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590+ more mcqs Solved MCQs

in Management Accounting

These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Business Administration (BBA) , Bachelor of Banking and Insurance (BBI) , Bachelor of Commerce (B Com) .

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501.	Sales margin variance due to sales quantities is measured as
A.	Standard profit - Revised standard profit
B.	Revised standard profit - Budgeted profit
C.	Standard profit + Revised standard profit
D.	Revised standard profit + Budgeted profit
Answer» B. Revised standard profit - Budgeted profit

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502.	.Which of the following statements are true about labor idle time?
A.	Labour idle time variance is not caused by non-availability of raw material
B.	Labour idle time variance is measured as : Abnormal idle hours * Actual hourly rate
C.	Labour idle time variance is always unfavorable or adverse
D.	All of the above
Answer» C. Labour idle time variance is always unfavorable or adverse

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503.	The formula used for calculation of labor rate variance is
A.	Total standard labour cost of actual output - Total actual cost of actual output
B.	(Standard rate per hour - Actual rate per hour) * Actual Hours
C.	(Standard time - Actual time) * Standard rate per hour
D.	Abnormal idle hours * Standard hourly rate
Answer» B. (Standard rate per hour - Actual rate per hour) * Actual Hours

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504.	Idle time variance arises when
A.	Only one grade of labour is used
B.	Time is lost due to abnormal reasons
C.	Both a and b
D.	None of the above
Answer» C. Both a and b

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505.	Material price, mix, usage and revised quantity variances are measured on _______ basis, whereas material yield variance is measured on _______ basis.
A.	Output, Input
B.	Output, Output
C.	Input, Output
D.	None of the above
Answer» C. Input, Output

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506.	Marginal cost is computed as
A.	Prime cost + All Variable overheads
B.	Direct material + Direct labour + Direct Expenses + All variable overheads
C.	Total costs – All fixed overheads
D.	All of the above
Answer» A. Prime cost + All Variable overheads

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507.	Marginal costing is also known as Direct costing
A.	Variable costing
B.	Both a and b
C.	None of the above
D.	none
Answer» C. None of the above

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508.	Which of the following statements are true? (a) Marginal costing is not an independent system of costing. (b) In marginal costing all elements of cost are divided into fixed and variable components. (c) In marginal costing fixed costs are treated as product cost. (d) Marginal costing is not a technique of cost analysis.
A.	A and B
B.	B and C
C.	A and D
D.	B and D
Answer» A. A and B

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509.	While computation of profit in marginal costing
A.	Total marginal cost is deducted from total sales revenues
B.	Total marginal cost is added to total sales revenues
C.	Fixed cost is added to contribution
D.	None of the above
Answer» A. Total marginal cost is deducted from total sales revenues

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510.	Under High and Low Point method, the output at two different levels is compared with the amount of __________ incurred at these two points.
A.	Total fixed costs
B.	Total costs
C.	Total fixed costs
D.	None of the above
Answer» B. Total costs

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511.	Which of the following statements related to Contribution Analysis are ture?
A.	If contribution is zero, there is loss equal to fixed costs
B.	If contribution is negative, loss is less than fixed costs
C.	If contribution is positive and more than fixed cost there will be profit.
D.	All of the above
Answer» A. If contribution is zero, there is loss equal to fixed costs

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512.	When contribution is negative but less than fixed cost,
A.	There is loss equal to fixed costs
B.	There is loss more than fixed costs
C.	There will be loss less than fixed costs
D.	All of above are false
Answer» C. There will be loss less than fixed costs

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513.	When contribution is positive but equal to fixed cost,
A.	There is loss equal to fixed costs
B.	There is loss more than fixed costs
C.	There will be loss less than fixed costs
D.	There will be neither profit not loss
Answer» D. There will be neither profit not loss

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514.	Absorption costing is also known as
A.	Historical costing
B.	Total costing
C.	Both a and b
D.	None of the above
Answer» C. Both a and b

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515.	In context of net operating profit, which of the following statements are true?
A.	If all costs are variable, the amount of profit obtained in marginal costing and absorption costing will be same.
B.	If the volume of sales and output is equal in a period, profit will be same in absorption costing and marginal costing.
C.	Both a and b
D.	None of the above
Answer» C. Both a and b

discuss

516.	Under absorption costing, managerial decisions are based on
A.	Profit
B.	Contribution
C.	Profit volume ratio
D.	None of the above
Answer» A. Profit

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517.	Managers utilizes marginal costing for
A.	Make or buy decision
B.	Utilization of additional capacity
C.	Determination of dumping price
D.	All of the above
Answer» D. All of the above

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518.	___________ is not suitable where selling price is determined on the basis of cost-plus method.
A.	Absorption costing
B.	Marginal costing
C.	Both a and b
D.	None of the above
Answer» B. Marginal costing

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519.	Which of the following are characteristics of B.E.P?
A.	There is no loss and no profit to the firm.
B.	Total revenue is equal to total cost.
C.	Contribution is equal to fixed cost.
D.	All of the above.
Answer» D. All of the above.

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520.	Which of the following are limitations of break-even analysis?
A.	Static concept
B.	Capital employed is taken into account.
C.	Limitation of non-linear behaviour of costs
D.	Limitation of presence of perfect competition
Answer» A. Static concept

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521.	Using equation method, Break-even point is calculated as
A.	Sales = Variable expenses + Fixed expenses + Profit
B.	Sales = Variable expenses + Fixed expenses - Profit
C.	Sales = Variable expenses - Fixed expenses + Profit
D.	None of the above
Answer» A. Sales = Variable expenses + Fixed expenses + Profit

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522.	Given selling price is Rs 10 per unit, variable cost is Rs 6 per unit and fixed cost is Rs 5,000. What is break-even point?
A.	500 units
B.	1,000 units
C.	1,250 units
D.	None of the above
Answer» C. 1,250 units

discuss

523.	Contribution is also known as
A.	Contribution margin
B.	Net Margin
C.	Both a and b
D.	None of the above
Answer» A. Contribution margin

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524.	Determine Contribution if Sales is Rs 1,50,000 and P/V ratio is 40%.
A.	Rs 60,000
B.	Rs 70,000
C.	Rs 30,000
D.	None of the above
Answer» A. Rs 60,000

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525.	Which of the following statements are true?
A.	Contribution doesn’t include fixed cost whereas profit includes fixed cost.
B.	Contribution is not based on the concept of marginal cost.
C.	Contribution above breakeven point becomes profit.
D.	All of the above
Answer» C. Contribution above breakeven point becomes profit.

discuss

526.	Profit-Volume ratio is also known as
A.	Contribution ratio
B.	Contribution/Sales ratio
C.	Marginal Income percentage
D.	All of the above
Answer» D. All of the above

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527.	Which of the following statements are true?
A.	P/V Ratio can never be used to measure break-even point
B.	Higher the P/V ratio less will be the profit and vice versa
C.	Concept of P/V ratio is also used to determine profit at a given volume of sales
D.	All of the above
Answer» C. Concept of P/V ratio is also used to determine profit at a given volume of sales

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528.	The P/V ratio can be improved by
A.	Decreasing the selling price per unit
B.	Increasing variable cost
C.	Changing the sales mix
D.	None of the above
Answer» C. Changing the sales mix

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529.	P/V ratio can be calculated on the basis of variable cost ratio as
A.	1 - Variable Cost Ratio
B.	1 + Variable Cost Ratio
C.	1/Variable Cost Ratio
D.	None of the above
Answer» A. 1 - Variable Cost Ratio

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530.	Sales for desired profit is measured as
A.	(Fixed cost + profit)/ (P/V Ratio)
B.	(Fixed cost + profit) * (P/V Ratio)
C.	(Fixed cost - profit)/ (P/V Ratio)
D.	None of the above
Answer» A. (Fixed cost + profit)/ (P/V Ratio)

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531.	Margin of safety is equal to
A.	Actual sales – Sales at Breakeven point
B.	Actual sales + Sales at Breakeven point
C.	Actual sales x Sales at Breakeven point
D.	Actual sales / Sales at Breakeven point
Answer» A. Actual sales – Sales at Breakeven point

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532.	Angle of incidence is the angle at which
A.	Total revenue line intersects the total cost line
B.	Total cost line intersects the variable cost line
C.	Variable cost line intersects fixed cost line
D.	Fixed cost line intersects total revenue line
Answer» A. Total revenue line intersects the total cost line

discuss

533.	Direct material cost + direct labor cost + other variable costs is equal to…
A.	Contribution
B.	Total cost
C.	Marginal cost
D.	Sales
Answer» A. Contribution

discuss

534.	The factor which limits the volume of output of different products of an understanding at a particular point of time is known as…
A.	Key factor
B.	BEP
C.	Contribution
D.	None
Answer» A. Key factor

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535.	The break even chart helps the management in…
A.	Forecasting costs and profits
B.	Cost control
C.	Long term planning and growth
D.	All of the above
Answer» D. All of the above

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536.	In management accounting, an emphasis and focus must be
A.	Past oriented
B.	Future oriented
C.	Bank oriented
D.	Communication oriented
Answer» B. Future oriented

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537.	In financial accounting, investors, banks, suppliers and government agencies are classified as
A.	External parties
B.	Internal parties
C.	Environmental parties
D.	Transactional parties
Answer» A. External parties

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538.	If the actual output is more than the budgeted output, volume variance is
A.	Favourable
B.	Non-favourable
C.	No impact
D.	None of the above
Answer» A. Favourable

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539.	To get to labour efficiency variance, the formula to be applied is
A.	Total standard labour cost of actual output - Total actual cost of actual output
B.	(Standard rate per hour - Actual rate per hour) * Actual Hours
C.	(Standard time - Actual time) * Standard rate per hour
D.	Abnormal idle hours * Standard hourly rate
Answer» C. (Standard time - Actual time) * Standard rate per hour

discuss

540.	Which of the following is technique of financial statement analysis?
A.	Common‐size statement
B.	Comparative statement
C.	Trend analysis
D.	All
Answer» D. All

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541.	For calculating trend percentages any year is selected as:
A.	Current year
B.	Previous year
C.	Base year
D.	None of these
Answer» C. Base year

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542.	If total cost of 100 units is Rs 5000 and those of 101 units is Rs. 5030 then increase of Rs. 30 in total cost is
A.	Marginal cost
B.	Prime cost
C.	All Fixed overheads
D.	None of the above
Answer» A. Marginal cost

discuss

543.	Which of the following statements are true?
A.	In absorption costing, cost is divided into three major parts while in marginal costing cost is divided into two main parts.
B.	In absorption costing period is important and in marginal costing product is important.
C.	Both a and b
D.	None of the above
Answer» C. Both a and b

discuss

544.	In case of other enterprises cash flow arising from interest paid should be classified as cash flow from ________ while dividends and interest received should be stated as cash flow from ____.
A.	Operating activities, financing activities
B.	Financing activities, investing activities
C.	Investing activities, operating activities
D.	None of the above
Answer» B. Financing activities, investing activities

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545.	Determine Contribution if Fixed cost is Rs 50,000 and loss is Rs 20,000.
A.	Rs 60,000
B.	Rs 70,000
C.	Rs 30,000
D.	None of the above
Answer» C. Rs 30,000

discuss

546.	Which of the below is an Accounting Concept
A.	Materiality
B.	Separate Legal Entity
C.	Consistency
D.	Conservatism
Answer» B. Separate Legal Entity

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547.	The Carl Care Company established the following direct labour cost standards for one unit of product Z: •Standard hours: 1.5 hours •Standard rate: $20 per hour •Standard cost: $30 (1.5 hours @ $20 per hour) During the month of July, 20,000 direct labour hours were worked, and 12,500 units of product Z were manufactured. The total wages related to direct labour in July were $405,000. The direct labour rate variance for July was:
A.	$5,000 unfavourable
B.	$5,000 favourable
C.	$30,000 favourable
D.	$30,000 unfavourable
Answer» A. $5,000 unfavourable

discuss

548.	Which of the following is an example of Semi-Variable Costs
A.	Salary
B.	Tax
C.	Telephone Expenses
D.	Office Expenses
Answer» C. Telephone Expenses

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549.	Long Term Solvency is indicated by:
A.	Current Ratio
B.	Debt / Equity Ratio
C.	Net Profit Ratio
D.	Gross Profit Ratio
Answer» B. Debt / Equity Ratio

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550.	A department makes a product whose contribution per unit is £1,000, and which takes 20 hours machine time. A component used in this product with a marginal cost of £300 (taking 5 hours of machine time) could be purchased from an external supplier. The department is working at full capacity. What is the maximum price that the company may pay to buy the component from an external supplier?
A.	£550
B.	£500
C.	£575
D.	£600
Answer» A. £550

discuss

590+ more mcqs Solved MCQs

Sales margin variance due to sales quantities is measured as

.Which of the following statements are true about labor idle time?

The formula used for calculation of labor rate variance is

Idle time variance arises when

Material price, mix, usage and revised quantity variances are measured on _______ basis, whereas material yield variance is measured on _______ basis.

Marginal cost is computed as

Marginal costing is also known as Direct costing

While computation of profit in marginal costing

Under High and Low Point method, the output at two different levels is compared with the amount of __________ incurred at these two points.

Which of the following statements related to Contribution Analysis are ture?

When contribution is negative but less than fixed cost,

When contribution is positive but equal to fixed cost,

Absorption costing is also known as

In context of net operating profit, which of the following statements are true?

Under absorption costing, managerial decisions are based on

Managers utilizes marginal costing for

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

Which of the following are characteristics of B.E.P?

Which of the following are limitations of break-even analysis?

Using equation method, Break-even point is calculated as

Given selling price is Rs 10 per unit, variable cost is Rs 6 per unit and fixed cost is Rs 5,000. What is break-even point?

Contribution is also known as

Determine Contribution if Sales is Rs 1,50,000 and P/V ratio is 40%.

Which of the following statements are true?

Profit-Volume ratio is also known as

Which of the following statements are true?

The P/V ratio can be improved by

P/V ratio can be calculated on the basis of variable cost ratio as

Sales for desired profit is measured as

Margin of safety is equal to

Angle of incidence is the angle at which

Direct material cost + direct labor cost + other variable costs is equal to…

The factor which limits the volume of output of different products of an understanding at a particular point of time is known as…

The break even chart helps the management in…

In management accounting, an emphasis and focus must be

In financial accounting, investors, banks, suppliers and government agencies are classified as

If the actual output is more than the budgeted output, volume variance is

To get to labour efficiency variance, the formula to be applied is

Which of the following is technique of financial statement analysis?

For calculating trend percentages any year is selected as:

If total cost of 100 units is Rs 5000 and those of 101 units is Rs. 5030 then increase of Rs. 30 in total cost is

Which of the following statements are true?

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

Determine Contribution if Fixed cost is Rs 50,000 and loss is Rs 20,000.

Which of the below is an Accounting Concept

Which of the following is an example of Semi-Variable Costs

Long Term Solvency is indicated by:

Material price, mix, usage and revised quantity variances are measured on _ basis, whereas material yield variance is measured on _ basis.

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