T.Y.B.Com. Costing Sem VI Objectives

T.Y.B.Com – Cost Accounting (SEM VI)

A) Multiple Choice Questions:

1) Process costing is a method of costing used to find out the cost of product in each process.

(a) Process Costing (b) Marginal costing

2) Invisible waste is also called as weight loss.

(a) Loss (b) invisible waste

3) Normal loss is a part of the process loss, which is caused under normal circumstances.

(a) Loss (b) invisible waste

4) Normal loss can not be avoided.

(a) Loss (b) invisible waste

5) Normal loss is also referred to as non controllable loss.

(a) Loss (b) invisible waste

6) Normal loss may have a scarp value.

(a) Loss (b) invisible waste

7) Abnormal loss is avoidable.

(a) Loss (b) invisible waste

8) Abnormal loss is a part of the process loss which is caused due to abnormal circumstances.

(a) Loss (b) invisible waste

9) Abnormal loss can be controlled by the management by taking precautionary measures.

(a) Loss (b) invisible waste

10) Abnormal gain arises due to rise in the efficiency of production department.

(a) Loss (b) invisible waste

11) By product means additional product manufactured along with the main product which has insignificant value.

(a) by product (b) invisible waste

12) Joint product means additional product manufactured along with the main product which has significant value.

(a) by product (b) Joint product

13) Contribution is the excess of selling price over variable cost

(a) contribution (b) profit

14) Contribution is also equal to fixed cost plus profit.

(a) contribution (b) profit

15) Ascertainment of impact of changes in the volume of output on profit is calculated by profit volume ratio.

(a) contribution (b) profit volume ratio

16) Break even point is the point at which total revenue is equal to total cost.

(a) contribution (b) profit

17) Margin of safety is the difference between the actual sales and the break even sales.

(a) contribution (b) Margin of safety

18) Marginal costing is a special technique to calculate the break even point and to calculate optimum level of production of the organization.

(a) contribution (b) Marginal costing

19) Standard costing is a system of cost accounting which make use of pre-determined standard costs relating to each element of cost

(a) Standard costing (b) Marginal costing

20) The deviation of the actual performance from the standard is called Variance.

(a) Standard costing (b) Marginal costing

21) The variance may be favourable or unfavourable

(a) Standard costing (b) Marginal costing

22) The variance is said to be adverse when actual cost is more than the standard cost.

(a) positive (b) adverse

23) Labour Cost Variance is the difference between the standard cost of labour specified for the output achieved and the actual cost of direct labour used.

(a) Cost (b) Rate

24) Contractor is a person who undertakes a contract.

(a) Contractor (b) Contractee

25) Contractee is a person on whose behalf the work is undertaken.

(a) Contractor (b) Contractee

26) Work certified is that portion of work which is completed and certified by the architect.

(a) Work certified (b) Work underfeed

27) Work un certified is that portion of work which is completed and but not certified by the architect.

(a) Work certified (b) Work underfeed

28) Non-Integrated cost accounting system involves use for cost control accounts.

(a) Integrated (b) Non-integrated

29) 29) Non-Integrated cost accounting system requires reconciliation of cost and financial books.

(a) Integrated (b) Non-integrated

30) Stores Ledger Control Account is debited with purchases of materials.

(a) Stores (b) WIP

31) Administration Overheads recovered are debited to Finished Goods Control Account.

(a) Stores (b) WIP

32) 32) ABC allocates overheads on the basis of activities.

(a) Stores (b) WIP

33) 33) Close down costs are taken into consideration in Life Cycle Costing.

(a) Stores (b) WIP

34) 34) ABC costing is defined as “Cost attribution to cost units on the basis of benefits received from indirect activities i.e. ordering, setting up, assuring quality, etc.

(a) ABC (b) WIP

35) Normal Loss is equal to

a. a) Normal Output – Actual Output b. Actual Output – Normal Output

c. c)Input x % of Normal Loss d. None of the Above

36 36) 12,000 kg of a material were input to a process in a period. The normal loss is 10% of input. There is no opening or closing work-in-progress. Output in the period was 10,920 kg. What was the abnormal gain/loss in the period?

a. a) Abnormal Gain of 120 kg b. Abnormal Loss of 120 kg

c. c) Abnormal Gain of 1,080 kg d. Abnormal Loss of 1,080 kg

37. Costs incurred prior to the point of separation of the joint or by-products are termed as

a. a) Process Cost b. Joint Cost

c. c) Main Cost d. Separable Cost

38 Selling price per unit less the variable cost per unit is the

(a) contribution per unit (b) fixed cost per unit

39 Profit volume ratio is improved by reducing

(a) variable cost (b) fixed cost

40 When selling price decreases the break even point

(a) increases (b) decreases

41 An estimate of what cost should be is known as

(a) Standard cost (b) Actual cost

42 A standard cost is

(a) predetermined cost (b) total cost

43 Contract costing usually is applicable in

a. a) Construction Works b. Textile Mills

c. c) Cement Industries d. Chemical Industries

44) The degree of completion of work is determined by comparing the work certified with

a. a) Contract price b. Work in Progress

c. c) Cash received on contract d. Retention Money

45) In contract costing credit is taken only for a part of the profit on

a. a) Completed Contract b. Incomplete Contract

c. c) Work Uncertified d. Work Certified

46) The cost of any sub-contracted work is

a. a) a direct expense of a contract and debited to the contract account

b. b) an indirect expense of a contract and is debited to the contract account

c. c) a direct expense of a contract and debited to the client’s account

d. d) a indirect expense of a contract and debited to the client’s account

47) Retention Money is equal to

a. a) Work certified less work uncertified

b. b) Contract price Less Work Certified

c. c) Work certified Less Payment received by contractor

d. d) None of above

48) The Total Value of Work Completed during an accounting year is equal to

a. a) Work Certified + Progress Payment Received

b. b) Work Certified + Work Uncertified

c. c)Work Certified + Retention Money

d. d) None of the Above

49) 49) Work certified is between 25% and 50% of the contract price. The transfer to P & L A/c will be

a. a) 1/3^rd of Notional Profits, reduced in the ratio of cash received to work certified

b. b)NIL

c. c) 2/3^rd of Notional Profits, reduced in the ratio of cash received to work certified

d. d) 100% of Notional Profits

50) 50) Work certified is between 50% and 90% of the contract price. The transfer to P & L A/c will be

a. a) 1/3^rd of Notional Profits, reduced in the ratio of cash received to work certified

b. b) NIL

c. c) 2/3^rd of Notional Profits, reduced in the ratio of cash received to work certified

d. d) 100% of Notional Profits

51) Materials Requisition Note

a. a) Authorises and records the issue of materials for use

b. b) Records the return of unused materials

c. c. Records the transfer of materials from one store to another

d. A classified record of materials, issues, returns and transfers

52) In this, cost of materials wages and overheads of each job undertaken is posted.

a. a. General Ledger Adjustment Account b. Stores Ledger Control Account

c. c. Work-in-Progress Ledger d. Finished Goods Control Account

53) 53) The raw materials issued to a job were overestimated and the excess is being sent back to the materials store. What document is required?

a. a) Stores credit note b. Stores debit note

c. c.Materials returned Note d. Materials transfer note

54) The cost of direct materials used in production is recorded as a

a. a. Debit to work in process

b. b. Debit to manufacturing overhead

c. c. Debit to wages expense

d. d. Debit to wages payable

55) In target costing,

a. a) The target cost is established first, then the target price.

b. b) The target cost is the estimated long run cost that enables a product or service to achieve a desired profit

c. c) The focus of target costing is to undercut the competition.

d. d) Target costs are generally higher than current costs.

56) 56. The costing technique that products a stipulated profit when a product is sold at its estimated market-driven price is termed:

a. a) Life Cycle Costing b. Product Costing

c. c) Target Costing d. Standard Costing

57) 57.The comparison of a company’s practices and performances levels against those of other organizations is most commonly known as:

a. a) Benchmarking b. Continuous improvement

c. c) Re-engineering d. comparative analysis

58) ABC is

a. a) Method of accounting for material, labour, overhead costs related to products

b. b) Method of allocating indirect costs

c. c) Another name for benchmarking

d. d) A cost object

59) Cost allocation bases in activity-based costing should be

a. a) Cost drivers b. Cost pools c. Activity centres d. Resources

60) Cost driver for personnel are –––––––

a. a) Recruitment Activity

b. b) Industrial Relations climate

c. c) Training requirements

d. d) All of the above

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Dr. Lal Tanwani

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T.Y.B.Com. Costing Sem VI Objectives

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