Cost and Managerial Accounting

1. Opening work in process inventory can be calculated as under

  1. FIFO and Average costing
  2. LIFO and Average costing
  3. FIFO and LIFO costing
  4. None of given option.
Correct answer: (A)
FIFO and Average costing

2. Which of the following statement measures the financial position of the entity on particular time?

  1. Income Statement
  2. Balance Sheet
  3. Cash Flow Statement
  4. Statement of Retained Earning
Correct answer: (B)
Balance Sheet

3. Which of the following is a characteristic of process cost accounting system?

  1. Material, Labor and Overheads are accumulated by orders
  2. Companies use this system if they process custom orders
  3. Opening and Closing stock of work in process are related in terms of completed units
  4. Only Closing stock of work in process is restated in terms of completed units
Correct answer: (C)
Opening and Closing stock of work in process are related in terms of completed units

4. Fixed cost per unit decreases when ______________

  1. Production volume increases.
  2. Production volume decreases.
  3. Variable cost per unit decreases.
  4. Variable cost per unit increases.
Correct answer: (A)
Production volume increases.

5. Cost of production report is a ______________

  1. Financial statement
  2. Production Process report
  3. Order Sheet
  4. None of above
Correct answer: (B)
Production Process report

6. The difference between total revenues and total variable costs is known as ______________

  1. Contribution margin
  2. Gross margin
  3. Operating income
  4. Fixed costs
Correct answer: (A)
Contribution margin

7. For which one of the following industry would you recommend a Process Costing system?

  1. Grain dealer
  2. Television repair shop
  3. Law office
  4. Auditor
Correct answer: (A)
Grain dealer

8. How many units would the company have to sell to attain target profits of Rs. 600,000?

  1. 88,000 units
  2. 100,000 units
  3. 106,668 units
  4. None of given options
Correct answer: (A)
88,000 units

9. Jan 1; finished goods inventory of Manuel Company was Rs.3, 00,000. During the year Manuel’s cost of goods sold was Rs. 19, 00,000, sales were Rs. 2, 000,000 with a 20% gross profit. Calculate cost assigned to the December 31; finished goods inventory.

  1. Rs. 4,00,000
  2. Rs. 6,00,000
  3. Rs. 16,00,000
  4. None of the given options
Correct answer: (D)
None of the given options

10. The Process of cost apportionment is carried out so that ______________

  1. Cost may be controlled
  2. Cost unit gather overheads as they pass through cost centers
  3. Whole items of cost can be charged to cost centers
  4. Common costs are shared among cost centers
Correct answer: (D)
Common costs are shared among cost centers
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