3. Contribution is a) sales total cost, b) sales variable cost, c) sales fixed cost, d) none of these.

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2 1. The term budget is derived from the French word (a) Boget (b) Bougette (c ) Bogeget (d) None of these 2. Profit will be the same under absorption costing and marginal costing only when a) there is no opening or closing stocks, b) there is only closing stocks, c) there is only opening stocks, d) Opening stocks are lower than closing stocks. 3. Contribution is a) sales total cost, b) sales variable cost, c) sales fixed cost, d) none of these. 4. Which one of the following statement is incorrect? a) fixed costs are not included in the valuation of stock under marginal costing, b) the technique of marginal costing is also known as variable costing, c) contribution is also known as marginal income, d) absorption costing is more suitable for decision taking than marginal costing. 5. Which one of the following statement is incorrect? a) marginal costing is a method of ascertaining cost, b) marginal costing technique is used by the management for decision making, c) in marginal costing, cost are classified into variable and fixed cost, d) sales above break-even point indicate profits. 6. Which one of the following statement is incorrect? a) P/V ratio indicates profitability, b) Sales below break-even point means profit, c) Margin of safety indicate profit, d) Contribution margin = sales x P/V Ratio. 7. Which of the following is characteristics of the budgetary control? a) establishment, b) co-ordination, c) continuous comparison, d) none of these. 8. Which one of the ratio is not included under the budgetary control ratio? a) activity ratio, b) capacity ratio, c) productivity ratio, d) cash ratio. 9. Master budget is prepared by the a) committee, b) manager, c) employee, d) none of these. 10. Which one of the following statement is not correct? a) all cost concepts are not relevant in decision-making, b) a manager is frequently required to make decision which involve alternative choice, c) decision-making is a future oriented activity, d) all cost are relevant in decision-making.

3 11. Which of the cost is related with decision making? a) fixed cost, b) marginal cost, c) full cost, d) none of these. 12. Which one of the factor is not influencing pricing decision? a) market force, b) trade customs, c) management s pricing strategy, d) orders. 13. The net profits will be maximized when contribution is a) maximized, b) minimized, c) equal, d) none of these. 14. Responsibility accounting seeks to establish a relationship between planning and controlling by a) establishing a system of collective responsibility, b) fixing organizational responsibilities for profit planning and control, c) dividing standards of work performance, d) controlling cost and performance. 15. Responsibility accounting is a system of.. where responsibility is assigned for the control cost. a) control, b) management, c) reduce, 16. Which one of the centre is not a part of responsibility centre? a) expense centre, b) revenue centre, c) profit centre, d) stock centre. 17. Each responsibility centre is put under the charge of a responsibility a) manager, b) accountant, c) employee, 18. Which one of the following is not essential for a sound system of budgetary control? a) chart, b) budget centre, c) budget, d) flexibility. 19. Which of the following statement is correct? a) marginal costing technique is used by management for decision making, b) in marginal costing, cost are classified into variable and fixed cost, c) a firm earn no profit or incurs no loss at BEP, 20. Which of the following statement is correct? a) BEP is the point at which total revenue is equal to total cost, b) Contribution margin = Sales x P/V ratio, c) BEP is the point at which total revenue is equal to total cost,

4 21. Which of the following statement is correct? a) break-even chart is the graphic representation of cost-volume profit relationship, b) angle of incidence is the angle formed by the sales line and the total cost line at the BEP, c) marginal cost is same as variable cost, 22. Which of the following statement is true? a) in marginal costing, managerial decisions are guided by contribution rather than by profit, b) MOS indicates profit, c) profit volume ratio indicates profitability, 23. Which of the following statement is false? a) marginal costing is a method of ascertaining cost, b) a firm incurs a loss when contribution is equal to fixed cost, c) Contribution is always equal to fixed cost, 24. Which of the following statement is false? a) a firm earn profit when contribution is equal to fixed cost under variable cost, b) MOS implies BEP, c) if the margin of safety is high, actual sales are very near to the breakeven sales, 25. Given, fixed cost = Rs , variable cost = Rs.5, sales price = Rs.10 per unit. Find out BEP (in units) a) 40000, b) 60000, c) 30000, d) Given, fixed cost = Rs , variable cost = Rs.5, sales price = Rs.10 per unit. If selling price is reduced by 10%, the new BEP will be a) 50000, b) 40000, c) 75000, d) The P/V ratio on X Co. Ltd. is 40% and its MOS is 50%. Find out the net profit, if sales volume is Rs a) Rs , b) Rs , c) Rs , d) Rs The P/V Ratio of X Ltd. is 40% and its MOS is 50%. Find out BEP, if sales volume is Rs a) Rs , b) Rs , c) Rs , d) Rs A company earned a profit of Rs during the year If the marginal cost and selling price of a product are Rs.8 and Rs.10 per unit respectively, the MOS will be a) Rs , b) Rs , c) Rs , d) Rs

5 30. In the context of standard costing, basic standards is established for a) short period, b) current period, c) indefinite period, d) pre-defined period. 31. Which one of the following statements about internal performance reporting is true? Internal performance reports a) always contain a mixture of financial and non-financial measurements, b) contain the same information as financial accounting statements, but they are produced monthly rather than annually, c) are required by an accounting standards to be based on the balance scorecard system d) can take any form that management chooses. 32. Which one of the following statements is correct? A highly centralized organization a) does not need any kind of performance measurement and reporting, b) permits a substantial degree of autonomy to divisional managers, c) is always less efficient than a decentralized organization, d) allows managers to retain close scrutiny and control over the business. 33. Which one of the following statements about divisional performance assessment is not true? a) Divisional managers should be assessed only on aspects of divisional performance over which they have control, b) Divisional performance is required to be reported to the Customs & Excise authorities on a quarterly basis, c) The method of assessment of divisional performance varies, depending upon whether the division is an investment centre or not, d) A highly autonomous division is responsible for virtually all aspects of its operations. 34. In a division that is treated as a profit centre, which of the following should be used as the basis for assessing divisional performance? a) Divisional profit before head office cost allocation, b) Contribution, c) Contribution less controllable fixed costs, d) Divisional profit before tax. Ans : c 35. Which one of the following statements about goal congruence in a decentralized organization is correct? Goal congruence a) requires the achievement of organizational goals within a tight timeframe, b) involves the minimization of inter-divisional rivalries in order to serve the best interests of the organization as a whole, c) means that all possible steps should be taken by divisional management to achieve the goals of the individual division, d) means that all divisional managers are given the same level of profit-related bonus.

6 36. A Ltd. has earned contribution of Rs and net profit of Rs on sales Rs Calculate MOS. a) Rs , b) Rs , c) Rs , d) Rs Which one of the following statements about non-financial performance measures is not correct? a) the use of non-financial performance measures helps to address the deficiencies of measurements such as Return on Investment (ROI), b) non-financial measures should correspond as far as possible with the aims of the organization as a whole, c) non-financial measures do not involve the calculation or recording of any numbers, d) the most appropriate non-financial measures vary, depending upon the nature of the organization. Ans : c 38. Which one of the following statement about the balance scorecard is correct? The balance scorecard a) is an interesting theoretical idea that has never taken off in practice, b) is used only by aeroplane manufacturers, c) is unhelpful because it involves too many separate reports, d) has been widely adopted in leading US and European companies. 39. Which one of the following is not a key perspective of the balanced scorecard? a) financial perspective, b) investment perspective, c) internal business perspective, d) customer perspective. 40. Which of the following is the correct description of the break-even-point? a) where total revenue equals total variable costs, b) where total revenue equals total contribution, c) where total revenue equals total fixed costs, d) where total revenue equals total fixed and variable costs. 41. In a profit-volume chart, what does the point at which the contribution line touches the vertical axis represent? a) the break-even point, b) total contribution, c) total variable cost, d) total fixed costs. 42. Which of the following best describes a fixed cost? a) a cost that is unaffected by time, b) a cost that involves a long-term commitment by the business, c) a cost that is unaffected by the level of inflation, d) a cost that is unaffected by the level of output.

7 43. Which one of the following best describes the margin of safety? a) the extent to which the total sales exceeds the total fixed costs, b) the extent to which the total sales exceeds the total fixed and variable costs, c) the extent to which the total sales exceeds the total variable costs, d) fixed costs / (sales revenue per unit variable costs per unit) 44. A variable cost is one that a) is constant per unit of output irrespective of the level of output, b) varies with the time period, c) will vary according to the general rate of inflation, d) varies directly but not proportionately with output. 45. A static budget is useful in controlling costs when cost behaviour is a) mixed, b) fixed, c) variable, d) linear. 46. Responsibility centers include a) cost centers, b) profit centers, c) investment centers, d) all of the above. 47. Responsibility reports for cost centers a) distinguish between fixed and variable costs, b) use static budget data, c) include both controllable and non-controllable costs, d) include only controllable costs. 48. In a responsibility report for a profit center, fixed costs are deducted from contribution margin to show a) profit center margin, b) controllable margin, c) net income, d) income from operations. 49. A manager of an investment center can improve ROI by a) increasing average operating assets, b) reducing sales, c) increasing variable costs, d) reducing variable and / or controllable fixed costs. 50. Which cost is taken into consideration for make or buy decisions? a) prime cost, b) total cost, c) cost of production, d) relevant cost.

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