Cost and Managerial Accounting

21. The The components of the prime cost are

  1. Direct Material + Direct Labor + Other Direct Cost
  2. Direct Labor + Other Direct Cost + FOH
  3. Direct Labor + FOH
  4. None of the given options
Correct answer: (A)
Direct Material + Direct Labor + Other Direct Cost

22. For which one of the following industry would you recommend a Job Order Costing system?

  1. Oil Refining
  2. Grain dealing
  3. Beverage production
  4. Law Cases
Correct answer: (D)
Law Cases

23. Which of the following represents a CVP equation?

  1. Sales = Contribution margin (Rs.) + Fixed expenses + Profits
  2. Sales = Contribution margin ratio + Fixed expenses + Profits
  3. Sales = Variable expenses + Fixed expenses + profits
  4. Sales = Variable expenses - Fixed expenses + profits
Correct answer: (C)
Sales = Variable expenses + Fixed expenses + profits

24. Inventory control aims at ______________

  1. Achieving optimization
  2. Ensuring against market fluctuations
  3. Acceptable customer service at low capital investment
  4. Discounts allowed in bulk purchase
Correct answer: (C)
Acceptable customer service at low capital investment

25. When a manufacturing process requires mostly human labor and there are widely varying wage rates among workers, what is probably the most appropriate basis of applying factory costs to work in process?

  1. Machine hours
  2. Cost of materials used
  3. Direct labor hours
  4. Direct labor dollars
Correct answer: (c)
Direct labor hours

26. Wh When prices are rising over time, which of the following inventory costing methods will result in the lowest gross margin/profits?

  1. FIFO
  2. LIFO
  3. Weighted Average
  4. Cannot be determined
Correct answer: (B)
LIFO

27. Cost accounting concepts include all of the following EXCEPT ______________

  1. Planning
  2. Controlling
  3. Sharing
  4. Delegating.
Correct answer: (C)
Sharing

28. Prime cost + Factory overhead cost is ______________

  1. Conversion cost.
  2. Production cost.
  3. Total cost.
  4. None of given option.
Correct answer: (B)
Production cost.

29. 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 increase sales price by 10%, what will be increasing sales profit of company by increasing unit sales price? (Cost & volume profit analysis keep in mind while solving)

  1. Rs.2,000
  2. Rs. 5,000
  3. Rs. 7,000
  4. None of the given options
Correct answer: (A)
Rs.2,000

30. In the case of plant, the limiting factor may be:

  1. Insufficient capacity
  2. shortage of experienced salesmen
  3. general shortage of power
  4. shortage of materials
Correct answer: (A)
Insufficient capacity
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