Cost and Managerial Accounting

11. Which of the following manufacturers is most likely to use a job order cost accounting system?

  1. A soft drink producer
  2. A flour mill
  3. A textile mill
  4. A builder of offshore oil rigs
Correct answer: (D)
A builder of offshore oil rigs

12. Opportunity cost is the best example of ______________

  1. Sunk Cost
  2. Standard Cost
  3. Relevant Cost
  4. Irrelevant Cost
Correct answer: (C)
Relevant Cost

13. ______________ method assumes that the goods received most recently in the stores or produced recently are the first ones to be delivered to the requisitioning department.

  1. FIFO
  2. Weighted average method
  3. Most recent price method
  4. LIFO
Correct answer: (D)
LIFO

14. Percentage of Margin of Safety can be calculated in which one of the following ways?

  1. Based on budgeted Sales
  2. Using budget profit
  3. Using profit & Contribution ratio
  4. All of the given options
Correct answer: (D)
All of the given options

15. If 120 units produced, 100 units were sold @ Rs. 200 per unit. Variable cost related to production & selling is Rs. 150 per unit and fixed cost is Rs. 5,000. If the management wants to decrease sales price by 10%, what will be the effect of decreasing unit sales price on profitability of company? (Cost & volume profit analysis keep in your mind while solving it)

  1. Remains constant
  2. Profits will increased
  3. Company will have to face losses
  4. None of the given options
Correct answer: (C)
Company will have to face losses

16. The following is the Corporation's Income Statement for last month: Particular Rs. Sales 4,000,000 Less: variable expenses 2,800,000 Contribution margin 1,200,000 Liss: fixed expenses 720,000 Net income 480,000. The company has no beginning or ending inventories. A total of 80,000 units were produced and sold last month. What is the company's contribution margin ratio?

  1. 30%
  2. 70%
  3. 150%
  4. None of given options
Correct answer: (A)
30%

17. The cost expended in the past that cannot be retrieved on product or service ______________

  1. Relevant Cost
  2. Sunk Cost
  3. Product Cost
  4. Irrelevant Cost
Correct answer: (B)
Sunk Cost

18. A typical factory overhead cost is ______________

  1. Audit
  2. Compensation of plant manager
  3. Design distribution
  4. Internal
Correct answer: (B)
Compensation of plant manager

19. Direct materials cost is Rs. 80,000. Direct labor cost is Rs. 60,000. Factory overhead is Rs. 90,000. Beginning goods in process were Rs. 15,000. The cost of goods manufactured is Rs. 245,000. What is the cost assigned to the ending goods in process?

  1. Rs. 45,000
  2. Rs. 15,000 Rs.
  3. 30,000
  4. There will be no ending Inventory
Correct answer: (D)
There will be no ending Inventory

20. Production volume of 1,200 units cost incurred Rs. 10,000 and production volume of 1,400 units cost incurred Rs.20, 000. The variable cost per unit would be?

  1. Rs. 50.00 per unit (May not be correct)
  2. Rs. 8.33 per unit
  3. Rs. 14.20 per unit
  4. Rs. 100 per unit
Correct answer: (A)
Rs. 50.00 per unit (May not be correct)
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