MCQ COST ACCOUNTING (Red Colour signifies Answer)

Transcription

1 MCQ COST ACCOUNTING (Red Colour signifies Answer) 1. Cost accounting involves A. drawing up balance sheet B. writing-off of costs C. ascertaining of cost D. preparation of statement of value added 2. Cost accounting is an integral part of A. financial accounting B. forensic accounting C. historical accounting D. management accounting 3. Material costs do NOT include cost of A. fixed assets B. raw materials C. work in progress D. packing materials 4. Which one of the following is a direct expense? A. director s salary B. cost of hiring a special equipment for a particular production order C. advertising expenses D. electricity expenses 5. Purchase orders are issued by A. Quality Control Manager B. Procurement Manager C. Stores Manager D. Cost Accountant 6. When ordered materials are received, they are brought into stores via A. Materials Requisition B. Local Purchase Order C. Goods Received Note D. Tenders 7. Under the First In First Out method, store issues are priced using the prices of A. the last batches received into store B. the first batches received into store C. the middle batches received into store D. the average of the first and last batches received into store 8. Overtime is A. work done over a period of time B. time spent in calling over production figures C. time spent by the employee working beyond the normal working hours D. time spent by the employee in the changing room 9. Time allowed minus tame taken equals. Answer (Time Saved)

2 10. Labour costs incurred on employees engaged in directly transforming the raw materials into finished goods is referred to as Answer (Direct Labour Costs) 11. The product of hours worked and wage rate per hour is Answer (Basic Wage) 12. Overheads are the aggregates of A. indirect materials, indirect labour and indirect expenses B. expenses incurred over the normal expense heads C. expenses incurred by the owners of the business D. all uncontrollable expenses 13. Distinguish between overhead allocation and overhead apportionment A. Allocation is used in government whilst appointment is used in the private sector B. Allocation is assigned direct to cost centres whilst appointment is shared to a number of cost centres C. Allocation is made scientifically whilst appointment is done arbitrarily D. Allocation benefits only managers whilst appointment benefits junior staff 14. Where the actual overheads for a period exceeds the predetermined overheads, we have a case of Answer (Under Absorption) 15. Where the production process is highly mechanized making the use of labour hours inappropriate for overhead absorption, what alternative basis may be used? Answer (Machine hour) 16. Which is the best way to treat over- and under-absorbed overheads for a period? Answer (write off to Profit & Loss Account) 17. In process costing, what does Abnormal Loss mean? A. Stock stolen during production B. Stock items given out as gifts before full production C. The greater of the present production s loss over the previous production D. The greater of actual process loss over what is deemed to be normal in the industry 18. What is scrap? A. Metal residue of a production process B. Residues of little or no value obtained during production C. Failed production items D. Cleaning materials

3 19. Which of these statements is correct as far as process costing is concerned? A. Each process output can be sold without further processing B. Only the materials introduced in process 1 is sufficient for the whole production C. Each manufacturing process has normal gain D. The output of one process forms the input of another process 20. In process costing, partly completed units are calculated to represent fully completed units based on the percentage of completion. Such representation is known as Answer (Equivalent units) 21. Where actual process wastage is less than what is regarded as normal in the industry, the difference is called Answer (Abnormal Gain) 22. Where is the total credit on Abnormal Gains Account transferred to at the end of the accounting period? Answer (Profit & Loss Account) 23. Which of the following is required in order to calculate EOQ? A. Cost of equity B. Stock out cost C. Opportunity cost D. None of the above 24. The is the number of units that a company should add to inventory with each order in order to minimize the total costs of inventory such as carrying costs, order costs, and shortage costs. a) Economic Order Quantity (EOQ) b) Maximum level c) Minimum level d) None of the above 25. Storage costs is an example of a) Ordering cost b) Carrying cost c) Both (a) and (b)

4 d) None of the above 26. 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 (d) a record of labour attendance 27. 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 28. 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 29. 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 30. 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 31. Calculate Re-order level from the following: Consumption per week: units Delivery period: days (a) 5600 units (b) 800 units (c) 1400 units (d) 200 units 32. Calculate EOQ (approx.) from the following details: Annual Consumption: units Ordering cost: Rs. 10 per order Purchase price: Rs. 100 per unit

5 Carrying cost: 5% (a) 310 (b) 400 (c) 290 (d) Calculate re-order level from the following: Safety stock: 1000 units Consumption per week: 500 units It takes 12 weeks to reach material from the date of ordering. (a) 1000 units (b) 6000 units (c) 3000 units (d) 7000 units 34. Material control involves. A. consumption of material B. Issue of material C. Purchase of material D. Purchase, storage and issue of materials 35. Material requisition is meant for. A. Supply of material from stores B. Purchase of material C. Sale of material D. stock of material 36. Calculate Reorder level, Maximum usage 420 units per day, minimum usage 240 units per day normal consumption 300 units per day, reorder period days A units B units C units D units 37. calculate Maximum stock level Reorder level 4000 kgs, reorder quantity 2,500 kgs, minimum reorder period 6 weeks, minimum consumption per week 300 kgs. A kgs B kgs C kgs D kgs 38. material is issued by storekeeper against requisitions A. issue B. material C. purchase D. good received

6 39. Given data Annual usage units, buying cost per order Rs.10, cost per unit Rs.100 & cost of carrying inventory 10 % of cost. Find out EOQ. A units B units C. 600 units D. 200 units 40. Find out the Reorder level form the following :Maximum consumption of material 300 units, lead time 2-4 weeks. A. 800 units B units C units D units 41. note is prepared after receiving and inspecting materials. A. Purchase B. Goods sold C. Goods received D. Goods order 42. If the annual demand is 6000 units and EOQ 500 units, what will be the number of orders in a year? a) 30 b) 15 c) 12 d) The maximum stock level and average stock level are 9000 kg and 7000 kg respectively. What will be the minimum stock level? a) 8000 kg b) 5000 kg c) 6000 kg d) 6500 kg 44. The essential condition of materials control is a) Proper planning b) Level of raw materials c) Physical verification of stock d) All the above mentioned items

7 Materials Fixation of various levels Certain stock levels are fixed up for every item of stores so that stocks and purchases can be efficiently controlled. These are: (a) Maximum Level: This represents the minimum quantity above which stocks should not be held at any time. (b) Minimum Level: This represents the minimum quantity of stock that should be held at all times. (c) Danger Level: Normal issues of stock are usually stopped at this level and made only under specific instructions. (d) Ordering Level: It is the level at which indents should be placed for replenishing stocks. (e) Ordering Quantity: It is the quantity that is ordered. Maximum stock level = Re-order level + Re-ordering quantity - (Minimum consumption x Minimum reorder period). Minimum level = Re-order level - (Normal consumption x Normal reorder period). Danger/Safety stock level = Ordering level - (Average rate of consumption x Re-order period) OR (Maximum rate of consumption - Average rate of consumption) x Lead time Ordering level = Minimum level + Consumption during time lag period OR Maximum consumption x Maximum re-order period Illustration 1 Materials X and Y are used as follows: Minimum usage - 50 units each per week Maximum usage units each per week Normal usage units each per week Ordering quantities X = Y = 1,000 units Delivery period X = 4-6 weeks Y = 2-4 weeks 600 units Calculate for each material (i) Maximum level (ii) Minimum level and (iii) Ordering level. Solution: Material X Ordering level = Maximum usage x Maximum delivery period = x 6 = 900 units. Minimum level = Ordering level - (Normal usage x Normal delivery period) = (100x5) = 400 units

8 Maximum level = (Ordering level + Ordering quantity) - (Minimum usage x Minimum delivery period) = (50x4) = 1, = 1,300 units Material Y Ordering Level = Maximum usage x Maximum delivery period = 150 x 4 = 600 units Minimum Level = Ordering level - (Normal usage x Normal delivery period) = (100x3) = 300 units. Maximum Level = (Ordinary level + Ordering quantity) - (Minimum usage x Minimum delivery period) = ,000 - (50 x 2) = 1, = 1,500 units. Normal delivery period has been computed as follows: 4+6 Material X = 5 weeks 2 Material Y = 3 weeks Maximum Level = (Ordinary level + Ordering quantity) - (Minimum usage x Minimum delivery period) = ,000 - (50 x 2) = 1, = 1,500 units. Normal delivery period has been computed as follows: 4+6 Material X = 5 weeks 2 Material Exercise Y 2+4 = 3 weeks 2 From the following records regarding material calculate (i) the re-order level, (ii) the maximum stock level, and (iii) the minimum stock level. Re-order quantity Minimum stock (for emergencies) Average delivery time Maximum stock level Average consumption per week Minimum consumption in 4 weeks 1,200 units 6,000units 5 weeks 4 weeks 20 weeks 400units