Cost and Managerial Accounting

481. When a firm doubles its inputs and finds that its output has more than doubled, this is known as:

  1. Economies of scale.
  2. Constant returns to scale.
  3. Diseconomies of scale.
  4. A violation of the law of diminishing returns.
Correct answer: (A)
Economies of scale.

482. The standard time required per unit of a product is 20 minutes. In a day of 8 working hours a worker gave an output of 30 units. If he gets a time rate of 20/hr., his total earnings under Halsey bonus scheme was:

  1. 200
  2. 192
  3. 180
  4. 16
Correct answer: (C)
180

483. Secondary packing expenses are:

  1. Part of prime cost
  2. Part of production overheads
  3. Part of distribution overheads
  4. Written-off to costing profit and loss account
Correct answer: (C)
Part of distribution overheads

484. Which of the following is not an assumption underlying the accountant's break-even chart?

  1. Fixed costs remain fixed throughout the range charted
  2. Selling prices do not change
  3. Variable costs fluctuate inversely with volume
  4. Unit variable costs remain constant throughout the range charted
Correct answer: (C)
Variable costs fluctuate inversely with volume

485. Depreciation on plant and machinery is:

  1. Not a cash cost, so is ignored in the cost accounts
  2. Part of manufacturing overheads
  3. Part of prime cost
  4. Always calculated using the straight-line method
Correct answer: (B)
Part of manufacturing overheads

486. Functionally, administration expenses may comprise expenses of the following activities:

  1. Secretarial and board of directors
  2. Accounting, financing, tax and legal
  3. Audit and personnel
  4. All of these
Correct answer: (D)
All of these

487. A manufacturing firm is very busy and is working overtime. The amount of overtime premium contained in direct wages would normally be classed as:

  1. Part of prime cost
  2. Factory overheads
  3. Direct labour cost
  4. Administrative overheads
Correct answer: (B)
Factory overheads

488. Labour turnover can be measured by the following methods except:

  1. Attrition method
  2. Separation method
  3. Replacement method
  4. Flux method
Correct answer: (A)
Attrition method

489. (1) Payment of higher wages does not necessarily mean that labour cost per unit is high.
(2) Control over payment of wages aims at reducing or eliminating irregularities during actual disbursements. True or False?

  1. (1) and (2) True
  2. (1) and (2) False
  3. (1) False; (2) True
  4. (1) True; (2) False
Correct answer: (A)
(1) and (2) True

490. In a perpetual inventory system, an inventory flow assumption (i.e. LIFO or FIFO) is used primarily for determining costs which are used in

  1. Forecasts of future sale.
  2. Recording the cost of goods sold.
  3. Recording Sales Revenue.
  4. Forecasts of future operating results.
Correct answer: (B)
Recording the cost of goods sold.
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