Cost and Managerial Accounting

421. The break-even point is that at which:

  1. The level of activity at which the business operates most economically.
  2. The level of activity at which the business makes neither a profit nor a loss.
  3. The fixed costs are lowest.
  4. The variable cost per unit is minimized.
Correct answer: (B)
The level of activity at which the business makes neither a profit nor a loss.

422. Cost accounting has been developed because of ______________ of financial accounting.

  1. limitations
  2. expenditure
  3. statutory requirements
  4. both (a) and (b)
  5. None of these
Correct answer: (A)
limitations

423. Continuous costing is also called

  1. Operation costing
  2. Process costing
  3. Batch costing
  4. Contract costing
  5. None of these
Correct answer: (B)
Process costing

424. The total of all direct expenses is known as

  1. Total cost
  2. Overhead
  3. Prime cost
  4. Work cost
  5. None of these
Correct answer: (C)
Prime cost

425. Value added is the change in

  1. Face value
  2. Market value
  3. Book value
  4. Realizable value
  5. None of these
Correct answer: (B)
Market value

426. The two aspects of material control are accounting aspect and ______________ aspect.

  1. Financial
  2. Economic
  3. social
  4. Operational
  5. None of these
Correct answer: (D)
social

427. With regard to break -even charts and break-even analysis, which of the following is true?

  1. It is assumed that variable cost fluctuates in direct proportion to output
  2. The break the break-even point is at the intersection of the sales line and the variable cost line
  3. A break-even chart shown the maximum profit possible
  4. A break-even chart is capable of dealing with any change of product mix
Correct answer: (A)
It is assumed that variable cost fluctuates in direct proportion to output

428. ABC Ltd. Has fixed costs of 60,000 p.a.. It manufactures a single product, which it sells for 20 per unit. Its contribution to sales ratio is 40%. ABC Ltd's break-even point in units is: sts of

  1. 3,000
  2. 5,000
  3. 7,500
Correct answer: (C)
7,500

429. Selling a product at a price equivalent to or below marginal cost is recommended for a short period in certain special circumstances, such as

  1. Introducing a new product
  2. Exploring foreign market
  3. Driving out a weaker competitor
  4. All of the above
Correct answer: (D)
All of the above

430. A firm requires 16,000 nos. of a certain component, which is buys at 60 each. The cost of placing an order and following it up is 120 and the annual storage charges works out to 10% of The cost of the item. To get maximum benefit the firm should place order for ______________ Units at a time.

  1. 1,000
  2. 900
  3. 800
  4. 600
Correct answer: (C)
800
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