the above terms
(11) the main purpose of cost accounting is
(a) to maintain profit
(b) to help in inventory valuation
(c) to enter into price War with competitive firms
(d) to provide information to management for decision-making
(12) _____ is anything for which a separate measurement is required
(a) cost unit
(b) cost object
(c) cost driver
(d) cost sentre
(13) Which of the following is true about Cost Control
(a) It is a corrective function

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(b) It challenges the set standards

(c) It ends when targets achieved
(d) It is concerned with future
(14) Cost Units used in Power Sector is :
(a) Kilo-meter (K.M.)
(b) Kilo–Watt-Hour (kWh)
(c) Number of Electric Points
(d) Machine Hours
(15) Process Costing method is suitable for :
(a) Transport Sector
(b) Chemical Industries
(c) Dam Construction
(d) Furniture- making
(16) distinction between Direct Cost and Indirect Cost is an example of classification.
(a) By element
(b) By Function
(c) By controllability
(d) By Variability
(17) The advantage of using IT in Cost Accounting does not include
(a) Single point data entry
(b) stock needs to be reconciled with goods received note
(c) reduction in multiplicity of documents
(d) integration of various functions
(18) A taxi provider charges minimum ₹80 thereafter ₹ 12 per kilometer of distance travelled,
the behaviour of conveyance Cost is
(a) fixed cost
(b) semi-variable
(c) variable
(d) administrative cost
(19) A Ltd. Has three Production Departments, and each department has machines, which of
the following cannot be treated as Cost Centre for cost allocation:
(a) Machines under the production Production Department
(b) Pruction Departments

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(c) Both Production Department and Machines

(d) A Ltd.
(20) Which of the following is an example of functional classification of cost?
(a) Semi -variable costs
(b) Fixed Cost
(c) Administrative overhead
(d) Indirect Overheads
(21) Cost which are ascertained after they have been incurred are known as
(a) sunk costs
(b) Imputed Costs
(c) Historical Costs
(d) Oppurtunity Costs
(22) Generally, for the purpose of Cost sheet preparation, costs are classified on the basis of -
(a) Functions
(b) variablity
(c) relevance
(d) nature
(23) Which of the following items is not excluded while preparing a cost sheet?
(a) Goodwill written off
(b) provision for taxation
(c) property tax on factory building
(d) Transfer to reserves
(24) What is prime cost
(a) Total direct cost only
(b) Total Indirect Costs only
(c) Total Non-Production Costs
(d) Total Production Costs
(25) Which of the following does not form part of prime cost
(a) Cost of Packing
(b) cost of transportation paid to bring materials to factory
(c) GST paid on Raw materials (where input credit cannot be claimed)
(d) overtime premium paid to workers
(26) Which of these is not an objective of Cost Accounting?

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(a) Ascertainment of Cost

(b) Determination of Selling Price
(c) Cost Control and Cost reduction
(d) Assisting Shareholders in decision making
(27) Which of the following are direct expenses ?
(1) Cost of Special Designs, drawings or layout
(2) Hire of Tools or Equipment for a particular job
(3) Salesman’s wages
(4) Rent, rates and Insurance of a factory
(a) (1) and (2)
(b) (1) and (3)
(c) (2) and (3)
(d) (3) and (4)
(28) Salary paid to plant Supervisor is a part of
(a) Direct expenses
(b) Factory Overheads
(c) Quality Control Cost
(d) administrative cost
(29) Depreciation of Director’s Laptop is treated as a part of :
(a) Administration Overheads
(b) Factory Overheads
(c) IT infrastructure Cost
(d) Research & Development Cost
(30) A manufacturing Company has set-up a lab for testing of products for compliance with
standards. Salary of this Lab Staff are part of :
(a) Works Overheads
(b) Quality Control Cost
(c) Direct Expenses
(d) Reearch & Development Cost
(31) Audit fees paid to external Statutory Auditors is part of
(a) Administration Cost
(b) Production Cost
(c) Selling & distribution Costs

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(d) Quality Costrol Cost

(32) Salary paid to factory stores is a part of
(a) Factory Overheads
(b) Production Cost
(c) Direct Employee Cost
(d) Direct Material Cost
(33) Canteen Expenses for factory workers are part of -
(a) Factory Overheads
(b) Administration cost
(c) marketing cost
(d) direct expenses
(34) A company pays Royalty to State Government on the basis of production, it is treated as:
(a) Direct material cost
(b) Quality Control Cost
(c) Direct Expenses
(d) Administrative Overhead
(35) Which of the following is not an element of Works Overhead ?
(a) Store Keeper’s Salary
(b) Plant Manager’s salary
(c) Sales Manager’s Salary
(d) Product Inspector’s Salary
(36) A profit centre is a centre
(a) Where the manager has the responsibility of generating and maximising profits
(b) Which is concerned with earning an adequate Return on Investment
(c) Both of the above
(d) Which manages cost
(37) Responsibility Centre can be categorised into:
(a) Cost Centres only
(b) Profit Centres only
(c) Investment Centres only
(d) Cost Centres, Profit Centres and Investment Centres
(38) Cost Unit is defined as:
(a) Unit of quantity of product, service or time in relation to which costs may be

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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
(39) 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
(40) 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
(41) Element/s of Cost of a product are:
(a) Material only
(b) Labour only
(c) Expenses only
(d) Material, Labour and expenses
(42) Abnormal cost is the cost:
(a) Cost normally incurred at a given level of output
(b) Cost not normally incurred at a given level of output
(c) Cost which is charged to customer
(d) Cost which is included in the cost of the product
(43) 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
(44) Sunk costs are:
(a) relevant for decision making

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(b) Not relevant for decision making

(c) cost to be incurred in future
(d) future costs
(45) Calculate the prime cost from the following information: Direct material purchased: ₹
1,00,000 Direct material consumed: ₹ 90,000 Direct labour: ₹ 60,000 Direct expenses: ₹
20,000 Manufacturing overheads: ₹ 30,000
(a) ₹ 1,80,000
(b) ₹ 2,00,000
(c) ₹ 1,70,000
(d) ₹ 2,10,000
(46) Total cost of a product: ₹ 10,000 Profit: 25% on Selling Price Profit is:
(a) ₹ 2,500
(b) ₹ 3,000
(c) ₹ 3,333
(d) ₹ 2,000
(47) Calculate cost of sales from the following:
Net Works cost: ₹ 2,00,000
Office & Administration Overheads: ₹ 1,00,000
Opening stock of WIP: ₹ 10,000
Closing Stock of WIP: ₹ 20,000
Closing stock of finished goods: ₹ 30,000
There was no opening stock of finished goods.
Selling overheads: ₹ 10,000
(a) ₹ 2,70,000
(b) ₹ 2,80,000
(c) ₹ 3,00,000
(d) ₹ 3,20,000
(48) Which of the following is considered as normal loss of material?
(a) Pilferage
(b) Loss due to accident
(c) Loss due to careless handling of material
(d) None of these
(49) The most important element of cost is-

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(a) Material
(b) Labour
(c) Overheads
(d) All of these
(50) Direct material is a –
(a) Adiministration Cost
(b) Selling and Distribution cost
(c) All of these
(d) None of these
(51) Which of the following is considered as accounting record?
(a) Bin Card
(b) Bill of material
(c) Store Ledger
(d) None of these
(52) Direct material can be classified as :
(a) Fixec cost
(b) Semi-Variable cost
(c) Vaiable Cost
(d) Prime cost
(53) In which of the following methods of pricing, costs lag behind the current economic
values?
(a) Replacement price method
(b) Last in first out price method
(c) First in first out price method
(d) Weighted average price method
(54) In which of the following methods, issues of materials are priced at pre-determined rate?
(a) Replacement price method
(b) Inflated price method
(c) Specific price method
(d) Standard price method
(55) Which of the following methods smoothes out the effect of fluctuations when material
prices fluctuate widely?
(a) FIFO

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(b) Simple Average

(c) LIFO
(d) Weighted average
(56) In which of the following incentive plan of payment, wages on time basis are not
Guaranteed?
(a) Halsey plan
(b) Rowan plan
(c) Taylor’s differential piece rate system
(d) Gantt’s task and bonus system
(57) Cost of idle time arising due to non-availability of raw material is :
(a) Charged to costing profit and loss A/c
(b) Charged to factory overheads
(c) Recovered by inflating the wage rate
(d) Ignored
(58) When overtime is required for meeting urgent orders, overtime premium should be
(a) Charged to costing profit and loss A/c
(b) Charged to overhead costs
(c) Charged to respective jobs
(d) Ignored
(59) Labour turnover is measured by
(a) Number of workers replaced average number of workers
(b) Number of workers left / number in the beginning plus number at the end
(c) Number of workers joining / number in the beginning of the period
(d) All of these
(60) Idle time is
(a) Time spent by workers in factory
(b) Time spent by workers in office
(c) Time spent by workers off their work
(d) Time spent by workers on their job
(61) Over time is :
(a) Actual hours being more than normal time
(b) Actual hours being more than standard time
(c) Standard hours being more than actual hours

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(d) Actual hours being less than standard time

(62) Labour productivity is measured by comparing
(a) Total output with total man-hours
(b) Added value for the product with total wage cost
(c) Actual time and standard time
(d) All of the above
(63) If the time saved is less than 50% of the standard time, then the wages under Rowan and
Halsey premium plan on comparison gives:
(a) Equal wages under two plans
(b) More wages to workers under Halsey Plan than Rowan Plan
(c) More wages to workers under Rowan Plan than Halsey Plan
(d) None of the above
(64) Under Taylor’s differential piece rate scheme, if a worker fails to complete the task within
the standard time, then he is paid
(a) 83% of the piece work rate
(b) 175% of the piece work rate
(c) 67% of the piece work rate
(d) 125% of the piece work rate
(65) Direct Expenses _____ includes imputed cost.
(a) Shall
(b) Shall not
(c) Shall be
(d) None of these
(66) Direct Expenses that does not meet the test of materiality can be _____ part of overhead.
(a) Treated
(b) Not treated
(c) All of the these
(d) None of these
(67) Example of Direct Expenses.
(a) Rent
(b) Royalty charged on production
(c) Bonus to employee
(d) None of these

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(68) The allotment of whole items of cost centres or cost unit is called :
(a) Cost allocation
(b) Cost apportionment
(c) Overhead absorption
(d) None of the above
(69) Directors remuneration and expenses form a part of:
(a) Production overhead
(b) Administration overhead
(c) Selling overhead
(d) Distribution overhead
(70) Charging to a cost center those overheads that result solely for the existence of that cost
Center is known as
(a) Allocation
(b) Apportionment
(c) Absorption
(d) Allotment
(71) Absorption means:
(a) Charging of overheads to cost centres
(b) Charging of overhead to cost units
(c) Charging of overheads to cost centres or cost units
(d) None of the above
(72) When the amount of under or over absorption is significant, it should be disposed of by:
(a) Transferring to costing profit and loss account
(b) The use of supplementary rates
(c) Carrying over as a deferred charge to the next accounting year
(d) None of the above
(73) Selling and distribution overheads are absorbed on the basis of:
(a) rate per unit.
(b) percentage on works cost.
(c) percentage on selling price of each unit.
(d) Any of the above
(74) Primary packing cost is a part of:
(a) Direct material cost

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(b) Distribution overhead

(c) Selling overhead
(d) Production cost
(75) Normal capacity of a plant refers to the difference between:
(a) Maximum capacity and practical capacity
(b) Maximum capacity and actual capacity
(c) Practical capacity and estimated idle capacity as revealed by long term sales trend
(d) Practical capacity and normal capacity
(76) When the amount of overhead absorbed is less than the amount of overhead incurred, it
is called:
(a) Under absorption of overhead
(b) Over absorption of overhead
(c) Proper absorption of overhead
(d) None of the above
(77) _____ is a scientific and accurate method of factory overhead absorption.
(a) Percentage of prime cost method
(b) Machine hour rate method
(c) Percentage of direct material cost method
(d) Percentage of direct labour cost method
(78) 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
(79) Out of the following, what is not the work of purchase department:
(a) Receiving purchase requisition
(b) Exploring the sources of material supply
(c) Preparation and execution of purchase orders
(d) Accounting for material received
(80) Bin Card 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

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(d) a record of labour attendance

(81) 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
(82) Re-order level is calculated as:
(a) Maximum consumption x Maximum re-order period
(b) Minimum consumption x Minimum re-order period
(c) 1/2 of (Minimum + Maximum consumption)
(d) Maximum level–Minimum level
(83) Economic order quantity is that quantity at which cost of holding and carrying inventory
is
(a) Maximum and equal
(b) Minimum and equal
(c) It can be maximum or minimum depending upon case to case.
(d) Minimum and unequal
(84) ABC analysis is an inventory control technique in which:
(a) Inventory levels are maintained
(b) Inventory is classified into A, B and C category with A being the highest quantity,
lowest value.
(c) Inventory is classified into A, B and C Category with A being the lowest quantity,
highest value
(d) Either b or c.
(85) Which one out of the following is not an inventory valuation method?
(a) FIFO
(b) LIFO
(c) Weighted Average
(d) EOQ
(86) In case of rising prices (inflation), FIFO method will:
(a) provide lowest value of closing stock and profit
(b) provide highest value of closing stock and profit
(c) provide highest value of closing stock but lowest value of profit

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(d) provide highest value of profit but lowest value of closing stock
(87) In case of rising prices (inflation), LIFO will:
(a) provide lowest value of closing stock and profit
(b) provide highest value of closing stock and profit
(c) provide highest value of closing stock but lowest value of profit
(d) provide highest value of profit but lowest value of closing stock
(88) Calculate Re-order level from the following: Consumption per week: 100-200 units
Delivery period: 14-28 days
(a) 5600 units
(b) 800 units
(c) 1400 units
(d) 200 units
(89) Calculate EOQ (approx.) from the following details:
Annual Consumption: 24000 units
Ordering cost: ₹ 10 per order
Purchase price: ₹ 100 per unit
Carrying cost: 5%
(a) 310
(b) 400
(c) 290
(d) 300
(90) Calculate the value of closing stock from the following according to FIFO method:
1st January, 2024: Opening balance: 50 units @ ₹ 4
Receipts:
5th January, 2024: 100 units @ ₹ 5
12th January, 2024: 200 units @ ₹ 4.50
Issues:
2nd January, 2024: 30 units
18th January, 2024: 150 units
(a) ₹ 765
(b) ₹ 805
(c) ₹ 786
(d) ₹ 700

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(91) Calculate the value of closing stock from the following according to LIFO method:
1st January, 2024: Opening balance: 50 units @ ₹ 4
Receipts:
5th January, 2024: 100 units @ ₹ 5
12th January, 2024: 200 units @ ₹ 4.50
Issues:
2nd January, 2024: 30 units
18th January, 2024: 150 units
(a) ₹ 765
(b) ₹ 805
(c) ₹ 786
(d) ₹ 700
(92) Calculate the value of closing stock from the following according to Weighted Average
method:
1st January, 2024: Opening balance: 50 units @ ₹ 4
Receipts:
5th January, 2024: 100 units @ ₹ 5
12th January, 2024: 200 units @ ₹ 4.50
Issues:
2nd January, 2024: 30 units
18th January, 2024: 150 units
(a) ₹ 765
(b) ₹ 805
(c) ₹ 786
(d) ₹ 700
(93) Cost of abnormal wastage is:
(a) Charged to the product cost
(b) Charged to the profit & loss account
(c) charged partly to the product and partly profit & loss account
(d) not charged at all.
(94) Calculate re-order level from the following:
Safety stock: 1000 units
Consumption per week: 500 units

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It takes 12 weeks to reach material from the date of ordering.

(a) 1000 units
(b) 6000 units
(c) 3000 units
(d) 7000 units
(95) From the following information, calculate the extra cost of material by following EOQ:
Annual consumption: = 45000 units
Ordering cost per order: = ₹ 10
Carrying cost per unit per annum: = ₹ 10
Purchase price per unit = ₹ 50
Re-order quantity at present = 45000 units
There is discount of 10% per unit in case of purchase of 45000 units in bulk.
(a) No saving
(b) ₹ 2,00,000
(c) ₹ 2,22,010
(d) ₹ 2,990
(96) Which of the following is an abnormal cause of Idle time:
(a) Time taken by workers to travel the distance between the main gate of factory and
place of their work
(b) Time lost between the finish of one job and starting of next job
(c) Time spent to meet their personal needs like taking lunch, tea etc
(d) Machine break downs
(97) 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
(98) Labour turnover means:
(a) Turnover generated by labour
(b) Rate of change in composition of labour force during a specified period
(c) Either of the above
(d) Both of the above
(99) Which of the following is not an avoidable cause of labour turnover:

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(a) Dissatisfaction with Job

(b) Lack of training facilities
(c) Low wages and allowances
(d) Disability, making a worker unfit for work
(100) Costs associated with the labour turnover can be categorised into:
(a) Preventive Costs only
(b) Replacement costs only
(c) Both of the above
(d) Machine costs
(101) Calculate workers left and discharged from the following:
Labour turnover rates are 20%, 10% and 6% respectively under Flux method, Replace-
ment method and Separation method. No. of workers replaced during the quarter is 80.
(a) 112
(b) 80
(c) 48
(d) 64
(102) Calculate workers recruited and joined from the following:
Labour turnover rates are 20%, 10% and 6% respectively under Flux method, Replace-
ment method and Separation method. No. of workers replaced during the quarter is 80.
(a) 112
(b) 80
(c) 48
(d) 64
(103) Calculate the labour turnover rate according to replacement method from the following:
No. of workers on the payroll:
At the beginning of the month: 500
At the end of the month: 600
During the month, 5 workers left, 20 workers were discharged and 75 workers were
recruited. Of these, 10 workers were recruited in the vacancies of those leaving and while
the rest were engaged for an expansion scheme.
(a) 4.55%
(b) 1.82%
(c) 6%
(d) 3%

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(104) Calculate the labour turnover rate according to Separation method from the following:
No. of workers on the payroll:
At the beginning of the month: 500
At the end of the month: 600
During the month, 5 workers left, 20 workers were discharged and 75 workers were
recruited. Of these, 10 workers were recruited in the vacancies of those leaving and while
the rest were engaged for an expansion scheme.
(a) 4.55%
(b) 1.82%
(c) 6%
(d) 3%
(105) A worker is allowed 60 hours to complete the job on a guaranteed wage of ₹ 10 per hour.
Under the Rowan Plan, he gets an hourly wage of ₹ 12 per hour. For the same saving in
time, how much he will get under the Halsey Plan?
(a) ₹720
(b) ₹540
(c) ₹600
(d) ₹900
(106) Overhead refers to:
(a) Direct or Prime Cost
(b) All Indirect costs
(c) only Factory indirect costs
(d) Only indirect expenses
(107) Allotment of whole item of cost to a cost centre or cost unit is known as:
(a) Cost Apportionment
(b) Cost Allocation
(c) Cost Absorption
(d) Machine hour rate
(108) 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
(109) Service departments costs should be allocated to:

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(a) Only Service departments

(b) Only Production departments
(c) Both Production and service departments
(d) None of the production and service departments
(110) Most suitable basis for apportioning insurance of machine would be:
(a) Floor Area
(b) Value of Machines
(c) No. of Workers
(d) No. of Machines
(111) 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
(112) AT Co makes a single product and is preparing its material usage budget for next year. Each
unit of product requires 2kg of material, and 5,000 units of product are to be produced
next year.
Opening inventory of material is budgeted to be 800 kg and AT co budgets to increase
material inventory at the end of next year by 20%
The material usage budget for next year is:
(a) 8,000 Kg
(b) 9,840 kg
(c) 10,000 Kg
(d) 10,160 Kg
(113) During a period 17, 500 labour hours were worked at a standard cost of ₹ 6.50 per hour.
The labour efficiency variance was ₹ 7,800 favourable.
How many standard hours were produced?
(a) 1200
(b) 16300
(c) 17500
(d) 18700
(114) In most of the manufacturing industries, the most important element of cost is
(a) material

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(b) Labour
(c) overheads
(d) None of the above
(115) Which of the following is NOT considered to be Normal loss of Materials ?
(a) Loss due to accidents
(b) Pilferage
(c) Loss due to breaking the bulk
(d) Loss due to transfering of liquid materials fromcontainer to another
(116) Which of following is NOT considered as Normal loss of material?
(a) Loss due to evaporation due to prevalent weather conditions
(b) Loss due to pilferage
(c) Loss due to breaking the bulk
(d) Loss due to transferring of liquid materials from container to another
(117) At the economic ordering quantity level, the following is true on an annual basis:
(a) Ordering Cost is minimum
(b) Carrying Cost is minimum
(c) Ordering Cost is equal to the Carrying Cost
(d) Purchase Price is minimum
(118) Continuous Stock Taking is a part of:
(a) Annual Stock Taking
(b) Perpetual Inventory
(c) ABC Analysis
(d) Bin Cards
(119) In which of the following methods, issues of materials are priced at pre-determined rate?
(a) Inflated Price Method
(b) Standard price method
(c) Replacement Price Method
(d) Market Price Method
(120) When Material prices Fluctuate widely, the method of pricing that gives absurd results is -
(a) Simple Average Price
(b) Weighted Average price
(c) Moving Average Price
(d) Inflated Price

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(121) When prices fluctuate widely, the method that will smooth out the effect of fluctuations is
(a) Simple Average Price
(b) Weighted Average price
(c) FIFO
(d) LIFO
(122) Under the FSN system of Inventory Control, Inventory is Classified on the basis of :
(a) Volumne of materail consumption
(b) Frequently of usage of items of inventory
(c) Criticality of the item of inventory of production
(d) Value of Items of Inventory
(123) Form used for making a formal request to the Purchasing Department to purchase
materials is a-
(a) material transfer note
(b) Purchase Requisition Note
(c) Bill of materials
(d) Material requisition note
(124) Classification of Materials on the basis of their Importance in Value is called:
(a) EOQ Analysis
(b) Stock level analysis
(c) ABC Analysis
(d) Value analysis
(125) For Return of Excess Materials from Production Department to stores, the document used
is:
(a) Material return note
(b) Stores debit note
(c) Shop Credit Note
(d) All the above (same)
(126) Which of the following is NOT related to a standard list of materials and components?
(a) Consumption Statement
(b) bill of materials
(c) Material specification list
(d) Material list
(127) Which of the following is NOT recorded on a Bin card?

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(a) material received from supplier

(b) material issued to production depts
(c) Inter department transfers
(d) Loss of materials
(128) What is the formula for Re-order level?
(a) Minimum Usage x minimum lead time
(b) Minimum Usage x maximum lead time
(c) Maximum Usage x minimum lead time
(d) Maximum Usage x maximum lead time
(129) (ROL+ROQ (-) minimum usage x minimum lead time ) is the computation formula for….
(a) Maximum level
(b) Minimum level
(c) Average level
(d) danger level
(130) Inventory turnover ratio is expressed in
(a) Rupees
(b) Percentage
(c) times
(d) Any of the above
(131) Generally, a _____ T/o and _____ days Average Inventory held is preferable
(a) High, less
(b) Low, high
(c) Low, low
(d) high, high
(132) Pricing of Materials in the order in which they are purchased is called _____ method
(a) Specific Identification
(b) FIFO
(c) LIFO
(d) Orderly
(133) Landed cost of materials does not include _____
(a) Cost of Containers
(b) Carriage Inwards
(c) Stock Insurance

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(d) Unloading Charges

(134) Cost of abnormal loss of materials is
(a) Debited to costing P & L
(b) Credited to Costing P&L
(c) InCluded In Landed Cost
(d) Included in OH
(135) Idle time is the time under which
(a) Full wages are paid to workers
(b) No output is produced by the workers
(c) Both (a) and (b)
(d) None of the above
(136) When a direct Worker is paid on a monthly fixed salary basis, the following is true :
(a) There is no idle time lost
(b) There is no idle time cost
(c) Idle time cost is separated and treated as overhead
(d) salari is fully treated as factory overhead cost
(137) Time and Motion study is conducted by
(a) Time Keeping Department
(b) Personnel Department
(c) Payroll Department
(d) Engineering Department
(138) Wages sheet is generally prepared by-
(a) Time Keeping Department
(b) Personnel Department
(c) Payroll Department
(d) Engineering Department
(139) For reducing the labour cost per unit, which of the following factors is most important?
(a) Low wage rate
(b) Longer hours of work
(c) Higher Productivity or Efficiency
(d) Strict control and supervison
(140) Time Booking refers to a method wherein _____ of an employees is recorded
(a) Attendance

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(b) book keeping details

(c) Health Status
(d) Time spent on a particulars job
(141) Employee Cost includes
(a) wages and salaries
(b) Allowances and incentives
(c) Payment for Overtime
(d) All of the above
(142) Standard Time of a job is 60 hours and guaranteed time rate is ₹ 90 per hour. What is the
amount of wages under Rowan plan if job is completed in 48 hours?
(a) ₹ 1620
(b) ₹ 1728
(c) ₹ 1800
(d) ₹ 1440
(143) Standard Time of a job is 60 hours and guaranteed time rate is ₹ 90 per hour. What is the
amount of wages under Halsey plan if job is completed in 48 hours?
(a) ₹ 1620
(b) ₹ 1440
(c) ₹ 180
(d) ₹ 1728
(144) If Overtime is required for meeting urgent orders, the Overtime premium should be
charged as -
(a) Respective job
(b) Over head Cost
(c) Costing P& L a/c
(d) None of above
(145) Keeping a rocord of total time spent by the worker inside the factory is called
(a) Time keeping
(b) Time Booking
(c) Time Managing
(d) Time Recording
(146) Wages attributable to Normal idle Time is treated as
(a) Direct Wages

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(b) Producction OH
(c) Either of the above
(d) None of the above
(147) In the context of Labour Turnover, Number of Workers left and discharged is called-
(a) Accession
(b) Replacement
(c) new replacement
(d) Separation
(148) (Hours worked X Rate per hour) is the computation of wages under
(a) Incentive System
(b) Piece rate System
(c) Attendance System
(d) Time rate System
(149) Under Halsey System, generally Bonus is computed as _____ x (Time Saved x Rate per
hour)
(a) 30%
(b) 50%
(c) 70%
(d) Actual Hrs/Std. Hrs
(150) A worker will earn wages under Halsey and Rowan System, if time Saved equals -
(a) 50% of Std Time
(b) 50% of Actual Time
(c) 1/2 of Total Time
(d) 1/2 of Lost time
(151) Labour Efficiency (based on time) is given by the Formula
(a) Std Time /Actual Time
(b) Actual time /std time
(c) Idle Time/Std time
(d) Idle Time /Actual Time
(152) If wages per day of 8 hours is ₹ 500, std outputis 100 units, Actual Output is 120, piece rate
wages-
(a) ₹ 500
(b) ₹ 600

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(c) ₹ 62.5
(d) ₹ 5
(153) If Std Time is 8 hours, Actual time is 6 hours, rate per hour is ₹ 100, Rwan Wages =
(a) ₹ 600
(b) ₹ 150
(c) ₹ 750
(d) ₹ 700
(154) If Actual Output in 8 hours is 700 units, Standard Output is 90 units per hour, Efficiency
Ratio is
(a) 97.22%
(b) 102.86%
(c) 100%
(d) 77.78%
(155) Fixed over costs are not effected in monetary terms during a fiven period by a change in
Output. But this statement is valid provided
(a) Increase in Output is not Substantial
(b) Increase in Output is substantial
(c) Both (a) and (b)
(d) None of the above
(156) _____ Capacity is defined as actually utilised capacity of a plant .
(a) theoretical
(b) Installed
(c) Practical
(d) Idle
(157) Maximum Possible Productive Capacity of a plant when no operating time is lost is its :
(a) Normal Capacity
(b) Practical Capacity
(c) Theoretical Capacity
(d) Capacity based on Sales Expectancy
(158) Charging of common Overheads cost to various cost centres, using appropriate bases is
known as -
(a) Allocation
(b) Apportionment

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(c) Absorption
(d) Re- Apportionment
(159) Distribution of service Department Overheads Cost to production Departments using
different assumptions and methods is known as
(a) Allocation
(b) Apportionment
(c) Absorption
(d) Re- Apportionment
(160) packing Cost is part of
(a) Production cost
(b) Selling Cost
(c) Distribution Cost
(d) It may be any of the above
(161) Which of the following is not treated as a Manufacturing Overhead ?
(a) Lubricants
(b) Cotton Waste
(c) apportioned administration overheads
(d) Night Shift allowance paid to a factory Worker due to general work pressure
(162) The difference between Actual Factory Overhead and Absorbed Factory Overhead will be
usually at the minimum level, provided pre-determined overhead rate is based on :
(a) Maximum capacity
(b) Direct Labour Hours
(c) Machine Hours
(d) Normal Capacity
(163) When Absorbed Overhead is Higher than the amount of Overhead incurred, it is called
(a) Under absorption of overhead
(b) Over absorption of overhead
(c) Proper absorption of overhead
(d) re–absorption of overhead
(164) Which of the following overhead cost may not be apportioned on the basis of Direct
Wages?
(a) Worker’s Holiday pay
(b) Perquisites to workers

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(c) ESI Contribution

(d) Managerial Salaries
(165) The following is an example of direct expenses as per CAS-10:
(a) Special raw material which is a substantial part of the prime cost
(b) Travelling expenses to site.
(c) Overtime charges paid to direct worker to complete work before time.
(d) Catalogue of prices of finished products.
(166) CAS 21 stands for:
(a) Capacity Determination
(b) Joint Cost
(c) Direct Expenses
(d) None of these
(167) Standard deals with the cost of service cost center is:
(a) CAS-9
(b) CAS-13
(c) CAS-16
(d) CAS-22
(168) Which standards deals with the principles and methods of determining depreciation and
amortization cost?
(a) CAS 9
(b) CAS 12
(c) CAS 15
(d) CAS 16
(169) Which standards deals with determination of averages/ equalized transportation cost?
(a) CAS 5
(b) CAS 6
(c) CAS 9
(d) CAS 22
(170) Which standard deals with the principles and methods of determining the manufacturing
Cost of excisable goods?
(a) CAS 2
(b) CAS 12
(c) CAS 15

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(d) CAS 22
(171) _____ deals with the principles and methods of determining the production or operation
overheads.
(a) CAS-3
(b) CAS-5
(c) CAS-9
(d) CAS-16
(172) CAS 13 stands for:
(a) Joint Cost
(b) Interest and financing charges
(c) Employee Cost
(d) Cost of Service cost centre
(173) Which of the following items is not included in preparation of cost sheet?
(a) Carriage inward
(b) Purchase returns
(c) Sales Commission
(d) Interest paid
(174) Which of the following items is not excluded while preparing a cost sheet?
(a) Goodwill written off
(b) Provision for taxation
(c) Property tax on Factory building
(d) Transfer to reserves
(175) Which of the following are direct expenses?(1) The cost of special designs, drawings or
layouts,(2) The hire of tools or equipment for a particular job,(3) Salesman’s wages,(4)
Rent, rates and insurance of a factory
(a) (1) and (2)
(b) (1) and (3)
(c) (1) and (4)
(d) (3) and (4)
(176) What is prime cost ?
(a) Total direct cost only
(b) Total indirect costs only
(c) Total non-production costs

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(d) Total production costs

(177) Which of the following is not an element of works overhead?
(a) Sales manager’s salary
(b) Plant manager’s salary
(c) Factory repairman’s wages
(d) Product inspector’s salary
(178) For the purpose of Cost Sheet preparation, costs are classified based on:
(a) Functions
(b) Relevance
(c) Variability
(d) Nature
(179) Salary paid to an office supervisor is a part of:
(a) Direct expenses
(b) Administration cost
(c) Quality control cost
(d) Factory overheads
(180) Audit fees paid to cost auditors is part of
(a) Selling and distribution cost
(b) Production cost
(c) Administration cost
(d) Not recorded in the cost sheet
(181) A company has set up a laboratory for testing of products for compliance with standards.
Salary of this laboratory stuffs are part of:
(a) Direct expenses
(b) Quality control cost
(c) Works overheads
(d) Research and development cost
(182) Canteen expenses for factory workers are part of:
(a) Administration cost
(b) Factory overhead
(c) Marketing cost
(d) None of the above
(183) Which of the following does not form part of prime cost?

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(a) GST paid on raw materials (input credit can be claimed)

(b) Cost of transportation paid to bring materials to factory
(c) Cost of packing
(d) Overtime premium paid to workers
(184) A company pays royalty to State Government on the basis of production, it is treated as:
(a) Direct expenses
(b) Factory overheads
(c) Direct Material Cost
(d) Administration Cost
(185) In Reconciliation Statements, expenses shown only in financial accounts are:
(a) Added to financial profit
(b) Deducted from financial profit
(c) Ignored
(d) Added to costing profit
(186) In Reconciliation Statement, expenses shown only in cost accounts are:
(a) Added to financial profit
(b) Deducted from financial profit
(c) Ignored
(d) Deducted from costing profit
(187) In Reconciliation Statement, transfers to reserves are:
(a) Added to financial profit
(b) Deducted from financial profit
(c) Ignored
(d) Added to costing profit
(188) In Reconciliation Statement, incomes shown only in financial accounts are:
(a) Added to financial profit
(b) Deducted from financial profit
(c) Ignored
(d) Deducted from costing profit
(189) In Reconciliation Statement, Closing Stock undervalued in Financial Accounts is
(a) Added to financial profit
(b) Deducted from financial profit
(c) Ignored

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(d) Added to costing profit

(190) Under non-integrated accounting system:
(a) Separate ledgers are maintained for cost and financial accounts
(b) Same ledger is maintained for cost and financial accounts by accountants
(c) (A) and (B) both
(d) None of the above
(191) Under non-integrated system of accounting, purchase of raw material is debited to:
(a) Purchase account
(b) Material control account / stores ledger control account
(c) General ledger adjustment account
(d) None of the above
(192) When costing loss is ₹ 5,600, administrative overhead under- absorbed being ₹ 600, the
loss as per financial accounts should be _____.
(a) ₹5000
(b) ₹5600
(c) ₹6200
(d) None of the above
(193) Which of the following items should be added to costing profit to arrive at financial profit?
(a) Income tax paid
(b) Over absorption of works overhead
(c) Interest paid on debentures
(d) All of the above
(194) Integral accounts eliminate the necessity of operating
(a) Cost Ledger control accoun
(b) Store Ledger control account
(c) Overhead adjustment account
(d) None of the above
(195) Under Non- integrated accounting system, the amount made to complete double entry
is :
(a) Finished goods control account
(b) Work in progress control account
(c) stores ledger control accounts
(d) General ledger adjustment account

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(196) Under the Non- Integrated Accounting System -

(a) Same ledger is maintained for Cost and financial Accounts by Accountants
(b) Separate ledgers are maintained for Cost and Financial Accounts
(c) All transactions relating to incomes, Expenditures, Assets and Liabilities are complete-
ly recorderd
(d) Product-wise or department wise information is not maintained
(197) Notional Costs -
(a) May be included in Integrated Accounts
(b) may be Included in Non–Integrated accounts
(c) Cannot Be included in Non-intergrated Accounts
(d) are not accounted at all in Ingrated or Non- integrated Accounts
(198) Which account is to be debited if materials worth ₹ 500 are returned to vendor under Non
-Ingrated Accounts
(a) Cost Ledger control account
(b) finished goods control Account
(c) WIP Control Account
(d) General ledger adjustment account
(199) What is the journal Entry under Integrated System for recording Sales made?
(a) No entry
(b) Dr sales,
Cr General Ledger Adjustment
(c) Dr. cash or bank
Cr. Sales
(d) Dr. General Ledger Adjsutment,
Cr .sales
(200) Which of the following items is most likely to be included in Cost Accounts ?
(a) Notional Rent
(b) Donations
(c) © Transfer to General Reserve
(d) Rent Receivable
(201) Job costing is used in:
(a) Furniture making
(b) Repair shops

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(c) Printing press

(d) All of the above
(202) In a job cost system, costs are accumulated _____.
(a) On a monthly basis
(b) By specific job
(c) By department or process
(d) By kind of material used
(203) The most suitable cost system where the products differ in type of material and work
performed is:
(a) Operating Costing
(b) Job costing
(c) Process costing
(d) All of these.
(204) Cost Price is not fixed in case of:
(a) Cost plus contracts
(b) Escalation clause
(c) De escalation clause
(d) All of the above
(205) Most of the expenses are direct in:
(a) Job costing
(b) Batch costing
(c) Contact costing
(d) None of the above
(206) Cost plus contract is usually entered into those cases where _____.
(a) Cost can be easily estimated
(b) Cost of certified and uncertified work
(c) Cost of certified work, cost of uncertified work and amount of profit transferred to
Profit and Loss Account
(d) Determination of contract cost with reasonable accuracy is not possible
(207) In order to determine cost of the products or services, different business firms follow:
(a) Different techniques of costing
(b) Uniform costing
(c) Different methods of costing

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(d) None of the above

(208) In case product produced or jobs undertaken are of diverse system, the system of costing
to be used should be:
(a) Operating Costing
(b) Process Costing
(c) Job Costing
(d) None of the above
(209) Job Costing is:
(a) Suitable where similar products are produced on mass scale
(b) Methods of costing used for non- standard and non- repetitive products
(c) Technique of costing
(d) Applicable to all industries regardless of the products or services provided
(210) Batch costing is a type of:
(a) Direct Costing
(b) Process Costing
(c) job Costing
(d) Differential Costing
(211) Batch costing is similar to that under job costing except with the difference that:
(a) Process becomes a cost unit
(b) Job becomes a cost unit
(c) Batch become the cost unit instead of a job
(d) None of the above
(212) Economic batch quantity is that size of the batch of production where:
(a) Carrying cost is minimum
(b) Set-up cost of machine is minimum
(c) Average cost is minimum
(d) Both A. and B
(213) Which of the following documents are used in job costing to record the issue of direct
materials to a job?
(a) Purchase order
(b) Purchase requisition
(c) Goods received note
(d) Material requisition

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(214) Which of the following statements is true?

(a) Batch costing is a variant of jobs costing
(b) Job cost sheet may be used for estimating profit of jobs
(c) Job costing cannot be used in conjunction with marginal costing
(d) In cost plus contracts, the contractor runs a risk of incurring a loss
(215) Which of the statement is true?
(a) Job costing can be suitably used for concerns producing any specific product
uniformly
(b) Job costing cannot be used in companies applying standard costing
(c) Job cost sheet may be prepared to facilitate routing and scheduling of the job
(d) Neither A, nor B, nor C
(216) The type of process loss that should not be allowed to affect the cost of good units is
called:
(a) Standard Loss
(b) Normal Loss
(c) Abnormal Loss
(d) Seasonal Loss
(217) Spoilage that occurs under inefficient operating conditions and is generally controllable
is called _____ .
(a) Normal defectives
(b) Abnormal spoilage
(c) Normal spoilage
(d) None of the above
(218) In which of the following situations an abnormal gain in a process occurs:
(a) When normal loss is equal to actual loss
(b) When the actual output is greater than the planned output
(c) When actual loss is more than the expected
(d) When actual loss is less than the expected loss
(219) The value of abnormal loss is equal to :
(a) Total cost of materials
(b) Total process cost less cost of scrap
(c) Total process cost less realisable value of normal loss less value of transferred out
goods
(d) Total process cost less realisable value of normal loss

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(220) A process account is debited by abnormal gain, the value is determined as:
(a) Equal to the value of good units less closing stock
(b) Equal to the value of normal loss
(c) Cost of good units less realisable value of normal loss
(d) Cost of good unit less realisable value of actual loss
(221) In sugar manufacturing industry molasses is also produced along with sugar. Molasses
may be of small value as compared with the value of sugar and is known as:
(a) Joint product
(b) Common product
(c) By-product
(d) None of them
(222) Method of apportioning joint costs on the basis of output of each joint product at the
point of split-offs is known as:
(a) Physical unit method
(b) Sales value method
(c) Average cost method
(d) Marginal cost and contribution method
(223) The main purposes of accounting of joint products and by-products is to:
(a) Determine the replacement cost
(b) Determine the opportunity cost
(c) Determine profit or loss on each product line
(d) None of the above
(224) Under net realisable value method of apportioning joint costs to joint products, the
selling & distribution cost is:
(a) Ignored
(b) Deducted from sales value
(c) Deducted from further processing cost
(d) Added to joint cost
(225) Which of the following is an example of by-product:
(a) Mustard seeds and mustard oil
(b) Diesel and Petrol in an oil refinery
(c) Edible oils and oil cakes
(d) Curd and butter in a diary

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(226) Which of following methods can be used when the joint products are of unequal quantity
and used for captive consumption:
(a) Physical units method
(b) Net realisable value method
(c) Technical estimates, using market value of similar goods
(d) Market value at spit- off method
(227) Cost of a particular service under operating costing is ascertained by preparing:
(a) Cost sheet
(b) Process account
(c) Job cost sheet
(d) Production account
(228) Operating costing is applicable to:
(a) Hospitals
(b) Cinemas
(c) Transport undertaking
(d) All of the above
(229) Composite cost unit for a hospital is:
(a) Per day
(b) Per bed
(c) Per patient day
(d) Per patient
(230) Cost units used in power sector is called:
(a) Number of hours
(b) Number of electric points
(c) Kilowatt-hour (KWH)
(d) Kilo meter (K.M.)
(231) Absolute Tonne-Km is an example of:
(a) Composite unit for bus operation
(b) Composite unit of transport sector
(c) Composite unit for oil and natural gas
(d) Composite unit in power sector
(232) In process costing, a joint product is
(a) a product which is later divided into many parts

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(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
(233) Process B had no opening inventory. 13,500 units of raw material were transferred in at
₹ 4.50 per unit. Additional material at ₹1.25per unit was added in process. Labour and
overheads were ₹ 6.25 per completed unit and ₹ 2.50 per unit incomplete. If 11,750
completed units were transferred out, what was the closing inventory in Process B?
(a) ₹ 6562.50
(b) ₹ 12,250.00
(c) ₹ 14,437.50
(d) ₹ 25,375.00
(234) A process costing system for J Co used an input of 3,500Kg of materials at ₹20 per Kg and
labour hours of 2,750 at ₹25 per hour. Normal loss is 20% and losses can be sold at a scrap
value of ₹5per Kg. Output was 2,950 Kg. What is the value of the output?
(a) ₹ 142,485
(b) ₹ 146,183
(c) ₹ 149,746
(d) ₹ 152,986
(235) In process costing, if an abnormal loss arises, the process account is generally
(a) Debited with the scrap value of the abnormal loss units
(b) Debited with the full production cost of the abnormal loss units
(c) Credited with the scrap value of the abnormal loss units
(d) Credited with the full production cost of the abnormal loss units
(236) Which of the following statements is/are correct?
(1) A materials requisition note is used to record the issue of direct material to a specific
job.
(2) A typical job cost will contain actual costs for material, labour and production
overheads, and non –production overheads are often added as a percentage of total
production cost
(3) The job costing method can be applied in costing batches
(a) (1) only
(b) (1) and (2) only
(c) (1) and (3) only

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(d) (2) and (3) only

(237) A job is budgeted to require 3,300 productive hours after incurring 25% idle time. If the
total labour cost budgeted for the job is ₹36,300. What is the labour cost per hour( to the
nearest cent)?
(a) ₹ 8.25
(b) ₹ 8.80
(c) ₹ 11.00
(d) ₹ 14.67
(238) A company calculates the prices of jobs by adding overheads to the prime cost and adding
30% to total costs as a profit margin. Job number Y256 was sold for ₹1690 and incurred
overheads of ₹ 694. What was the prime cost of the job?
(a) ₹ 489
(b) ₹ 606
(c) ₹ 996
(d) ₹ 1300
(239) State which of the following are the characteristics of service costing?
(1) High levels of indirect costs as a proportion of total costs
(2) Use of composite cost units
(3) Use of equivalent units
(a) (1) only
(b) (1) and (2) only
(c) (2) only
(d) (2) and (3) only
(240) Which of the following organisations 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
(241) In case of joint products, the main objective of accounting of the cost is to apportion the
joint costs incurred up to the split off point. For cost apportionment one company has
chosen Physical Quantity Method. Three joint products ‘A’, ‘B’ and ‘C’ are produced in the
same process. Up to the point of split off the total production of A, B and C is 60,000 kg,
out of which ‘A’ produces 30,000 kg and joint costs are ₹ 3,60,000. Joint costs allocated to
product A is:
(a) ₹ 1,20,000

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(b) ₹ 60,000
(c) ₹ 1,80,000
(d) None of the these
(242) A transport company is running five buses between two towns, which are 50 kms apart.
Seating capacity of each bus is 50 passengers. Actually passengers carried by each bus
were 75% of seating capacity. All buses ran on all days of the month. Each bus made one
round trip per day.
Passenger kms are:
(a) 2,81,250
(b) 1,87,500
(c) 5,62,500
(d) None of the above
(243) The cost of a product under marginal costing system includes:
(a) Prime cost plus variable overhead
(b) Prime cost plus fixed overhead
(c) Prime cost plus factory overhead
(d) Only prime cost
(244) The difference between absorption costing and marginal costing is in regard to the
treatment of:
(a) Direct materials
(b) Fixed overhead
(c) Prime cost
(d) Variable overhead
(245) Fixed costs are treated as :
(a) Overhead costs
(b) Prime costs
(c) Period costs
(d) Conversion costs
(246) When sales and production (in units) are same then profits under :
(a) Marginal costing is lower than that of absorption costing
(b) Marginal costing is higher than that of absorption costing
(c) Marginal costing is equal to that of absorption costing
(d) None of the above
(247) When sales exceeds production (in units) then profit under:

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(a) Marginal costing is higher than that of absorption costing

(b) Marginal costing is equal to that of absorption costing
(c) Marginal costing is lower than that of absorption costing
(d) None of the above
(248) which of the following factors responsible for change in the break even point?
(a) change in selling price
(b) change in variable cost
(c) change in fixed cost
(d) all of the above
(249) Variable cost -
(a) Remains fixed in total
(b) Remains fixed per unit
(c) Varies per unit
(d) Nor increase or decrease
(250) Marginal Costing technique follows the following basic of classification:
(a) Element wise
(b) Function Wise
(c) Behaviour wise
(d) Identifiability wise
(251) P/V ratio will increase if the:
(a) There is a decrease in fixed cost
(b) There is an increase in fixed cost
(c) There is a decrease in selling price per unit.
(d) There is a decrease in variable cost per unit.
(252) The technique of differential cost is adopted when:
(a) To ascertain P/V ratio
(b) To ascertain marginal cost
(c) To ascertain cost per unit
(d) To make choice between two or more alternative courses of action
(253) Which of the following would not be used to estimate standard direct material prices?
(a) The availability of bulk purchase discounts
(b) Purchase contracts already agreed
(c) The forecast movement of prices in the market

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(d) Performance standards in operation

(254) What is an attainable standard?
(a) A standard which includes no allowance for losses, waste and inefficiencies. It
represents the level of performance which is attainable under perfect operating
conditions
(b) A standard which includes some allowance for losses, waste and inefficiencies. It
represents the level of performance which is attainable under efficient operating
conditions
(c) A standard which is based on currently attainable operating conditions
(d) A standard which is kept unchanged, to show the trend in costs
(255) Budgets are shown in-Terms:
(a) Qualitative
(b) Quantitative
(c) Materialistic
(d) both (b) and (c)
(256) Which of the following is not an element of master budget?
(a) Capital Expenditure Budget
(b) Production Schedule
(c) Operating Expenses Budget
(d) All above the above
(257) Which of the following is not a potential benefit of using a budget?
(a) Enhanced coordination of firm activities
(b) More motivated managers
(c) Improved inter- departmental communication
(d) More accurate external financial statements
(258) Which of the following is a long-term budget?
(a) Master Budget
(b) Flexible Budget
(c) Cash Budget
(d) Capital Budget
(259) Materials become key factor, if
(a) quota restrictions exist
(b) insufficient advertisement prevails
(c) there is low demand

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(d) there is no problem with supplies of materials

(260) The difference between fixed cost and variable cost assumes significance in the prepara-
tion of the following budget:
(a) Master Budget
(b) Flexible Budget
(c) Cash Budget
(d) Capital Budget
(261) The budget that is prepared first of all is .
(a) Master budget
(b) Sales budget assuming that it is the key factor
(c) Cash Budget
(d) Capital expenditure budget
(262) Sales budget is a .
(a) expenditure budget
(b) functional budget
(c) master budget
(d) None of these
(263) When a company wants to prepare a factory overhead budget in which the estimated
costs are directly derived from the estimates of activity levels, which of the following
budget should be prepared by the company?
(a) Flexible budget
(b) Fixed budget
(c) Master budget
(d) R & D budget
(264) Which of the following budgets facilitates classification of fixed and variable costs:
(a) Capital expenditure budget
(b) Flexible budget
(c) Cash budget
(d) Raw materials budget
(265) The entire budget organisation is controlled and headed by a senior executive known as:
(a) General Manager
(b) Accountant
(c) Budget Controller

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(d) None of the above

(266) Which of the following is a long-term budget?
(a) Master Budget
(b) Flexible Budget
(c) Cash Budge
(d) Capital Budget
(267) A flexible budget requires a careful study of
(a) Fixed, semi-fixed and variable expenses
(b) Past and current expenses
(c) Overheads, selling and administrative expenses
(d) None of these.
(268) The basic difference between a fixed budget and flexible budget is that a fixed budget
_____.
(a) is concerned with a single level of activity, while flexible budget is prepared for
different levels of activity
(b) Is concerned with fixed costs, while flexible budget is concerned with variable costs
(c) is fixed while flexible budget changes
(d) None of these
(269) Which of the following is not a reason for an idle time variance?
(a) Wage rate increase
(b) Machine breakdown
(c) Illness or injury to worker
(d) Non- availability of material
(270) During September, 300 labour hours were worked for a total cost of ₹ 4800. The variable
overhead expenditure variance was ₹ 600 (A). Overheads are assumed to be related to
direct labour hours of active working. What was the standard cost per labour hour?
(a) ₹ 14
(b) ₹ 16.50
(c) ₹ 17.50
(d) ₹ 18
(271) Which of the following would explain an adverse variable production overhead efficiency
variance? Employees were of a lower skill level than specified in the standard Unexpected
idle time resulted from a series of machine breakdown Poor Quality material was difficult
to process
(a) (1), (2) and (3)

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(b) (1) and (2)

(c) (2) and (3)
(d) (1) and (3)
(272) 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) 12960
(b) 14400
(c) 15840
(d) 16000
(273) CG Co manufactures a single product T. Budgeted production output of product T during
June is 200 units. Each unit of product T requires 6 labour hours for completion and CG Co
anticipates 20 per cent idle time. Labour is paid at a rate of ₹7 per hour. The direct labour
cost budget for March is
(a) ₹ 6,720
(b) ₹ 8,400
(c) ₹ 10,080
(d) ₹ 10,500
(274) A Local Authority is preparing cash Budget for its refuse disposal department. Which of
the following items would not be included in the cash budget?
(a) Capital cost of a new collection vehicle
(b) Depreciation of the machinery
(c) Operatives wages
(d) Fuel for the collection Vehicles
(275) The actual output of 162,500 units and actual fixed costs of ₹ 87000 were exactly as
budgeted. However, the actual expenditure of ₹ 300,000 was ₹ 18,000 over budget. What
was the budget variable cost per unit?
(a) ₹ 1.20
(b) ₹ 1.31
(c) ₹1.42
(d) ₹ 1.50
(276) A ltd is a manufacturing company that has no production resource limitations for the
foreseeable future. The Managing Director has asked the company mangers to coordinate
the preparation of their budgets for the next financial year. In what order should the

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following budgets be prepared?

(1) Sales budget
(2) Cash budget
(3) Production budget
(4) Purchase budget
(5) Finished goods inventory budget
(a) (2), (3), (4), (5), (1)
(b) (1), (5), (3), (4), (2)
(c) (1), (4), (5), (3), (2)
(d) (4), (5), (3), (1), (2)
(277) S produces and sells one product, P, for which the data are as follows:
Selling price ₹ 28
Variable cost ₹ 16
Fixed cost ₹4
The fixed costs are based on a budgeted production and sales level of 25,000 units for the
next period.
Due to market changes both the selling price and the variable cost are expected to
increase above the budgeted level in the next period.
If the selling price and variable cost per unit increase by 10% and 8% respectively, by how
much must sales volume change, compared with the original budgeted level, in order to
achieve the original budgeted profit for the period?
(a) 10.1% decrease
(b) 11.2% decrease
(c) 13.3% decrease
(d) 16.0% decrease
(278) A company makes a single product and incurs fixed costs of ₹ 30,000 per annum. Variable
cost per unit is ₹ 5 and each unit sells for ₹ 15. Annual sales demand is 7,000 units. The
breakeven point is :
(a) 2,000 units
(b) 3,000 units
(c) 4,000 units
(d) 6,000 units
(279) A company manufactures a single product for which cost and selling price data are as
follows:
Selling price per unit ₹ 12

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Variable cost per unit ₹8

Fixed cost for a period ₹ 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) 72%
(d) 125%
(280) A company’s break even point is 6,000 units per annum. The selling price is ₹ 90 per unit
and the variable cost is ₹ 40 per unit. What are the company’s annual fixed costs?
(a) ₹ 120
(b) ₹ 2,40,000
(c) ₹ 3,00,000
(d) ₹ 5,40,000
(281) After inviting tenders for supply of raw materials, two quotations are received as follows :
Supplier P ₹ 2.20 per unit, Supplier Q ₹ 2.10 per unit plus ₹ 2,000 fixed charges irrespective
of the units ordered. The order quantity for which the purchase price per unit will be the
same –
(a) 22,000 units
(b) 20,000 units
(c) 21,000 units
(d) None of the above.
(282) The cost per unit of a product manufactured in a factory amounts to ₹ 160 (75% variable)
when the production is 10,000 units. When production increases by 25%, the cost of
production will be ₹ per unit.
(a) ₹ 145
(b) ₹ 150
(c) ₹ 152
(d) ₹ 140
(283) 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

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(d) Prime Cost

(284) 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
(285) _____ is a summary of all functional budgets in a capsule form.
(a) Functional Budget
(b) Master Budget
(c) Long Period Budget
(d) Flexible Budget
(286) is a detailed budget of cash receipts and cash expenditure incorporating both revenue
and capital items.
(a) Cash Budget
(b) Capital Expenditure Budget
(c) Sales Budget
(d) Overhead Budget
(287) Following information is available of XYZ Limited for quarter ended June, 2023
Fixed cost ₹ 5,00,000
Variable cost ₹ 10 per unit
Selling price ₹ 15 per unit
Output level 1,50,000 units
What will be amount of profit earned during the quarter using the marginal costing
technique?
(a) ₹ 2,50,000
(b) ₹ 10,00,000
(c) ₹ 5,00,000
(d) ₹ 17,50,000
(288) The P/v ratio of a company is 50% and margin of safety is 40%. If present sales is ₹ 30,00,000
then Break Even Point in ₹ will be:
(a) ₹ 9,00,000
(b) ₹ 18,00,000
(c) ₹ 5,00,000

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(d) None of the above

(289) Following information is available of PQR for year ended March, 2013: 4,000 units in
process, 3,800 units output, 10% of input is normal wastage, ₹ 2.50 per unit is scrap value
and ₹ 46,000 incurred towards total process cost then amount on account of abnormal
gain to be transferred to Costing P&L will be:-
(a) ₹ 2,500
(b) ₹ 2,000
(c) ₹ 4,000
(d) ₹ 3,500
(290) 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.
(291) When the sales increase from ₹ 40,000 to ₹ 60,000 and profit increases by ₹ 5,000, the P/V
ratio is:
(a) 20%
(b) 30%
(c) 25%
(d) 40%
(292) In activity based costing, costs are accumulated by activity. Such Accumulated Amounts
are called -
(a) Cost drivers
(b) Cost objects
(c) Cost pools
(d) Cost Benefits Analysis
(293) Steps in ABC Include -
(a) Identification of activities and their respective costs
(b) Identification of cost Driver of each activity and computation of an allocation rate per
activity
(c) Allocation of Overhead Cost to products /services based on the activities involved
(d) all of the above
(294) Which of the following is not a benefit of ABC ?
(a) Accurate cost allocation

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(b) Improved decision making

(c) Better control on activity and costs
(d) reduction of prime cost
(295) The key elements of Activity Based Budgeting are -
(a) Type of Activity to be performed
(b) Quantity of activity to bee performed
(c) Cost of activity to be performed
(d) all of the above
Answer
(1) (b) the total of direct costs
(2) (d) a selling & distribution overhead
(3) (a) Direct expense
(4) (b) overhead apportionment
(5) (b) Element
(6) (c) It ends when the targets are achieved
(7) (d) Cost object
(8) (d) Revenue centre
(9) (c) Factory overhead
(10) (d) All of the above terms
(11) (d) to provide information to management for decision-making
(12) (b) cost object
(13) (c) It ends when targets achieved
(14) (b) Kilo–Watt-Hour (kWh)
(15) (b) Chemical Industries
(16) (a) By element
(17) (b) stock needs to be reconciled with goods received note
(18) (b) semi-variable
(19) (d) A Ltd.
(20) (c) Administrative overhead
(21) (c) Historical Costs
(22) (a) Functions
(23) (c) property tax on factory building

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(24) (a) Total direct cost only

(25) (a) Cost of Packing
(26) (d) Assisting Shareholders in decision making
(27) (a) (1) and (2)
(28) (b) Factory Overheads
(29) (a) Administration Overheads
(30) (b) Quality Control Cost
(31) (a) Administration Cost
(32) (a) Factory Overheads
(33) (a) Factory Overheads
(34) (c) Direct Expenses
(35) (c) Sales Manager’s Salary
(36) (a) Where the manager has the responsibility of generating and maximising profits
(37) (d) Cost Centres, Profit Centres and Investment Centres
(38) (a) Unit of quantity of product, service or time in relation to which costs may be
ascertained or expressed
(39) (c) Which do not change in total during a given period despise changes in output
(40) (a) can not
(41) (b) Material, Labour and expenses
(42) (b) Cost not normally incurred at a given level of output
(43) (b) Raw material, Finished goods
(44) (b) Not relevant for decision making
(45) (c) ₹ 1,70,000
(46) (c) ₹ 3,333
(47) (b) ₹ 2,80,000
(48) (c) Loss due to careless handling of material
(49) (a) Material
(50) (d) None of these
(51) (c) Store Ledger
(52) (c) Vaiable Cost
(53) (c) First in first out price method
(54) (d) Standard price method
(55) (d) Weighted average

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(56) (c) Taylor’s differential piece rate system

(57) (a) Charged to costing profit and loss A/c
(58) (b) Charged to overhead costs
(59) (a) Number of workers replaced average number of workers
(60) (c) Time spent by workers off their work
(61) (a) Actual hours being more than normal time
(62) (d) All of the above
(63) (c) More wages to workers under Rowan Plan than Halsey Plan
(64) (a) 83% of the piece work rate
(65) (b) Shall not
(66) (a) Treated
(67) (b) Royalty charged on production
(68) (a) Cost allocation
(69) (b) Administration overhead
(70) (a) Allocation
(71) (b) Charging of overhead to cost units
(72) (b) The use of supplementary rates
(73) (d) Any of the above
(74) (d) Production cost
(75) (c) Practical capacity and estimated idle capacity as revealed by long term sales trend
(76) (a) Under absorption of overhead
(77) (b) Machine hour rate method
(78) (c) Maintaining stores ledger
(79) (d) Accounting for material received
(80) (b) Quantitative record of material received, issued and balance
(81) (a) Quantitative as well as value wise records of material received, issued and balance;
(82) (a) Maximum consumption x Maximum re- order period
(83) (d) Minimum and equal
(84) (c) Inventory is classified into A, B and C Category with A being the lowest quantity,
highest value
(85) (d) EOQ
(86) (b) provide highest value of closing stock and profit
(87) (a) provide lowest value of closing stock and profit

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(88) (b) 800 units

(89) (a) 310
(90) (a) ₹ 765
(91) (b) ₹ 805
(92) (c) ₹ 786
(93) (b) Charged to the profit & loss account
(94) (d) 7000 units
(95) (d) ₹ 2,990
(96) (d) Machine break downs
(97) (c) should be charged to the job directly
(98) (b) Rate of change in composition of labour force during a specified period
(99) (d) Disability, making a worker unfit for work
(100) (c) Both of the above
(101) (c) 48
(102) (a) 112
(103) (b) 1.82%
(104) (a) 4.55%
(105) (b) ₹540
(106) (b) All Indirect costs
(107) (b) Cost Allocation
(108) (d) Repeated distribution method
(109) (c) Both Production and service departments
(110) (b) Value of Machines
(111) (a) One single overhead absorption rate for the whole factory
(112) (c) 10,000 Kg
(113) (d) 18700
(114) (a) material
(115) (c) Loss due to breaking the bulk
(116) (b) Loss due to pilferage
(117) (c) Ordering Cost is equal to the Carrying Cost
(118) (b) Perpetual Inventory
(119) (b) Standard price method
(120) (d) Simple Average Price

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(121) (b) Weighted Average price

(122) (b) Frequently of usage of items of inventory
(123) (b) Purchase Requisition Note
(124) (c) ABC Analysis
(125) (d) All the above (same)
(126) (a) Consumption Statement
(127) (c) Inter department transfers
(128) (b) Maximum Usage x maximum lead time
(129) (a) Maximum level
(130) (c) times
(131) (a) High, less
(132) (b) FIFO
(133) (c) Stock Insurance
(134) (a) Debited to costing P & L
(135) (c) Both (a) and (b)
(136) (a) There is no idle time cost
(137) (d) Engineering Department
(138) (c) Payroll Department
(139) (c) Higher Productivity or Efficiency
(140) (d) Time spent on a particulars job
(141) (d) All of the above
(142) (b) ₹ 1728
(143) (b) ₹ 180
(144) (a) Respective job
(145) (a) Time keeping
(146) (c) Either of the above
(147) (d) Separation
(148) (d) Time rate System
(149) (b) 50%
(150) (a) 50% of Std Time
(151) (a) Std Time /Actual Time
(152) (b) ₹ 600
(153) (c) ₹ 750

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(154) (a) 97.22%

(155) (a) Increase in Output is not Substantial
(156) (c) Practical
(157) (c) Theoretical Capacity
(158) (b) Apportionment
(159) (d) Re- Apportionment
(160) (d) It may be any of the above
(161) (d) Night Shift allowance paid to a factory Worker due to general work pressure
(162) (d) Normal Capacity
(163) (b) Over absorption of overhead
(164) (d) Managerial Salaries
(165) (b) Travelling expenses to site.
(166) (d) None of these
(167) (b) CAS-13
(168) (d) CAS 16
(169) (a) CAS 5
(170) (d) CAS 22
(171) (a) CAS-3
(172) (d) Cost of Service cost centre
(173) (d) Interest paid
(174) (c) Property tax on Factory building
(175) (a) (1) and (2)
(176) (a) Total direct cost only
(177) (a) Sales manager’s salary
(178) (a) Functions
(179) (b) Administration cost
(180) (c) Administration cost
(181) (b) Quality control cost
(182) (b) Factory overhead
(183) (d) Overtime premium paid to workers
(184) (a) Direct expenses
(185) (d) Added to financial profit
(186) (b) Deducted from financial profit

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(187) (a) Added to financial profit

(188) (b) Deducted from financial profit
(189) (a) Added to financial profit
(190) (a) Separate ledgers are maintained for cost and financial accounts
(191) (b) Material control account / stores ledger control account
(192) (c) ₹6200
(193) (b) Over absorption of works overhead
(194) (a) Cost Ledger control accoun
(195) (d) General ledger adjustment account
(196) (b) Separate ledgers are maintained for Cost and Financial Accounts
(197) (b) may be Included in Non–Integrated accounts
(198) (d) General ledger adjustment account
(199) (d) Dr. General Ledger Adjsutment, Cr .sales
(200) (a) Notional Rent
(201) (d) All of the above
(202) (b) By specific job
(203) (b) Job costing
(204) (a) Cost plus contracts
(205) (c) Contact costing
(206) (d) Determination of contract cost with reasonable accuracy is not possible
(207) (c) Different methods of costing
(208) (c) Job Costing
(209) (b) Methods of costing used for non-standard and non-repetitive products
(210) (c) job Costing
(211) (c) Batch become the cost unit instead of a job
(212) (d) Both A. and B
(213) (d) Material requisition
(214) (b) Job cost sheet may be used for estimating profit of jobs
(215) (d) Neither A, nor B, nor C
(216) (c) Abnormal Loss
(217) (b) Abnormal spoilage
(218) (b) When the actual output is greater than the planned output
(219) (d) Total process cost less realisable value of normal loss

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(220) (c) Cost of good units less realisable value of normal loss
(221) (c) By-product
(222) (a) Physical unit method
(223) (c) Determine profit or loss on each product line
(224) (b) Deducted from sales value
(225) (c) Edible oils and oil cakes
(226) (c) Technical estimates, using market value of similar goods
(227) (c) Job cost sheet
(228) (d) All of the above
(229) (c) Per patient day
(230) (c) Kilowatt-hour (KWH)
(231) (b) Composite unit of transport sector
(232) (b) a product which is produced simultaneously with other products and is of similar
value to at least one of the other products.
(233) (c) ₹ 14,437.50
(234) (a) ₹ 142,485
(235) (d) Credited with the full production cost of the abnormal loss units
(236) (c) (1) and (3) only
(237) (a) ₹ 8.25
(238) (b) ₹ 606
(239) (b) (1) and (2) only
(240) (c) Maintenance division of a manufacturing company
(241) (c) ₹ 1,80,000
(242) (c) 5,62,500
(243) (a) Prime cost plus variable overhead
(244) (b) Fixed overhead
(245) (c) Period costs
(246) (c) Marginal costing is equal to that of absorption costing
(247) (a) Marginal costing is higher than that of absorption costing
(248) (d) all of the above
(249) (b) Remains fixed per unit
(250) (c) Behaviour wise
(251) (d) There is a decrease in variable cost per unit.

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(252) (d) To make choice between two or more alternative courses of action
(253) (d) Performance standards in operation
(254) (b) A standard which includes some allowance for losses, waste and inefficiencies. It
represents the level of performance which is attainable under efficient operating
conditions
(255) (d) both (b) and (c)
(256) (b) Production Schedule
(257) (d) More accurate external financial statements
(258) (d) Capital Budget
(259) (a) quota restrictions exist
(260) (b) Flexible Budget
(261) (b) Sales budget assuming that it is the key factor
(262) (b) functional budget
(263) (a) Flexible budget
(264) (b) Flexible budget
(265) (c) Budget Controller
(266) (d) Capital Budget
(267) (a) Fixed, semi-fixed and variable expenses
(268) (a) is concerned with a single level of activity, while flexible budget is prepared for
different levels of activity
(269) (a) Wage rate increase
(270) (a) ₹ 14
(271) (d) (1) and (3)
(272) (d) 16000
(273) (d) ₹ 10,500
(274) (b) Depreciation of the machinery
(275) (a) ₹ 1.20
(276) (b) (1), (5), (3), (4), (2)
(277) (b) 11.2% decrease
(278) (b) 3,000 units
(279) (a) 20%
(280) (c) ₹ 3,00,000
(281) (b) 20,000 units

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(282) (c) ₹ 152

(283) (b) Variable Cost
(284) (d) Flexible budget
(285) (b) Master Budget
(286) (a) Cash Budget
(287) (a) ₹ 2,50,000
(288) (b) ₹ 18,00,000
(289) (a) ₹ 2,500
(290) (a) Fixed overheads
(291) (c) 25%
(292) (c) Cost pools
(293) (d) all of the above
(294) (d) reduction of prime cost
(295) (d) all of the above

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NOTES

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MQP
Objectives

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MTP Jun’23 Set 1

1. Multiple Choice Questions

(i) Costs which are ascertained after they have been incurred are known as
(a) Sunk Costs
(b) Imputed Costs
(c) Historical Costs
(d) Opportunity Costs
(ii) Prime cost plus variable overheads is known as
(a) Factory Cost
(b) Marginal Cost
(c) Cost of Production
(d) Total Cost
(iii) In which of the following methods, issue of materials is priced at pre-determined rate?
(a) Specific price method
(b) Standard price method
(c) Inflated price method
(d) Replacement price method
(iv) For reducing the labour cost per unit, which of the following factors is the most important?
(a) Low wage rates
(b) Longer hours of work
(c) Higher input-output ratio
(d) Strict control and supervision
(v) Maximum possible productive capacity of a plant when no operating time is lost is its
(a) Normal capacity
(b) Practical capacity
(c) Theoretical capacity
(d) Capacity based on sales expectancy
(vi) In job costing, which of the following documents is used to record the issue of direct
materials to a job?
(a) Goods Receipt Note
(b) Purchase Order

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(c) Purchase Requisition Note

(d) Material Requisition Note
(vii) The main purpose of accounting of joint products and by-products is to
(a) determine the profit/loss on each product line.
(b) determine the selling price.
(c) comply with the statutory requirements.
(d) identify the cost and load it on the main product.
(viii) The following is not treated as a manufacturing overhead:
(a) Lubricants
(b) Cotton waste
(c) Apportioned administration overheads
(d) Night shift allowance paid to a factory worker due to general work pressure.
(ix) When you attempt a reconciliation of profits as per Financial Accounts and Cost Accounts,
the following is done:
(a) Add the under absorption of overheads in Cost Accounts if you start from the profits
as per Financial Accounts.
(b) Add the under absorption of overheads in Cost Accounts if you start from the profits
as per Cost Accounts.
(c) Add the over absorption of overheads in Cost Accounts if you start from the profits as
per Financial Accounts.
(d) Add the over absorption of overheads in Cost Accounts if you start from the profits as
per Cost Accounts.
(x) The fixed-variable cost classification has a special significance in the preparation of
(a) Cash budget
(b) Master budget
(c) Flexible budget
(d) Capital budget
(xi) Which one of the following is related to the calculation of labour turnover.
(a) Replacement method
(b) Cost of utilities
(c) Decision package
(d) Direct expenses

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(xii) Cost Accounting Standard 10 (CAS-10) relates to

(a) Cost of utilities
(b) Decision package
(c) Direct expenses
(d) Production strategy

2. State whether the following statements are “True” or “False”. [1 × 7 = 7]

(i) Profit is the result of two varying factors sales and variable cost.
(ii) Bin card is a record of both quantities and value.
(iii) Overtime premium is directly assigned to cost objects.
(iv) In a reconciliation statement, expenses shown only in financial accounts are added to
financial profit.
(v) The basic assumption under which Direct Costing is operational is that the contribution to
sales ratio remains constant at all levels of activity.
(vi) Performance Budgeting is synonymous with Responsibility Accounting.
(vii) Any deviation from the standards can be quickly detected and responsibility pinpointed so
that the company can take appropriate action to eliminate inefficiencies or take advantage
of efficiencies - this is termed as management by exception.

3. Fill in the blanks [1 × 6 = 6]

(i) _____ costs are historical costs which are incurred in the past.
(ii) In Absorption Costing, _____ cost is added to inventory.
(iii) CAS-2 is the Cost Accounting Standard on _____ determination.
(iv) _____is the summary of all functional budgets.
(v) Standard Costing is one of the _____ techniques.
(vi) Distribution of identifiable expenses to any department is called _____ .
Answers:
(a)

(i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii)
c b b c c d a d a c a c
(b)

(i) (ii) (iii) (iv) (v) (vi) (vii)

False False True True True True True

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(c)

(i) (ii) (iii) (iv) (v) (vi)

Sunk Cost Fixed Cost Capacity Master Cost Control Allocation
budget

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MTP Jun’23 Set 2

1. Multiple Choice Questions

(i) Which of the following statements is/are correct?

1. A materials requisition note is used to record the issue of direct material to a specific
job
2. A typical job cost will contain actual costs for material, labour and production
overheads, and non- production overheads are often added as a percentage of total
production cost
3. The job costing method can be applied in costing batches
(a) (1) only
(b) (1) and (2) only
(c) (1) and (3) only
(d) (2) and (3) only
(ii) Cost of idle time arising due to non-availability of raw material is
(a) Recovered by inflating the raw material rate.
(b) Recovered by inflating the wage rate.
(c) Charged to factory overheads.
(d) Charged to costing profit and loss account.
(iii) Selling and distribution overheads are absorbed on the basis of
(a) Rate per unit.
(b) Percentage on works cost.
(c) Percentage on selling price of each unit.
(d) Any of the above
(iv) What entry will be passed under integrated system for purchase of stores on credit?
(a) Dr. Stores
Cr. Creditors
(b) Dr. Purchases
Cr. Creditors
(c) Dr. Stores Ledger Control A/c
Cr. Creditors
(d) Dr. Stores Ledger Control A/c
Cr. General Ledger Adjustment A/c

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(v) _____ deals with the principles and methods of determining the production or operation
overheads.
(a) CAS-3
(b) CAS-5
(c) CAS-9
(d) CAS-16
(vi) Marginal costing technique follows the following basis of classification:
(a) Element-wise
(b) Function-wise
(c) Behaviour-wise
(d) Identifiability-wise
(vii) Which of the following is not a potential benefit of using a budget?
(a) More motivated managers
(b) Enhanced co-ordination of firm activities
(c) Improved inter-departmental communication
(d) More accurate external financial statements
(viii) Cost Accounting Standard 1 (CAS1) deals with _____
(a) Classification of cost
(b) In terms of completed units
(c) Reference to the job
(d) To determine the value of closing inventory
(ix) Equivalent Production refers to production
(a) Of items which have high initial costs
(b) For classification of cost
(c) In terms of completed units
(d) To determine the value of closing inventory
(x) One of the major de-merit of a centralized purchase organization
(a) High initial costs
(b) Classification of cost
(c) Reference to the job
(d) To determine the value of closing inventory
(xi) The fixed-variable cost classification has a special significance in the preparation of
(a) Cash budget

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(b) Master budget

(c) Flexible budget
(d) Capital budget
(xii) Which of the following closely matches with Just In Time (JIT)
(a) Decision package
(b) Cost of utilities
(c) Production strategy
(d) Replacement method

2. State whether the following statements are “True” or “False”. [1 × 7 = 7]

(i) By-products may undergo further processing before sale.

(ii) Materials which can be identified with the given product unit of cost centre is called as
indirect materials.
(iii) Increasing Labour Turnover increases the productivity of labour resulting in low costs.
(iv) In case of materials that suffers loss in weight due to evaporation etc. the issue price of the
materials is inflated to cover up the losses
(v) Penalties and fines are included in cost accounts to determine the cost of production.
(vi) Chemical works, soap making and Milk dairy production are examples of process costing.
(vii) Split-off point is a point beyond input factors are commonly used for production of
multiple products, which can be either joint products or by-products. After this point, the
joint products or by-products gain individual identity.

3. Fill in the blanks [1 × 6 = 6]

(i) In standard costs, _____ norm is applied as a scale of reference for assessing actual cost to
serve as a basis of cost control.
(ii) Material Transfer Note is a _____ for transferring the materials from one job to other job.
(iii) One of the disadvantages of overtime working is incurring _____ labour cost.
(iv) CAS-2 deals with Cost Accounting Standard on _____ determination.
(v) Where the cost and financial accounts are maintained independently of each other, it is
indispensable to _____ them, as there are differences in the profits of two sets of books.
(vi) The _____ is the starting point in preparing the master budget.
Answers:

1. (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii)
c d d c a c d a c a c c

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2. (i) (ii) (iii) (iv) (v) (vi) (vii)

True False False True False True False

3. (i) (ii) (iii) (iv) (v) (vi)

pre-determined document excess (or capacity reconcile sales budget
additional or
more or higher)

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MQP Dec’23 Set 1

1. Multiple Choice Questions

(i) _____ deals with the principles and methods of determining the production or operation
overheads.
(a) CAS-3
(b) CAS-5
(c) CAS-9
(d) CAS-16
(ii) Time and motion study is conducted by the _____.
(a) Time –keeping department
(b) Personnel department
(c) Payroll department
(d) Engineering department
(iii) Royalty paid on sales ₹89,000 and Software development charges related to product is
₹22,000. Calculate Direct Expenses.
(a) ₹1,11,100
(b) ₹1,11,000
(c) ₹1,11,110
(d) ₹1,10,000
(iv) Marginal Costing technique follows which of the following basis of classification?
(a) Element wise
(b) Function wise
(c) Behaviour
(d) Identifiability wise
(v) If an organization has all the resources it needs for production, then the principal budget
factor is most likely to be _____.
(a) non-existing
(b) sales demand
(c) raw materials
(d) labour supply
(vi) In process, conversion cost means _____.
(a) Cost of direct materials, direct labour, direct expenses

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(b) Direct labour, direct expenses, indirect material, indirect labour, indirect expenses
(c) Prime cost plus factory overheads
(d) All costs up to the product reaching the consumer, less direct material costs
(vii) If sales are ₹150,000 and variable cost are ₹50,000. Compute P/V ratio.
(a) 66.66%
(b) 100%
(c) 133.33%
(d) 65.66%
(viii) Selling and distribution overheads are absorbed on the basis of _____.
(a) rate per unit.
(b) percentage on works cost.
(c) percentage on selling price of each unit.
(d) Any of the above
(ix) In a process 800 units are introduced during 2022-23. 5% of input is normal loss. Closing
work-in-progress 60% complete is 100 units. 660 completed units are transferred to next
process. Equivalent production for the period is _____.
(a) 760 units
(b) 744 units
(c) 540 units
(d) 720 units
(x) A hotel having 100 rooms of which 80% are normally occupied in summer and 25% in
winter. Period of summer and winter be taken as 6 months each and normal days in a
month be assumed to be 30. The total occupied room days will be _____.
(a) 1525 Room days
(b) 18900 Room days
(c) 36000 Room days
(d) None of the above
(xi) Integral accounts eliminate the necessity of operating _____.
(a) Cost Ledger Control Account
(b) Store Ledger Control Account
(c) Overhead Adjustment Account
(d) None of the above
(xii) Batch Costing is suitable for _____.
(a) Sugar Industry

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(b) Chemical Industry

(c) Pharma Industry
(d) Oil Industry
(xiii) In which of the following incentive plan of payment, wages on time basis are not
Guaranteed?
(a) Halsey plan
(b) Rowan plan
(c) Taylor’s differential piece rate system
(d) Gantt’s task and bonus system
(xiv) During a period 13600 labour hours were worked at a standard rate of ₹8 per hour. The direct
labour efficiency variance was ₹8,800 (Adv). How many standard hours were produced?
(a) 12000 hours
(b) 12500 hours
(c) 13000 hours
(d) 13500 hours
(xv) Difference between standard cost and actual cost is called as _____.
(a) Wastage
(b) Loss
(c) Variance
(d) Profit
Answer:

(i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xix) (xv)
a d b c b b a d d b a c c b c

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MQP Dec’23 Set 2

Multiple Choice Questions
(i) Which of the following is not a feature of Job Costing?
(a) Each job maintains its separate identity throughout the production stage
(b) The job is meant for a mass market
(c) Production pattern is not repetitive and continuous
(d) Production begins only after getting order from the customer
(ii) Cost of Sales = Cost of Production + _____.
(a) Selling and Distribution Overhead rate per unit
(b) Factory Overhead Cost
(c) Direct Labour
(d) None of the above
(iii) Charging to a cost centre those overheads that result solely for the existence of that cost
centre is known as:
(a) Allocation
(b) Apportionment
(c) Absorption
(d) Allotment
(iv) P/V ratio will increase if:
(a) There is a decrease in fixed cost
(b) There is an increase in fixed cost
(c) There is a decrease in selling price per unit.
(d) There is a decrease in variable cost per unit.
(v) The following is not treated as a manufacturing overhead:
(a) Lubricants
(b) Cotton waste
(c) Apportioned administration overheads
(d) Night shift allowance paid to a factory worker due to general work pressure.
(vi) Which of the following would not be used to estimate standard direct material prices?
(a) The availability of bulk purchase discounts
(b) Purchase contracts already agreed
(c) The forecast movement of prices in the market
(d) Performance standards in operation

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(vii) The main purposes of accounting of joint products and by-products is to:
(a) Determine the replacement cost
(b) Determine the opportunity cost
(c) Determine profit or loss on each product line
(d) None of the above
(viii) A certain process needed standard labour of 24 skilled labour hours and 30 unskilled
labour hours at ₹ 60 and ₹ 40 respectively as the standard labour rates. Actually, 20 and 25
labour hours were used at ₹ 50 and ₹ 50 respectively. Then, the labour mix variance will be:
(a) Adverse
(b) Favourable
(c) Zero
(d) Favourable for skilled and unfavourable for unskilled
(ix) 1200 units were introduced in a process in which 120 units is the normal loss. If the actual
output is 900 units, then there is:
(a) No abnormal gain
(b) Abnormal loss of 180 units
(c) No abnormal loss
(d) Abnormal gain of 180 units
(x) Z Ltd. is planning to sell 1,00,000 units of product A for ₹ 12.00 per unit. The fixed costs are
₹ 2,80,000. In order to realize a profit of ₹ 2,00,000, what would the variable costs be?
(a) ₹4,80,000
(b) ₹ 7,20,000
(c) ₹ 9,00,000
(d) ₹ 9,20,000
(xi) A firm has fixed expenses ₹ 90,000, sales ₹ 3,00,000 and profit ₹ 60,000. The P/V ratio of the
firm is:
(a) 10%
(b) 20%
(c) 30%
(d) 50%
(xii) When costing loss is ₹ 5,600, administrative overhead under-absorbed being ₹ 600, the
loss as per financial accounts should be _____ .
(a) ₹ 5,000
(b) ₹ 5,600

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(c) ₹ 6,200
(d) None of the above
(xiii) At the economic ordering quantity level, the following is true:
(a) The ordering cost is minimum
(b) The carrying cost is minimum
(c) The ordering cost is equal to the carrying cost
(d) The purchase price is minimum
(xiv) A company has to pay a ₹ 1 per unit royalty to the designer of a product which it manufac-
tures and sells. The royalty charge would be classified in the company’s accounts as a _____
(a) Direct expense
(b) Production overhead
(c) Administrative overhead
(d) Selling overhead.
(xv) If the time saved is less than 50% of the standard time, then the wages under Rowan and
Halsey premium plan on comparison gives:
(a) Equal wages under two plans
(b) More wages to workers under Halsey Plan than Rowan Plan
(c) More wages to workers under Rowan Plan than Halsey Plan
(d) None of the above.
Answers:

(i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv)
b a a d d d c c b b d c c a c

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MQP Jun’24 Set 1

1. Choose the correct option: [15 x 2 = 30]

(i) Which standards deals with the principles and methods of determining depreciation and
amortization cost?
(a) CAS 9
(b) CAS 12
(c) CAS 15
(d) CAS 16
(ii) _____ is anything for which a separate measurement of cost is required.
(a) Cost driver
(b) Cost centre
(c) Cost unit
(d) Cost object
(iii) Direct Expenses _____ includes imputed cost.
(a) Shall
(b) Shall not
(c) Shall be
(d) None of these
(iv) Fixed costs are treated as
(a) Overhead costs
(b) Prime costs
(c) Period costs
(d) Conversion costs
(v) Sales budget is a _____ .
(a) expenditure budget
(b) functional budget
(c) master budget
(d) None of these
(vi) In which of the following situations an abnormal gain in a process occurs:
(a) When normal loss is equal to actual loss
(b) When the actual output is greater than the planned output
(c) When actual loss is more than the expected

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(d) When actual loss is less than the expected loss

(vii) Absorption means
(a) Charging of overheads to cost centres
(b) Charging of overhead to cost units
(c) Charging of overheads to cost centres or cost units
(d) None of the above
(viii) Primary packing cost is a part of
(a) Direct material cost
(b) Distribution overhead
(c) Selling overhead
(d) Production cost
(ix) Equivalent production of 1,000 units, 60% complete in all respect, is:
(a) 1,000 units
(b) 1,600 units
(c) 600 units
(d) 1,060 units (1000 × 60%)
(x) When costing loss is ₹ 5,600, administrative overhead under-absorbed being ₹ 600, the
loss as per financial accounts should be _____ .
(a) ₹ 5,000
(b) ₹ 5,600
(c) ₹ 6,200
(d) None of the above
(xi) Contribution is ₹ 3,00,000 and sales is ₹ 15,00,000. Compute P/V ratio.
(a) 15%
(b) 20%
(c) 22%
(d) 17.5%
(xii) What is the labour rate variance if standard hours for 100 units of output are 400 @ ₹ 2 per
hour and actual hours taken are 380 @ ₹ 2.25 per hour?
(a) ₹ 120 (adverse)
(b) ₹ 100 (adverse)
(c) ₹ 95 (adverse)
(d) ₹ 25 (favourable)

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(xiii) Standard cost of material for a given quantity of output is ₹ 15,000 while the actual cost of
material used is ₹ 16,200. The material cost variance is:
(a) ₹ 1,200 (A)
(b) ₹ 16,200 (A)
(c) ₹ 15,000 (F)
(d) ₹ 31,200 (A)
(xiv) Job Costing is used in:
(a) Furniture making
(b) Repair shops
(c) Printing press
(d) All of the above
(xv) Under Taylor’s differential piece rate scheme, if a worker fails to complete the task within
the standard time, then he is paid
(a) 83% of the piece work rate
(b) 175% of the piece work rate
(c) 67% of the piece work rate
(d) 125% of the piece work rate
Answer :

(i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv)
d d b c b d b d c c b c a d a

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MQP Dec’24 [Set 1]

Choose the correct option: [15 × 2 = 30]
(i) What is the primary objective of cost accounting?
(a) Maximize profits
(b) Record financial transactions
(c) Provide financial statements
(d) Facilitate cost control and decision-making
(ii) If the direct materials consumed are ₹30,000, direct labour is ₹20,000, and factory overhead
is 15,000, what is the total manufacturing cost?
(a) 50,000
(b) 65,000
(c) 35,000
(d) 20,000
(iii) The sum of direct labour and factory overhead is termed _____.
(a) Prime Cost
(b) Conversion Cost
(c) Cost of goods manufactured
(d) Direct Cost
(iv) A company employs three drivers to deliver goods to its customers. The salaries paid to
these drivers are:
(a) a part of prime cost
(b) a direct production expense
(c) a production overhead
(d) a selling and distribution overhead
(v) What does CAS-11 emphasize regarding the treatment of abnormal administrative costs?
(a) Inclusion in cost calculations
(b) Exclusion from cost calculations
(c) Separate disclosure in footnotes
(d) Attestation by external auditors
(vi) Which of the following is a scientific and accurate method for calculating factory overhead
absorption?
(a) Percentage of prime cost method
(b) Machine hour rate method

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(c) Percentage of direct material cost method

(d) Percentage of direct labour cost method
(vii) A company calculates the prices of jobs by adding overheads to the prime cost and adding
30% to total costs as a profit margin. Job number Y256 was sold for ₹1,690 and incurred
overheads of ₹694. What was the prime cost of the job?
(a) 489
(b) 606
(c) 996
(d) 1,300
(viii) Which of the following does not form part of prime cost?
(a) GST paid on raw materials (input credit can be claimed)
(b) Cost of transportation paid to bring materials to factory
(c) Cost of packing
(d) Overtime premium paid to workers
(ix) Job costing is:
(a) Suitable where similar products are produced on a mass scale
(b) Method of costing used for non-standard and non-repetitive products
(c) Applicable to all industries regardless of the products or services produced
(d) None of the above
(x) Normal capacity of a plant refers to the difference between:
(a) Maximum capacity and practical capacity
(b) Maximum capacity and actual capacity
(c) Practical capacity and estimated idle capacity as revealed by long term sales trend
(d) Practical capacity and normal capacity
(xi) A flexible budget requires a careful study of:
(a) Fixed, semi-fixed and variable expenses
(b) Past and current expenses
(c) Overheads, selling and administrative expenses.
(d) None of these.
(xii) Marginal Costing technique follows the _____ basis of classification of costs.
(a) Element wise
(b) Function Wise
(c) Behaviour wise

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(d) Identifiability wise

(xiii) What characterizes a non-integrated cost accounting system?
(a) Unified ledger system
(b) Separate cost and financial accounts
(c) Sole reliance on cost principles
(d) Complex reconciliation processes
(xiv) Administration overheads are usually absorbed as a percentage of _____.
(a) Works Cost
(b) Prime Cost
(c) Cost of goods sold
(d) Cost of production
(xv) If the time saved is less than 50% of the standard time, then the wages under Rowan and
Halsey premium plan on comparison gives:
(a) Equal wages under two plans
(b) More wages to workers under Halsey Plan than Rowan Plan
(c) More wages to workers under Rowan Plan than Halsey Plan
(d) None of the above
Answer:

(i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv)
d b b d b b b d b c a c b a b

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Termwise
Objective

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Jun’23

1. Multiple Choice Questions

(i) B Ltd. pays 10 per unit royalty to the designer of a product which it manufactures and sells.
The royalty charge would be classified in the company’s accounts as a
(a) Direct expense
(b) Production overhead
(c) Administrative overhead
(d) Selling overhead
(ii) The sum of direct labour and factory overhead is termed as
(a) Sunk cost
(b) Fixed cost
(c) Conversion cost
(d) Variable cost
(iii) Overtime is
(a) Actual hours being more than normal hours
(b) Actual hours being more than standard hours
(c) Standard hours being more than actual hours
(d) Actual hours being less than standard hours
(iv) Directors’ remuneration and expenses form a part of
(a) Production overhead
(b) Administration overhead
(c) Selling overhead
(d) Distribution overhead
(v) Which of the following CAS deals with the principles and methods of determining depreci-
ation and amortization cost?
(a) CAS-8
(b) CAS - 12
(c) CAS - 14
(d) CAS-16
(vi) For the purpose of cost sheet preparation, costs are classified based on
(a) Nature
(b) Functions

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(c) Relevance
(d) Variability
(vii) Which of the following items should be added to costing prbfit to arrive at financial profit?
(a) Income tax paid
(b) Over absorption of works overhead
(c) Interest paid on bonds
(d) All of the above
(viii) Which of the following statements is true?
(a) Batch costing is a variant of job costing
(b) Job cost sheet may be used for estimating profit of jobs
(c) Job costing cannot be used in conjunction with marginal costing
(d) In cost plus contracts, the contractor runs a risk of incurring a loss
(ix) Which of the following is an example of by-product?
(a) Curd and butter in a dairy
(b) Mustard seeds and mustard oil
(c) Edible oils and oil cakes
(d) Diesel and petrol in an oil refinery
(x) Standard price of material per kg is ₹ 20, standard usage per unit of production is 5 kg.
Actual usage of production of 100 units is 520 kgs, all of which was purchased at the rate
of ₹ 22 per kg. Material usage varianceis
(a) ₹ 400 (Adverse)
(b) ₹ 400 (Favourable)
(c) ₹ 1,040 (Adverse)
(d) ₹ 1,040 (Favourable)
(xi) Which of the following factors are responsible for change in the break-even point?
(a) Change in fixed cost
(b) Change in variable cost
(c) Change in selling price
(d) All of the above
(xii) Which of the following is not a potential benefit of using a budget?
(a) More motivated managers
(b) Improved inter-departmental communication
(c) Enhanced co-ordination of firm activities
(d) More accurate external financial statements

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2. State whether the following statements are “True” or “False”. (You may write only the
Roman numeral and whether “True” or “False” without copying the statements into the
answer books): [1 × 7 = 7]

(i) Cost unit is anything for which a separate measurement of cost is required.
(ii) Stores Ledger is maintained inside the stores by the store-keeper.
(iii) Continuous stock taking is an essential feature of the perpetual inventory system.
(iv) Travelling expense to the project site is a direct expense.
(v) Cost of idle time arising due to non-availability of raw material is charged to factory
overheads.
(vi) Budgetary control facilitate introduction of ‘Management by Exception’.
(vii) Costs incurred prior to the split off point are known as “Incremental Costs”.

3. Fill in the blanks (You may write only the Roman numeral and the content filling the
blanks): [1 × 6 = 6]

(i) Ticket counter in a Cinema Hall is an example of _____ centre.

(ii) As per the Payment of Bonus Act, 1965, the maximum limit of bonus is _____ per cent of
gross earnings.
(iii) Under absorption of overheads means that actual overheads are _____ than absorbed
overheads.
(iv) CAS _____ stands for cost of service cost centre.
(v) _____ is a system for reporting revenue and cost information to the individual responsible
for the revenue-causing and/or cost-incurring function.
(vi) Under integrated accounting system, the accounting entry for payment of wages is to
debit _____ and to credit cash account.
Answers:

1. (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii)
A C A B D B B B C A D D

2. (i) (ii) (iii) (iv) (v) (vi) (vii)

False False True True False True False

3. (i) (ii) (iii) (iv) (v) (vi)

Revenue 20 More 13 Responsibility Accounting Wages Control Account

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Dec ‘23
(i) Which of the following is applicable for cost control?
(a) It is a corrective function.
(b) It is related with the future,
(c) It challqucs the standard cost.
(d) It ends when the targets are achieved.
(ii) Under integral accounts, issue of direct material is debited to the following account:
(a) Purchase account
(b) Stores ledger control account
(c) Factory overhead control account
(d) Work-in-progress control account
(iii) Product ‘X’ generates a contribution to sales ratio of 40%. Fixed costs directly attributable
to ‘X’ amounts to ₹ 60,000 per month. The sales required to achieve a monthly profit of ₹
12,000 will be
(a) ₹ 1,87,500
(b) ₹ 2,00,000
(c) ₹ 1,65,000
(d) ₹ 1,80,000
(iv) The most suitable cost system where the products differ in type of materials and work
performed is _____
(a) Batch Costing
(b) Job Costing
(c) Process Costing
(d) Operating Costing
(v) Primary packing is a part of
(a) Direct material cost
(b) Production cost
(c) Selling overhead
(d) Distribution overhead
(vi) Cash Budget of PQR & Co. forewarns of a short-term surplus. Which of the following would
be the appropriate action to be taken in such a situation?
(a) Purchase new fixed assets
(b) Repay long-term loans
(c) Pay creditors early to obtain a cash discount

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(d) Write-off preliminary expenses

(vii) The sales amount of Product ‘Z is ₹ 1,00,000. Its variable cost is ₹ 40,000 and fixed cost is ₹
50,000. The amount of BEP sales will be
(a) ₹ 60,000
(b) ₹ 50,000
(c) ₹ 83,333
(d) ₹ 90,000
(viii) Which of the following does not form part of prime cost?
(a) Cost of packing
(b) Overtime premium paid to workers
(c) GST paid on raw materials (input credit can be claimed)
(d) Cost of transportation paid to bring materials to factory
(ix) S & Co., which is using batch costing, provides the following information:
Annual demand for the components 4,800 units
Setting up cost per batch ₹ 50
Manufacturing cost per unit ₹ 100
Carrying cost per unit 12% per annum
On the basis of the above, Economic Batch Quantity of the firm is
(a) 100 units
(b) 200 units
(c) 300 units
(d) 400 units
(x) The method of apportioning joint costs on the basis of output of each joint product at
split-off is known as—
(a) Physical unit method
(b) Average cost method
(c) Sales value method
(d) Marginal cost and contribution method
(xi) In a process 12,000 units are introduced during a period. 5% of input is normal loss.
work-in-progress transferred 60% complete is 1,500 units. 9,900 completed units are to
next process,
Equivalent production for the period is
(a) 13,500 units
(b) 11,160 units

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(c) 8.100 units

(d) 10,800 units
(xii) Time allowed for a job is 80 hours, A worker takes 68 hours to complete the job. rate per
hour is ₹ 15, Total earnings of the worker under the Rowan Bonus Plan is
(a) ₹ 1,020
(b) ₹ 1,200
(c) ₹ 1,173
(d) ₹ 1,110
(xiii) Following information is available:
Overhead incurred ₹ 3,00,000
Overhead recovered ₹ 2,00,000
Cost of sales ₹ 5,00,000
Finished goods ₹ 4,00,000
Work-in-progress ₹ 3,50,000
From the above, Supplementary Overhead Rate to recover the under-absorbed overhead
is _____
(a) ₹ 0.20
(b) ₹ 0.25
(c) ₹ 0.08
(d) ₹ 0.29
(xiv) Which of the following Cost Accounting Standards (CASs) deals with Determination of
Average (Equalized) Cost of Transportation?
(a) CAS-5
(b) CAS-6
(c) CAS-9
(d) CAS-16
(xv) If standard hours for 100 units of output are 800 @ ₹ 4 per hour and actual hours taken are
760 @ ₹ 4.50 per hour, then the Labour Rate Variance is _____
(a) ₹ 480 (Adverse)
(b) ₹ 400 (Adverse)
(c) ₹ 380 (Adverse)
(d) ₹ 100 (Favourable

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Answer :

(i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv)
d d d b b c c b b a d c c a c

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Jun’24

1. Choose the correct answer from the given alternatives (You may write only the Roman
numeral and the alphabet chosen for your answer): 2 × 15 = 30

(i) _____ is a method of dealing with overheads which involves spreading common costs
over cost centres on the basis of benefit received.
(a) Overhead analysis
(b) Overhead apportionment
(c) Overhead allocation
(d) Overhead absorption
(ii) Which of the following CAS deals with the principles and methods of determining the
Production and Operation Overheads?
(a) CAS-2
(b) CAS-3
(c) CAS-5
(d) CAS-10
(iii) Hotel Dream House is having 250 rooms of which 70% are normally occupied in summer
and 40% are occupied in winter. Period of summer and winter be taken as 6 months each
and normal days in a month be assumed to be 30. What is the value of total occupied room
days?
(a) 31,500 room days
(b) 45,000 room days
(c) 36,000 room days
(d) 49,500 room days
(iv) In which of the following methods of pricing, costs lag behind the current economic values?
(a) Replacement price method
(b) Weighted average price method
(c) FIFO price method
(d) LIFO price method
(v) A Lorry starts with a load of 40 Metric Tonnes (MT) of goods from Station ‘A’. It unloads 16
MT in Station ‘B’ and the balance goods in Station ‘C’. On return trip, it reaches Station ‘A’
with a load of 32 MT, loaded at Station ‘C’. The distance between A to B, B to C and C to A are
40 kms, 60 kms and 80 kms respectively. On the basis of above information, “Commercial
MT-kilometers” are -
(a) 5,600 MT-kilometers

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(b) 5,760 MT-kilometers

(c) 6,200 MT-kilometers
(d) 6,450 MT-kilometers
(vi) In a process 800 units are introduced during 2023-24. 5% of input is normal loss. Closing
work-in-progress 60% complete is 100 units. 660 completed units are transferred to next
process. Equivalent production for the period is _____.
(a) 900 units
(b) 744 units
(c) 540 units
(d) 720 units
(vii) Following information is available :
Opening stock ₹ 4,000
Closing stock ₹ 6,400
Material consumed ₹ 31,200
On the above basis, what is the Inventory Turnover Ratio?
(a) 7.8
(b) 5
(c) 6
(d) 3
(viii) When P/V ratio is 20% and margin of safety ratio is 30%, profit is _____ of
(a) sales.
(b) 4%
(c) 6%
(d) 8%
(e) 10%
(ix) In P Ltd., labour force at the beginning of July 2023 was 3,800 and at the end of July 2023
was 4,200. During the month, 50 workers left while 80 workers were discharged. 560
workers were engaged out of which only 60 were appointed in the vacancy created by the
number of workers separated and the rest on account of expansion scheme. On the basis
of above information, Labour Turnover Ratio of the firm by Flux Method is _____.
(a) 14.00%
(b) 3.25%
(c) 1.50%
(d) 8.63%

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(x) If an organisation has all the resources it needs for production, then the principal budget
factor is most likely to be _____.
(a) Cash supply
(b) Sales demand
(c) Raw materials
(d) Labour supply
(xi) The sum of direct labour and factory overheads is termed _____.
(a) Sunk cost
(b) Opportunity cost
(c) Direct cost
(d) Conversion cost
(xii) RST & Co. has set up a laboratory for testing of products for compliance with standards.
Salary of this laboratory staff is a part of _____.
(a) Direct expenses
(b) Works overhead
(c) Quality control cost
(d) Research and development cost
(xiii) A company requires 1,00,000 units of an item annually. The cost per unit is ₹ 10. Ordering
cost is ₹ 500 per order and inventory carrying cost is 50% per unit per annum. The Economic
Order Quantity (EOQ) in this case is _____.
(a) 4,470 units
(b) 4,472 units
(c) 6,420 units
(d) 6,472 units
(xiv) Which of the following method is used for evaluation of equivalent production when prices
are fluctuating in the market?
(a) FIFO method
(b) LIFO method
(c) Simple average method
(d) Weighted average method
(xv) In the year 2023-24, X & Co. used 2,820 kg of material at a total standard cost of ₹ 11,562.
The material usage variance was ₹ 123 (Favourable). In the above case, Standard Weight of
Material (SQ) for the period is _____.
(a) 2,900 kg.
(b) 2,850 kg.

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(c) 3,048 kg.

(d) 2,648 kg.
Answer :

(i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv)
(b) (b) (d) (c) (b) (d) (c) (b) (d) (b) (d) (c) (b) (d) (b)

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NOTES

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Postal
Test Paper
Objectives

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Postal Test Paper

1. Multiple Choice Questions

(i) Ticket counter in a Metro Station is an example of:

(a) Profit centre
(b) Investment centre
(c) Cost centre
(d) Revenue centre
(ii) Which of the following is applicable for Cost Control?
(a) It is related with the future
(b) It is a corrective function
(c) It ends when the targets are achieved
(d) It challenges the standards set
(iii) Absorption costing is also referred as:
(a) Historical costing
(b) Traditional costing
(c) Full costing
(d) All of the above terms
(iv) Prime cost is:
(a) all costs incurred in manufacturing a product
(b) the total of direct costs
(c) the material cost of a product
(d) the cost of operating a department
(v) Direct Material is a:
(a) Administration Cost
(b) Selling and Distribution Cost
(c) All of these
(d) None of these
(vi) Which of the following methods smoothes out the effect of fluctuations when material
prices fluctuate widely?
(a) FIFO
(b) Simple Average
(c) LIFO

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(d) Weighted average

(vii) Labour turnover is measured by:
(a) Number of workers replaced / average number of workers
(b) Number of workers left / number in the beginning plus number at the end
(c) Number of workers joining / number in the beginning of the period
(d) All of these
(viii) Under Taylor’s differential piece rate scheme, if a worker fails to complete the task within
the standard time, then he is paid:
(a) 83% of the piece work rate
(b) 175% of the piece work rate
(c) 67% of the piece work rate
(d) 125% of the piece work rate
(ix) Normal capacity of a plant refers to the difference between:
(a) Maximum capacity and practical capacity
(b) Maximum capacity and actual capacity
(c) Practical capacity and estimated idle capacity as revealed by long term sales trend
(d) Practical capacity and normal capacity
(x) Selling and Distribution overhead are absorbed on the basis of:
(a) Rate per unit
(b) Percentage on works cost
(c) Percentage on selling price of each unit
(d) Any of these
(xi) A company employs three drivers to deliver goods to its customers. The salaries paid to
these drivers are:
(a) a part of prime cost
(b) a direct production expense
(c) a production overhead
(d) a selling and distribution overhead
(xii) Which of the following is considered an accounting record?
(a) Bin Card
(b) Bill of Material
(c) Store Ledger
(d) None of these

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2. State whether the following statements are “True or “False”: [1×7=7]

(i) Material returned note is prepared to keep a record of return of surplus materials to stores.
(ii) As per the Payment of Bonus Act, 1965 the maximum limit of bonus is 20% of gross earning
(iii) Departments that assist producing department indirectly are called service departments.
(iv) Primary packaging cost is included in distribution cost.
(v) Cost ledger control account makes the cost ledger self-balancing.
(vi) Notional interest on owner’s capital appears only in financial profit and loss account.
(vii) Operating costing is applied to ascertain the cost of products.

3. Fill in the blanks: [1 × 6 = 6]

(i) The _____ product generally has a greater sale value than by product.
(ii) Three types of standards are_____ , _____, _____.
(iii) Responsibility Accounting is a system of accounting that recognizes various_____ through-
out the organisation.
(iv) Only difference between variable costing and absorption costing is the classification
of_____.
(v) Variable costs change _____ in direct proportion to changes in output.
(vi) A variable cost is _____per unit.
Answers:

1. (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii)
d c d b d d a a c d d c

2. (i) (ii) (iii) (iv) (v) (vi) (vii)

True True True False True False False

3. (i) (ii) (iii) (iv) (v) (vi)

Main Basic, Ideal responsibility fixed factory in total constant
and Current centres overhead

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NOTES

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