Cost and Managerial Accounting

381. Obsolescence is the measure of the loss of value of an asset due to:

  1. Technological innovation
  2. Changes in market conditions
  3. Both (a) and (b) above
  4. None of the above
Correct answer: (C)
Both (a) and (b) above

382. The treatment of idle time in cost includes the following

  1. Cost of normal and controllable idle time is charged to factory overheads
  2. Cost of normal but uncontrollable idle time is treated as prime cost
  3. Cost of abnormal and uncontrollable idle time is charged to costing profit and loss account
  4. All of the above
Correct answer: (D)
All of the above

383. Avoidable causes of labour turnover include the following except:

  1. Redundancy
  2. Low wages
  3. Bad working conditions
  4. Marriage
Correct answer: (D)
Marriage

384. Replacement costs of labour turnover include the following except:

  1. Loss of output
  2. Cost of personnel administration
  3. Cost of tool and machine breakage
  4. Cost of scrap and defective work
Correct answer: (B)
Cost of personnel administration

385. Ratios which may be used for comparing labour cost over time include the following except:

  1. Gross profit ratio
  2. Efficiency ratio
  3. Illness ratio
  4. Absenteeism ratio
Correct answer: (A)
Gross profit ratio

386. Which of the following is NOT a reason for carrying inventory?

  1. To maintain independence of operations
  2. To take advantage of economic purchase-order size
  3. To make the system less productive
  4. To meet variation in product dem
Correct answer: (C)
To make the system less productive

387. The factors to be taken into consideration in formulating incentive schemes include:

  1. Quantity and quality of output
  2. Incidence of overhead, and effect upon workers
  3. Simplicity and legal provisions
  4. All of the above
Correct answer: (D)
All of the above

388. In a profit sharing scheme the available surplus is shared by the following except:

  1. Government
  2. Shareholders
  3. Employees
  4. Firm
Correct answer: (A)
Government

389. The authorized heads of deduction from wages payable include the following except:

  1. Car allowance
  2. Income tax
  3. Provident fund
  4. Employees'state insurance
Correct answer: (A)
Car allowance

390. Suppose a firm sells its product at a price lower than the opportunity cost of the inputs used to produce it. Which is true?

  1. The firm will earn accounting and economic profits.
  2. The firm will face accounting and economic losses.
  3. The firm will face an accounting loss, but earn economic prfits.
  4. The firm may earn accounting profits, but will face economic losses.
Correct answer: (D)
The firm may earn accounting profits, but will face economic losses.
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