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Chapter - 1: Introduction To Cost Accounting: I. Multiple Choice Questions
Chapter - 1: Introduction To Cost Accounting: I. Multiple Choice Questions
I.
2.
3.
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8.
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15.
16.
Objective Questions
34. The cost which relates to the inputs like materials, labour and expenses directly
connected with the product is known as :
i) Engineered cost
ii)
Relevant cost
iii) Product cost
iv)
Urgent cost
35. Cost which is related to capacity is called :
i) Fixed cost
ii)
Capacity cost
iii) Plant cost
iv)
none of the above
36. Cost which is unaffected by the change in output is called as :
i) Fixed cost
ii)
Variable cost
iii) Period cost
iv)
None of the above
Storing
All of the above
Objective Questions
2.
3.
4.
5.
Purchase requisition is
i) an order for supply of materials.
ii) a requirement of material.
iii) a request to return the material.
Purchase order is
i) sent by the purchase officer to supplier.
ii) a request to return the material.
iii) a request to inspect the material.
Material Inspection Note is
i) prepared and forwarded to the Stores Department.
ii) signed by the store keeper.
iii) signed by the supplier.
Bin Card is
i) a inspection note.
ii) a continous record of stock stored.
iii) a statement of delivery of materials.
A store ledger is
i) an evidence of delivery of materials.
ii) a ledger of the supplier.
iii) a ledger which shows movement of each item of materials.
6.
Bill of materials
i) is an invoice sent by the supplier.
ii) helps to calculate the cost of materials of a job.
iii) is an inpection record of materials.
7. Material control includes
i) inventory control.
ii) control over labour.
iii) control over overheads.
8. Under periodic inventory control
i) stock is verified at the end of a certain period.
ii) stock is verified continuously.
iii) stock is verified everyday.
9. Under perpetual inventory control
i) stock is verified continuously.
ii) stock is verified periodically.
iii) stock is verified at the end of every quarter.
10. ABC Analysis is
i) analysis of A, B and C type of material.
ii) a technique of selective control.
iii) a technique under which control is always best.
2.
3.
4.
5.
6.
7.
8.
Issue of materials during a period of time is priced at the latest purchase cost under
i) FIFO
iii)
Simple Average
ii) LIFO
iv)
Weighted Average
Stores Department maintains a record in which a separate folio is maintained for
each item
i) Stores Ledger
iii)
Stock Register
ii) Bin Card
iv)
Bill of Materials
In times of rising prices, the pricing of issues will be at a more recent current market
prices in
i) FIFO
iii)
LIFO
ii) Weighted Average
iv)
Simple Average
The inventory is valued at the most recent market prices and it is near to the
valuation based on replacement cost in
i) FIFO
iii)
Weighted Average
ii) LIFO
iv)
Base Stock Method
According to the method of pricing, issues are close to current economic values
i) LIFO
iii)
Highest In First Out Price
ii) FIFO
iv)
Weighted Average Price
In the method of pricing, cost lag behind the current economic values
i) LIFO
iii)
Replacement Price
ii) FIFO
iv)
Weighted Average Price
When prices fluctuate widely, the method that will smooth out the effect of
fluctuations is
i) Simple Average
iii)
FIFO
ii) Weighted Average
iv)
LIFO
In the method, the charge to production is not at actual cost
i) Weighted Average
iii)
Replacement Price
ii) Standard Price
iv)
All of these
Objective Questions
9.
10.
11.
12.
13.
14.
15.
Issue of material during the period is priced at the latest purchase cost under :
i) FIFO
ii)
LIFO
iii) Average
iv)
None of the above
Issue of material under _____ method is from oldest lots.
i) FIFO
ii)
LIFO
iii) Average
iv)
None of the above
During the period of rising prices, pricing of the issue will be at more recent price
under :
i) LIFO
ii)
FIFO
iii) Average
iv)
None of the above
The inventory is valued at more recent price under :
i) LIFO
ii)
FIFO
iii) Average
iv)
None of the above
Trade discount :
i) Increases cost of material
ii)
Decreases cost of material
iii) Does not affect cost of material
iv)
None of the above
FIFO method is :
i) Logical
ii)
Illogical
iii) Recognised by AS2
iv)
both a & c
Under perpetual Inventory system stock is ascertained :
i) Periodically
ii)
Continuously
iii) At the end of the year
iv)
None of the above
2.
3.
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5.
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8.
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12.
13.
14.
15.
16.
17.
18.
19.
20.
2.
Labour turnover is
i) Turnover of goods
iii) Stock Turnover
Labour Turnover is caused by
i) Low wages
iii) Unscientific selection
ii)
iv)
Turnover of labour
Debtor's Turnover
ii)
iv)
Objective Questions
3.
4.
5.
6.
7.
8.
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12.
13.
14.
2.
3.
4.
10
5.
6.
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9.
10.
11.
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19.
20.
Objective Questions
11
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
Idle time is
i) Paid by the employer
ii)
Time wasted by the workers
iii) Not paid by the employer
iv)
All of the above
Idle time may be caused due to
i) Power failure
ii)
Machine breakdown
iii) Waiting for work
iv)
(i) & (ii)
Industrial cause of idle time is
i) Strike
ii)
Lockouts
iii) Population movement
iv)
All of the above
Wages in normal idle time should be charged to
i) Office overheads
ii)
Factory overheads
iii) Selling overheads
iv)
Distribution overheads
Overtime
i) Causes excess labour cost
ii)
Increases productivity
iii) Increases labour turnover
iv)
all of the above
Tea and lunch break is :
i) Normal Idle time
ii)
Abnormal Idle Time
iii) Overtime
iv)
none of the above
Time spent to overcome fatigue is :
i) Normal Idle Time
ii)
Abnormal Idle Time
iii) Overtime
iv)
none of the above
Machine setting time is :
i) Normal Idle Time
ii)
Abnormal Idle Time
iii) Overtime
iv)
none of the above
Travelling time from one job to another job is :
i) Normal Idle Time
ii)
Abnormal Idle Time
iii) Overtime
iv)
none of the above
Machine breakdown is :
i) Normal Idle Time
ii)
Abnormal Idle Time
iii) Overtime
iv)
All of the above
Waiting for tools is :
i) Abnormal Idle time
ii)
Normal Idle time
iii) Overtime
iv)
All of the above
Strikes and lockout is :
i) Normal Idle time
ii)
Abnormal Idle Time
iii) Overtime
iv)
none of the above
Power failure is :
i) Abnormal Idle Time
ii)
Normal Idle Time
iii) Overtime
iv)
None of the above
Overtime premium at Normal Rate is treated as :
i) Direct labour
ii)
Indirect labour
iii) Factory overheads
iv)
none of the above
Overtime premium paid due to negligence of a worker is charged to the concerned :
i) Worker
ii)
Department
iii) Overheads
iv)
All of the above
Overtime premium due to abnormal causes is charged to :
i) Financial P & L A/c
ii)
Costing P & L A/c
iii) Balance sheet
iv)
All of the above
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ii)
iv)
Productivity
None of the above
Chapter 9 : Overheads
1.
2.
3.
4.
5.
6.
7.
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13.
14.
Indirect costs cannot be identified with a particular cost centre are shared between
cost centre using
i) a method of apportionment
ii) a method of allocation
iii) a recovery rate
The method of apportionment suitable for allocating rent of building between cost
centres
i) number of employees
ii)
machine hours
iii) KWH
iv)
floor area
The allotment of whole items of cost to cost unit is called
i) cost allocation
ii)
cost apportionment
iii) cost classification
iv)
overhead absorption
Administrative overheads are recovered as a percentage of
i) direct materials
ii) prime cost
iii) works cost
Selling and distribution overheads are absorbed on the basis of
i) rate per unit
ii)
percentage on works cost
iii) percentage on selling price
iv)
any of these
Depreciation on machine is apportioned on the basis of
i) machine cost
ii)
machine hours
iii) labour hours
iv)
labour cost
Power is allocated on the basis of
i) H.P. of machines
ii)
cost of machines
iii) machine hours of machine
iv)
labour hours
Employee welfare expenses are allocated on the basis of
i) number of employees
ii)
labour hours
iii) machine hours
iv)
prime cost
Electricity charges are allocted on the basis of
i) number of light points
ii)
cost of machines
iii) labour hours
iv)
factory cost
Charging overheads to invidual unit is known as :
i) allocation
ii)
apportionment
iii) absorption
iv)
collection
Direct expenses are also known as :
i) Chargeable expenses
ii)
Prime cost
iii) Variable cost
iv)
Period cost
The process of arranging items into groups accoridng to their degree of similarity is
called :
i) Classification
ii)
Analysis
iii) Identification
iv)
Ascertainment
The cost directly attributable to a department is called as :
i) Allotment
ii)
Allocation
iii) Recovery
iv)
Charging
The process of redistribution of overheads of support department to production
departmnet is called as :
i) Secondary distribution
ii)
primary distribution
iii) Repeat distribution
iv)
none of the above
Objective Questions
13
15. Total of indirect material, indirect labour and indirect expenses is called as :
i) indirect overheads
ii)
Overheads cost
iii) works overheads
iv)
Chargeable cost
16. The process of charging the traceable overheads to cost centres is called as :
i) Overheads allocation
ii)
Overheads charging
iii) Overheads allotment
iv)
None of the above
17. Research cost should be treated as :
i) Production overheads
ii)
Period cost
iii) Variable cost
iv)
None of the above
18. Storekeeping expenses are allocated on the basis :
i) No. of material requisitions
ii)
Area
iii) Direct labour hours
iv)
None of the above
19. Salary of works manager is a :
i) Office overheads
ii)
Factory overheads
iii) Selling overheads
iv)
All of the above
20. Insurance is a :
i) Fixed overheads
ii)
Variable overheads
iii) Semivariable overheads
iv)
None of the above
21. Assigning code numbers to a group of overheads is called as :
i) Classification
ii)
Codification
iii) Analysis
iv)
None of the above
2.
3.
4.
5.
6.
7.
The process by which cost items are charged direct to a cost unit is called
i) absorption
ii)
apportionment
iii) allocation
iv)
allotment
A common absorption rate used through out the following for all jobs and units of
output irrespective of the department in which they were produced is called
i) machine hour rate
ii)
department absorption rate
iii) overall absorption rate
iv)
blanket absorption rate
When allocating service department costs to production departments, the method
that does not consider different cost behaviour pattern is the
i) step method
ii)
reciprocal method
iii) simple rate method
iv)
dual rate method
Machine hour rate is followed when
i) most of the work is done by machine
ii) most of the work is done by labour
iii) one operator uses several machines
Labour hour rate is followed when most of the work is done by
i) labour
ii) machines
iii) different groups of machines
When overheads recovered in costing are less than actual overheads incurred it is
called :
i) underabsorption
ii)
over absorption
iii) recovery
iv)
none of the above
When overheads recovered in costing are more than actual overheads incurred it is
called :
i) underabsorption
ii)
over absorption
iii) application
iv)
all of the above
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8.
9.
10.
11.
12.
13.
14.
2.
3.
4.
5.
6.
7.
8.
Objective Questions
15
9.
ii)
iv)
ii)
iv)
office overheads
direct cost
ii)
iv)
Factory overheads
Direct materials
ii)
iv)
Factory cost
Realisable value
16
Objective Questions
17
18
8. The workers who work outside the factory premises are called outworkers.
9. Payroll Accounting is concerned with calculation of wages.
10. Payroll shows Gross wages.
11. Payslip is prepared for a group of workers.
12. Idle facility and idle time are the same.
13. Overtime premium is always treated as factory overheads.
14. Abnormal idle time wages is included in cost of production.
15. Idle time is the difference between time clocked and time booked.
Chapter 9 : Overheads
1.
2.
3.
4.
5.
Objective Questions
19
20
Objective Questions
21
22
Objective Questions
23
24
18. _________ _________ _________ _________ plan does not penalise the workers who
produces below standard output.
Chapter 9 : Overheads
1. Indirect cost is known as _________.
2. Cost incurred to secure orders is _________.
3. Material which cannot be charged directly _________.
4. Rent of building is _________ overheads.
5. Cost which can be controlled is _________ cost.
6. Cost of abnormal idle time is _________ overheads.
7. Depreciation on machinery is charged under _________ overheads.
8. Royalty on production is a _________charge.
9. Costing department expenses are considered as _________ overheads.
10. Stationery in production dept is _________ material.
11. Salary of office clerk is _________ labour.
12. Rent is _________ expense.
13. Overheads are classified on the basis of behaviour as _________ _________
_________.
14. Overheads are classified on the basis of function as _________ _________ _________.
15. Cost of catelogues is _________ _________.
16. Rent of premises is _________ overheads.
17. Telephone charges is _________ _________ overheads.
18. Actual benefit received by the department is _________ of apportionment of
overheads.
19. Compensation to workers is apportioned on the basis of _________.
20. Store keeping expenses are apportioned on the basis of _________ material.
Objective Questions
25
26
Column B
i)
b) Costing Information
c)
T.V.
d) Bricks
e)
v)
Computer Service
Wages of Carpenter
Column B
i)
Direct Labour
c)
e)
v)
Direct Wages
Cloth in Garments
Column B
i)
Basic Material
b) Paper in Books
c)
e)
v)
Direct Labour
Column B
i)
Normal Cost
c)
Abnormal Cost
d) Estimated Cost
e)
v)
Sunk Cost
Imputed Cost
Bin Card
Column B
i)
b) Purchase Order
ii) Cheapest
c)
A Class Items
d) C Class Items
Objective Questions
27
e)
Maximum Level
v)
f)
Minimum Level
G) Average Level
h) Most Economical Order Size
vii)
Costliest
Opening Stock + Closing Stock
2
viii) EOQ
Purchase Requisition
Column B
i)
Movement of Stock
b) Bin Card
c)
iii) Stock
Verification
Continously
Stores Ledger
d) Periodic Inventory
e)
v)
Perpetual Inventory
Done
vi) Requirement
Column B
i)
FIFO
c)
Recognised by AS 2
d) W. A.
e)
FIFO
v)
f)
LIFO
vi) LIFO
g)
WA
h) FIFO
Column B
i)
b) Clock Card
c)
d) Casual Workers
e)
Time Keeping
v)
f)
g)
Individual Workers
h) Pay Slip
i)
Muster Roll
j)
Job Card
x)
k) Net Wages
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l)
Wage Abstract
m) Out Workers
n) Piece Workers
Labour Turnover
Column B
i)
b) Low Wages
c)
d) Medical Services
e)
Accident
v)
f)
Welfare Services
g)
Death
Column B
i)
No Incentive to Efficiency
c)
e)
v)
f)
g)
Halsey Plan
h) Rowan Plan
i)
j)
x)
Idle Time
Column B
i)
c)
iii) Normal
Overtime
iv) Normal
e)
v)
Abnormal
Objective Questions
29
f)
vi) Abnormal
g)
Power Failure
vii) Depreciation
h) Overtime Premium
viii) Accident
ix) Overtime
x)
Lower Cost
Chapter 9 : Overheads
1.
Column A
a)
Rent
Column B
i)
H.P. of Machines
b) Lighting
c)
Power
d) Depreciation
e)
v)
Advertising
Percentage of Sales
vi) Employees
2.
Column A
a)
Rent
Column B
i)
c)
Supervision
d) Insurance
e)
v)
Depreciation
Requisition Slip
Stationary
Column B
i)
Indirect Material
b) Office Salary
c)
Rent
d) Cost of Catelogues
e)
v)
Telephone Charges
F) Compensation to Workers
g)
Absorption
Column B
i)
c)
30
Costing
e)
Overabsorption of Overheads
v)
f)
Depreciation of Machine
g)
Rent
Column B
1. Interest on Loan
i)
Direct Cost
2. Prime Cost
ii)
Factory
Cost
Overheads
3. Cost of Production
iii) Prime
Cost
Overheads
4. Factory Cost
5. Profit
v)
plus
plus
Office
Factory
Overheads are
Column B
i)
Factory Overheads
c)
Stock Valuation
d) Cost of Rectification
e)
Stock of WIP
v)
f)
g)
h) Sales
i)
Direct Cost
x)
Column B
1. Reconciliation
i)
ii)
3. Interest on capital
4. Notional expenses
v)
system
of
Objective Questions
31
32
What
What
What
What
What
What
What
is
is
is
is
is
is
is
Labour Turnover?
flux method of labour turnover?
preventive cost of labour turnover?
replacement cost of labour turnover?
the cause of labour Turnover?
unavoidable cause of labour Turnover?
the effect of Labour Turnover?
What
What
What
What
What
What
is
is
is
is
is
is
Idle Time?
Normal Idle Time?
Abnormal Idle Time?
Overtime Premium?
the treatment for overtime premium?
the treatment for idle time?
Chapter 9 : Overheads
1. What is Overheads?
2. What is Factory Overheads?
3. What is Factory Cost?
Objective Questions
What
What
What
What
What
What
What
is
is
is
is
is
is
is
Recovery of Overheads?
Under Absorption of Overheads?
Over Absorption of Overheads?
Labour Hour Rate?
Machine Hour Rate?
Standing Charge?
Machine Expense?
What
What
What
What
What
What
What
is
is
is
is
is
is
is
Direct Cost?
Direct Labour?
chargeable Expenses?
Prime Cost?
Factory Cost?
cost of production?
cost of sales?
Chapter 12 : Reconciliation
1.
2.
3.
4.
5.
Opportunity Cost
Relevant Cost
Direct Cost
Indirect Cost
Committed Cost
Shutdown Cost
Marginal Cost
Out of Pocket Cost
Cash Cost
Bin Card
Scientific Purchasing
Re-order Level
ABC Analysis
EOQ
33
34
6.
7.
8.
9.
Bin Card
Stores Ledger
Material Control
Periodic Inventory System
Perpetual Inventory System
Material Requisition
LIFO Method
FIFO Method
Weighted Average Method
Suitability of Stock Valuation Method
Clock Card
Muster Roll Accounting
Pay Slip
Idle Time Sheet
Daily Time Sheet
Job Card
Casual Workers
Out Workers
Wage Abstract
Labour Turnover
Causes of Labour Turnover
Effect of Labour Turnover
Preventive Cost of Labour Turnover
Replacement Cost of Labour Turnover
Objective Questions
3.
4.
5.
6.
7.
8.
Chapter 9 : Overheads
1.
2.
3.
4.
5.
Manufacturing Overheads
Selling Overheads
Office Overheads
Fixed Overheads
Fringe Benefits
Prime Cost
Direct Labour
Factory Cost
Cost of Production
Cost of Sales
Valuation of Stock
Cost Reconciliation
Overabsorption of Overheads
Under absorption of Overheads
Notional Cost
Impact of Overvaluation of closing stock on costing profit
Impact of under valuation of closing stock on costing profit.
35