Cost and Managerial Accounting

461. The break-even point is the point where:

  1. Total sales revenue equals total expenses (variable and fixed)
  2. Total contribution margin equals total fixed expenses
  3. Total sales revenue equals to variable expenses only
  4. Both a & b
Correct answer: (D)
Both a & b

462. 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

463. If 120 units produced, 100 units were sold @ 200 per unit. Variable cost related to production & selling is 150 per unit and fixed cost is 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?

  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

464. The main purpose of cost accounting is to:

  1. Maximize profits.
  2. Help in inventory valuation
  3. Provide information to management for decision making
  4. Aid in the fixation of selling price
Correct answer: (C)
Provide information to management for decision making

465. Find the value of purchases if Raw material consumed 90,000; Opening and closing stock of raw material is 50,000 and 30,000 respectively.

  1. 10,000
  2. 20,000
  3. 70,000
  4. 1,60,000
Correct answer: (C)
70,000

466. Remuneration based on piece work is not suitable when:

  1. The amount of output cannot be accurately measured.
  2. The nature of work is repetitive.
  3. The quantity of work is more important than quality.
  1. (1) only
  2. (3) only
  3. (1) and (3)
  4. (2) and (3)
Correct answer: (A)
(1) only

467. The methods of job evaluation include:

  1. Grading
  2. Ranking
  3. Points value
  4. All of the above
Correct answer: (D)
All of the above

468. Favorable conditions for the operation of piece rates include:

  1. Homogeneous products
  2. Long, uninterrupted run of production
  3. Inspection
  4. High proportion of indirect labour
Correct answer: (B)
Long, uninterrupted run of production

469. 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

470. Which of the following is a direct labour cost?

  1. Supervisors'salaries in the factory.
  2. Costs of the payroll accounting section.
  3. A bonus paid to the store man.
  4. The wages of an operative paid on the basis of output achieved.
Correct answer: (D)
The wages of an operative paid on the basis of output achieved.
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