McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Cost Accounting .
| 51. |
Which of the following is an essential of a budget? |
| A. | It is prepared for a definite future period |
| B. | It is a statement prepared prior to a defined period of time |
| C. | The Budget is monetary and I or quantitative statement of policy |
| D. | All of the above |
| Answer» D. All of the above | |
| 52. |
When preparing a production budget, the quantity to be produced equals |
| A. | sales quantity + opening inventory of finished goods + closing inventory of finished goods |
| B. | sales quantity – opening inventory of finished goods + closing inventory of finished goods |
| C. | sales quantity – opening inventory of finished goods – closing inventory of finished goods |
| D. | sales quantity + opening inventory of finished goods – closing inventory of finished goods |
| Answer» B. sales quantity – opening inventory of finished goods + closing inventory of finished goods | |
| 53. |
In comparing a fixed budget with a flexible budget, what is the reason for the difference between the profit figures in the two budgets? |
| A. | Different levels of activity |
| B. | Different levels of spending |
| C. | Different levels of efficiency |
| D. | The difference between actual and budgeted performance |
| Answer» A. Different levels of activity | |
| 54. |
When budget allowances are set without the involvement of the budget owner, the budgeting process can be described as: |
| A. | top down budgeting |
| B. | negotiated budgeting |
| C. | zero based budgeting |
| D. | participative budgeting |
| Answer» A. top down budgeting | |
| 55. |
For which of the following would zero based budgeting be most suitable? |
| A. | Building construction |
| B. | Mining company operations |
| C. | Transport company operations |
| D. | Government department activities |
| Answer» D. Government department activities | |
| 56. |
Which among the below is the reason behind Material Price Variance: |
| A. | Change in basis purchase price of material. |
| B. | Uneconomical size of purchase order. |
| C. | Payment of excess or less freight. |
| D. | All of the above |
| Answer» D. All of the above | |
| 57. |
In a factory Standard rate per hour Rs. 4, Standard time per unit of output – 20 hours, Units produced - 500, Actual hours worked - 12,000. Compute Labour Efficiency Variance. |
| A. | Rs. 6000 (Favourable) |
| B. | Rs. 8000 (Adverse) |
| C. | Rs. 9,600 (Favourable) |
| D. | Rs. 8000 (Favourable) |
| Answer» B. Rs. 8000 (Adverse) | |
| 58. |
MSE Manufacturing gives you the following details. Standard Price per kg of Material Rs. 2, Actual Material used 2,000 kg, Actual cost of Material Rs. 3,000. Actual output 2,100 kg. Compute Material Price Variance. |
| A. | Rs. 1050 (Favourable) |
| B. | Rs. 1142 (Favourable) |
| C. | Rs. 1000 (Favourable) |
| D. | None of the above |
| Answer» C. Rs. 1000 (Favourable) | |
| 59. |
Which of the following factors does not affect Learning Curve |
| A. | Method of production |
| B. | Labour strike |
| C. | Shut down |
| D. | Efficiency rate |
| Answer» C. Shut down | |
| 60. |
Which of the following is not a reason to use the concept of Learning Curve? |
| A. | Labour efficiency |
| B. | Introducing new technology |
| C. | Value chain effect |
| D. | Standardization, specialization, and methods improvements |
| Answer» B. Introducing new technology | |
| 61. |
Learning curve theory is not applicable to |
| A. | Direct labour |
| B. | Material |
| C. | Spoilage and defective works |
| D. | Overhead |
| Answer» D. Overhead | |
| 62. |
Decision-marking concerns with: |
| A. | Past |
| B. | Future |
| C. | Past and Future both |
| D. | None of the above |
| Answer» B. Future | |
| 63. |
A large Margin of Safety indicates |
| A. | Over-Capitalization |
| B. | The soundness of business |
| C. | Over Production |
| D. | None of the above |
| Answer» B. The soundness of business | |
| 64. |
Revision of budgets is |
| A. | Unnecessary |
| B. | Cannot determine |
| C. | Necessary |
| D. | Inadequate data |
| Answer» C. Necessary | |
| 65. |
Which of the following operating measures would a manager would like to see decreasing over time? |
| A. | Merchandise Inventory Turn-over |
| B. | Total quality cost |
| C. | % of on-time deliveries |
| D. | Finished Goods Inventory Turn-over |
| Answer» B. Total quality cost | |
| 66. |
Another name for the 'Learning Curve' is |
| A. | Exponential Curve |
| B. | Growth Curve |
| C. | Production Curve |
| D. | Experience Curve |
| Answer» D. Experience Curve | |
| 67. |
The well known basic function of management is |
| A. | Motivating |
| B. | Leadership |
| C. | Decision making |
| D. | Communicating |
| Answer» C. Decision making | |
| 68. |
Contribution margin is equal to |
| A. | Sales - Fixed Cost - Profit |
| B. | Profit + Variable Cost |
| C. | Fixed Cost - Loss |
| D. | None of the above |
| Answer» C. Fixed Cost - Loss | |
| 69. |
In a system whereby all activities are revaluated each time a budget is formulated and starts with the assumption that requirement of funds does not exist is called |
| A. | Performance Budgeting |
| B. | Programme Budgeting |
| C. | Flexible Budgeting |
| D. | Zero- based Budgeting |
| Answer» D. Zero- based Budgeting | |
| 70. |
The management’s time is saved by reporting only the deviations from the predetermined standards is called |
| A. | Management by objectives |
| B. | Budgetary Control |
| C. | Standard Costing |
| D. | Management by Exception |
| Answer» D. Management by Exception | |
| 71. |
Marginal Costing is also known as |
| A. | Direct Costing |
| B. | Absorption Costing |
| C. | Variable Cost |
| D. | Variable Costing |
| Answer» D. Variable Costing | |
| 72. |
Another name for ‘Contribution’ is |
| A. | Marginal Income |
| B. | Gross Profit |
| C. | Net Income |
| D. | None of the above |
| Answer» A. Marginal Income | |
| 73. |
Management Accounting |
| A. | accumulates, summarises and analyses the available data. |
| B. | is primarily concerned with the requirements of the management. |
| C. | makes Corporate Planning and Strategy effective. |
| D. | All of the above |
| Answer» D. All of the above | |
| 74. |
XYZ Ltd. makes a special gadget for the car it manufactures. The machine for the gadget works to full capacity and incurs Rs. 15 Lakhs and Rs. 40 Lakhs respectively as Variable and Fixed Costs. If all the gadgets were purchased from an outside supplier, the machine could be used to produce other items, which would earn a total contribution of Rs. 25 Lakhs. What is the maximum price that XYZ Ltd. should be willing to pay to the outside supplier for the gadgets, assuming there is no change in Fixed Costs? |
| A. | Rs. 40 Lakhs |
| B. | Rs. 65 Lakhs |
| C. | Rs. 25 Lakhs |
| D. | Rs. 15 Lakhs |
| Answer» A. Rs. 40 Lakhs | |
| 75. |
The difference between hours paid and hours worked is known as |
| A. | Labour rate variance |
| B. | Labour efficiency variance |
| C. | Idle time variance |
| D. | Net efficiency variance |
| Answer» C. Idle time variance | |
| 76. |
The difference in total cost that results from two alternative courses of action is called |
| A. | Relevant Cost |
| B. | Opportunity Cost |
| C. | Differential Cost |
| D. | Marginal Cost |
| Answer» C. Differential Cost | |
| 77. |
A budget that gives a summary of all the functional budgets and projected Profit and Loss A/c is known as |
| A. | Master budget |
| B. | Flexible budget |
| C. | Performance budget |
| D. | Discretionary budget |
| Answer» A. Master budget | |
| 78. |
When there are no opening or closing stocks, profit under marginal costing will be |
| A. | Greater than in absorption costing |
| B. | Less than in absorption costing |
| C. | Equal to absorption costing |
| D. | Greater, Lower or Equal depending on certain factors |
| Answer» C. Equal to absorption costing | |
| 79. |
Break Even Point can be reduced by |
| A. | Increasing selling price per unit |
| B. | Reducing the variable costs |
| C. | Reducing fixed costs |
| D. | All of the above |
| Answer» D. All of the above | |
| 80. |
One of the following is not within the scope of Management Accounting |
| A. | Formulation of policies |
| B. | Classification and collection of costs |
| C. | Planning and co-ordinating the activities of the enterprise |
| D. | Decision making on alternative courses of action |
| Answer» B. Classification and collection of costs | |
| 81. |
AB company budgets for fixed overhead of Rs. 24,000 and Production of 4800 units. Actual Production is 4200 units. If fixed overhead cost increased is Rs. 22,000, the Fixed overhead volume variance will be |
| A. | Rs. 1,000 (Adv.) |
| B. | Rs. 2,000 (Fav.) |
| C. | Rs. 3,000 (Adv.) |
| D. | Rs. 3,000 (Fav.) |
| Answer» C. Rs. 3,000 (Adv.) | |
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