180+ Applied Cost Accounting Solved MCQs

101.

In marginal costing managerial decisions are guided by…………than by profit

A. Marginal cost
B. Variable cost
C. Incremental cost
D. Contribution margin
Answer» D. Contribution margin
102.

There will be…………in marginal costing when there is production but no sales

A. Profit
B. Loss
C. Cost
D. Income
Answer» B. Loss
103.

Marginal costing is a technique of

A. Cost reduction
B. Cost control
C. Profit planning
D. Profit maximization
Answer» B. Cost control
104.

In differential cost analysis decisions are taken by comparing the………… with differential cost

A. Marginal cost
B. Marginal revenue
C. Incremental revenue
D. Either (b) or (c)
Answer» C. Incremental revenue
105.

A………… is useful only when the actual level of activity corresponds to the budgeted level of activity

A. Flexible budget
B. Master budget
C. Fixed budget
D. Sales budget
Answer» C. Fixed budget
106.

………… is the act of building budgets

A. Budgeting
B. Estimating
C. Forecasting
D. ZBB
Answer» A. Budgeting
107.

Budgeting system……………. key managerial functions

A. Co-ordinate
B. Integrates
C. Controls
D. Organize
Answer» B. Integrates
108.

……………. is a budget starts from zero

A. ZBB
B. PB
C. PPB
D. All of these
Answer» A. ZBB
109.

……………. is the budget incorporating all the components functional budgets

A. Sales budget
B. Production budget
C. Capital budget
D. Master budget
Answer» D. Master budget
110.

……………. is the most important budget

A. Master budget
B. Cash budget
C. Sales budget
D. Production budget
Answer» C. Sales budget
111.

……………. forms the basis on which all other budgets are built up

A. Master budget
B. Cash budget
C. Sales budget
D. Summary budget
Answer» C. Sales budget
112.

The job costing each job is a ……………. to which all costs are assigned

A. Profit unit
B. Cost unit
C. Expenses
D. Variable
Answer» B. Cost unit
113.

Job costing can be used in industries using

A. Farm costing
B. Multiple costing
C. Standard costing
D. One-operation costing
Answer» C. Standard costing
114.

The loss incurred on an incomplete contract is transferred to

A. Profit and Loss Account
B. Contract account
C. Work certified
D. Work in progress account
Answer» A. Profit and Loss Account
115.

Contract costing is a basic method of

A. Specific costing
B. Specific order costing
C. Economic batch costing
D. Economic order costing
Answer» B. Specific order costing
116.

In cost-plus contract, the contractor will get costplus

A. Accumulated profit
B. Stipulated profit
C. Earned profit
D. Budgeted profit
Answer» B. Stipulated profit
117.

In marginal costing valuation of stock of work in progress is done on the basis of

A. Market cost
B. Marginal cost
C. Product cost
D. Cost price
Answer» B. Marginal cost
118.

In marginal costing selling price is based on

A. Contribution
B. Marginal cost
C. Market cost
D. Marginal cost plus contribution
Answer» D. Marginal cost plus contribution
119.

The difference between selling price and marginal cost is

A. Profit
B. Marginal cost
C. Contribution
D. Loss
Answer» C. Contribution
120.

Fixed expenses + profit=?

A. Contribution
B. Marginal cost
C. Prime cost
D. Variable cost
Answer» A. Contribution
121.

Stock of work in progress and finished goods are valued at marginal costing not include

A. Fixed cost
B. Semi-fixed
C. Semi-variable
D. Variable
Answer» A. Fixed cost
122.

In the marginal costing method, the actual amount of fixed overheads is wholly charged to

A. Cost sheet
B. Profit and loss
C. Balance sheet
D. Cost account
Answer» B. Profit and loss
123.

……………..is a financial plan

A. Budget
B. Budgetary control
C. P/V ratio
D. BEP
Answer» A. Budget
124.

Budget control is exercised by

A. Budget officer
B. Budget director
C. Budget controller
D. All the above
Answer» D. All the above
125.

Period for which budget is prepared is called

A. Budget period
B. Financial period
C. Fiscal period
D. Accounting period
Answer» A. Budget period
126.

The most important budget having primary importance is called

A. Sales budget
B. Cash budget
C. Master budget
D. Fixed budget
Answer» A. Sales budget
127.

……………..is a forecast of the total output of the whole organization

A. Sales budget
B. Production budget
C. Master budget
D. Material budget
Answer» B. Production budget
128.

……………..budget provides information about the materials to be acquired from the market

A. Material budget
B. Production budget
C. Cash budget
D. Purchase budget
Answer» D. Purchase budget
129.

……………..budget gives different budgeted cost for different levels of activity

A. Flexible budget
B. Fixed budget
C. Master budget
D. Production budget
Answer» A. Flexible budget
130.

In contract costing payment of cash to the contractor is made on the basis of

A. Estimated work
B. Standard work
C. Certified work
D. Uncertified work
Answer» C. Certified work
131.

In job costing each job is a ……………..to which all cost are assigned

A. Profit unit
B. Cost unit
C. Expenses
D. Variable
Answer» B. Cost unit
132.

In contract costing credit is taken only for a part of the profit on

A. Incomplete contract
B. Complete contract
C. Estimated contract
D. Initial contract
Answer» A. Incomplete contract
133.

If the contract is almost complete, the amount of profit generally transferred to profit and loss account is equal to

A. Estimated profit*(Contract price/Work certified)
B. National profit*(Cash Received/Work certified)
C. Estimated profit*(Work certified/Contract price)
D. Work certified*(Contract price/Estimated price)
Answer» C. Estimated profit*(Work certified/Contract price)
134.

Job costing can be done in conjunction with

A. Standard costing
B. Process costing
C. Multiple costing
D. Marginal costing
Answer» D. Marginal costing
135.

In contract costing most of the items of cost are

A. Direct
B. Indirect
C. Variable
D. Semivariable
Answer» A. Direct
136.

When the completion stage of a contract is less than ¼ of the total expenditure on the contract is transferred to

A. Profit & Loss account
B. Work certified account
C. Work in progress account
D. Contract account
Answer» C. Work in progress account
137.

Contract testing is a basic method of

A. Specific costing
B. Specific order costing
C. Economic batch costing
D. Economic order costing
Answer» B. Specific order costing
138.

At break even point, the

A. Fixed cost equal to the total sales value
B. Variable cost equal to the total sales value
C. Total cost equal to the total sales value
D. Variable cost equal to fixed cost
Answer» C. Total cost equal to the total sales value
139.

At break even point, the contribution equal to

A. Fixed cost
B. Variable cost
C. Total cost
D. Zero
Answer» A. Fixed cost
140.

Break even chart depicts

A. Cost volume profit relationship
B. Relationship between fixed and variable cost only
C. Relationship between price and quantity demanded
D. Relationship between price and quantity supplied
Answer» A. Cost volume profit relationship
141.

Period costs means

A. Variable cost
B. Fixed cost
C. Prime cost
D. Direct cost
Answer» B. Fixed cost
142.

The valuation of stock, in marginal costing, as compared to absorption costing is

A. Higher
B. Lower
C. Same
D. Difficult to say
Answer» B. Lower
143.

Contribution margin is also known as

A. Gross profit
B. Net profit
C. Earning before interest and tax
D. Marginal income
Answer» D. Marginal income
144.

Contribution is the difference in

A. Sales and fixed cost
B. Sales and variable cost
C. Sales and total cost
D. Variable cost and fixed cost
Answer» B. Sales and variable cost
145.

Contribution is the sum of

A. Fixed cost and profit
B. Variable cost and profit
C. Total cost and profit
D. Factory cost and profit
Answer» A. Fixed cost and profit
146.

The angle formed at the intersection of sales line and variable cost line is called

A. Angle of incidence
B. Acute angle
C. Loss area
D. Profit area
Answer» A. Angle of incidence
147.

Profit-volume ratio is a relationship between

A. Profit earned to sales volume
B. Target profit to target sales volume
C. Contribution to sales
D. All of the above
Answer» C. Contribution to sales
148.

During the boom period, the profits of a firm will increase at a much faster rate whose P/V ratio is,

A. Very high
B. Moderate
C. Low
D. Very low
Answer» A. Very high
149.

During the recession period, the profits of a firm will decrease at a much slower rate whose P/V ratio is,

A. Very high
B. Moderate
C. Low
D. Very low
Answer» D. Very low
150.

When variable cost per unit increases break even point ……………….

A. Increase
B. Decreases
C. Does not change
D. Difficult to say
Answer» A. Increase
151.

A decrease in the variable cost per unit, the profit-volume ratio will

A. Increase
B. Decreases
C. Does not change
D. Difficult to say
Answer» A. Increase
152.

When fixed cost decreases, the break even point ……………….

A. Increase
B. Decreases
C. Does not change
D. Difficult to say
Answer» B. Decreases
153.

A method of costing which is used to ascertain the cost of products at each stage of it’s manufacture is called

A. Job costing
B. Batch costing
C. Process costing
D. None of these
Answer» C. Process costing
154.

The process A/c is debited with

A. All expenses and losse
B. Material, labour and overheads
C. Material and labour only
D. Incomes and gains
Answer» B. Material, labour and overheads
155.

The process A/c is credited with

A. Value of by-products & scrap
B. All expenses and losses
C. Material and labour
D. Incomes and gains
Answer» A. Value of by-products & scrap
156.

Normal Process Loss is

A. Avoidable and controllable
B. Unavoidable and expected
C. Avoidable and unexpected
D. Unavoidable and uncontrollable
Answer» B. Unavoidable and expected
157.

Normal cost of Normal output is equal to

A. Total cost-scrap value of normal los
B. Total loss-normal loss
C. Total input-normal loss
D. None
Answer» A. Total cost-scrap value of normal los
158.

The finished product of one process becomes

A. Raw material of next proces
B. Finished product of next process
C. Output of next process
D. All of the above
Answer» A. Raw material of next proces
159.

Units of abnormal gain………………..in process A/c and ……………in abnormal gain A/c

A. Credited, Debited
B. Debited, Debited
C. Debited, Credited
D. Credited, Credited
Answer» C. Debited, Credited
160.

Units of abnormal loss is………………..in abnormal process A/c and ……………in process A/c

A. Debited, Credited
B. Credited, Debited
C. Debited, Debited
D. Credited, Credited
Answer» B. Credited, Debited
161.

If abnormal loss has any scrap value , it should be credited to

A. Abnormal los
B. Profit & Loss A/c
C. Process A/c
D. None
Answer» A. Abnormal los
162.

Any loss over and above the normal loss is called

A. Waste
B. Abnormal loss
C. Spoilage
D. Scrap
Answer» C. Spoilage
163.

……………..is a method of costing in which cost are collected and accumulated for each job order

A. Batch costing
B. Job costing
C. Process costing
D. Contract costing
Answer» B. Job costing
164.

Production order costing is also known as

A. Job costing
B. Lot costing
C. Both a and b
D. None of the above
Answer» C. Both a and b
165.

Under job costing, on what basis production is performed?

A. Customers taste and preference
B. Customers income
C. Customers order and specifications
D. Both a and b
Answer» C. Customers order and specifications
166.

The limitations of job costing are ;

A. Expensive
B. More clerical work
C. Historical nature
D. All of them
Answer» D. All of them
167.

How many steps are there in job costing procedure?

A. 5
B. 4
C. 6
D. 8
Answer» A. 5
168.

………………..is a modified form of job costing

A. Process costing
B. Batch costing
C. Contract costing
D. Work costing
Answer» B. Batch costing
169.

Select suitable examples for batch costing

A. Radio set
B. Component part of watches
C. Toy making unit
D. All of them
Answer» D. All of them
170.

EBQ stands for

A. Economic Order Quantity
B. Economic Batch Order
C. Economic Batch Quantity
D. Economic Batch Quality
Answer» C. Economic Batch Quantity
171.

EBQ =

A. 2CO/l
C. 2DS/IC
Answer» C. 2DS/IC
172.

What is the purpose of calculating EBQ ?

A. To reduce cost
B. Optimum production
C. Identify ideal or economic batch
D. None of the above
Answer» C. Identify ideal or economic batch
173.

In which type of contract, the contractee agrees to pay the cost of work done plus a percentage of overhead and profit

A. Fixed price contract
B. Cost plus contract
C. Fixed price contract with exclalation or de-exclalation
D. Completed contract
Answer» B. Cost plus contract
174.

Contract account is a form of ………………….

A. Nominal account
B. Real account
C. Personal account
D. Statement
Answer» A. Nominal account
175.

The portion of value of work that has been done by the contractor and architect or supervisor of the contractee certified that work is ………..

A. Work uncertified
B. Contract price
C. Work certified
D. Retention money
Answer» C. Work certified
176.

The cost of work that has been done by the contractor on the closing date of account, but has not reach stipulated stages to qualify certification of architect of contractee

A. Work certified
B. Work uncertified
C. Contract price
D. None of these
Answer» B. Work uncertified
177.

Retention money is retained by whom ………………….

A. Contractor
B. Contractee
C. Both a and b
D. None of these
Answer» B. Contractee
178.

If the value of work certified less than 25% of contract price,profit to be credited to P&L is

A. No profit is credited to P & L a/c
B. 1/3 of national profit credited to P & L a/c
C. 2/3 of national profit credited to P & L a/c
D. None of these
Answer» A. No profit is credited to P & L a/c
179.

In which situation, 2/3 of national profit credited to P & L a/c

A. If the value of work certified equal to or more than 90% of the contract price
B. If the value of work certified less than 25% of the contract price
C. Both a and b
D. If the value of work certified equal to or more than 50% but less than 90% of the contract price
Answer» D. If the value of work certified equal to or more than 50% but less than 90% of the contract price
180.

If the value of work certified equal to or more than 90% of contract price, profit to be credited is……………….

A. 2/3 * National profit * (Cash received/Work certified)
B. No profit credited to P&L a/c
C. Estimated profit on completion*(Work certified/Contract price)
D. 1/3 * National profit * (Cash received/Work certified)
Answer» C. Estimated profit on completion*(Work certified/Contract price)
181.

Example for cost plus contract

A. Construction work in war
B. Manufacture of ship in special type or design
C. Construction of fish tank
D. Both a and b
Answer» D. Both a and b
182.

The expenses incurred in extra work is

A. Debited in contract amount
B. Credited in contract amount
C. Not shown in contract amount
D. None of the above
Answer» A. Debited in contract amount
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