Cost and Managerial Accounting

81. Blanket overhead rate is:

  1. One single overhead absorption rate for the whole factory
  2. Rate which is blank or nil rate
  3. rate in which multiple overhead rates are calculated for each production department, service department etc.
  4. Always a machine hour rate
Correct answer: (A)
One single overhead absorption rate for the whole factory

82. Budgeted sales of X for March are 18000 units. At the end of the production process for X, 10% of production units are scrapped as defective. Opening inventories of X for March are budgeted to be 15000 units and closing inventories will be 11,400 units. All inventories of finished goods must have successfully passed the quality control check. The production budget for X for March, in units is:

  1. 12,960
  2. 14,400
  3. 15,840
  4. 16,000
Correct answer: (D)
16,000

83. In process costing, a joint product is

  1. a product which is later divided into many parts
  2. a product which is produced simultaneously with other products and is of similar value to at least one of the other products.
  3. A product which is produced simultaneously with other products but which is of a greater value than any of the other products.
  4. a product produced jointly with another organization
Correct answer: (B)
a product which is produced simultaneously with other products and is of similar value to at least one of the other products.

84. Which of the following organisations should not be advised to use service costing?

  1. Distribution service
  2. Hospital
  3. Maintenance division of a manufacturing company
  4. A light engineering company
Correct answer: (D)
A light engineering company

85. A company manufactures a single product for which cost and selling price data are as follows:
Selling price per unit - Rs. 12
Variable cost per unit - Rs. 8
Fixed cost for a period - Rs. 98,000
Budgeted sales for a period - 30,000 units
The margin of safety, expressed as a percentage of budgeted sales,is:

  1. 20%
  2. 25%
  3. 73%
  4. 125%
Correct answer: (A)
20%

86. In 'make or buy' decision, it is profitable to buy from outside only when the supplier's price is below the firm's own ______________.

  1. Fixed Cost
  2. Variable Cost
  3. Total Cost
  4. Prime Cost
Correct answer: (B)
Variable Cost

87. For the financial year ended as on March 31, 2013 the figures extracted from the balance sheet of Xerox Limited as under:
Opening Stock Rs. 29,000; Purchases Rs. 2,42,000; Sales Rs. 3,20,000; Gross Profit 25% of Sales. Stock Turnover Ratio will be :-

  1. 8 times
  2. 6 times
  3. 9 times
  4. 10 times
Correct answer: (A)
8 times

88. In element-wise classification of overheads, which one of the following is not included -

  1. Fixed overheads
  2. Indirect labour
  3. Indirect materials
  4. Indirect expenditure.
Correct answer: (A)
Fixed overheads

89. Cost Unit is defined as:

  1. Unit of quantity of product, service or time in relation to which costs may be ascertained or expressed
  2. A location, person or an item of equipment or a group of these for which costs are ascertained and used for cost control.
  3. Centres having the responsibility of generating and maximising profits
  4. Centres concerned with earning an adequate return on investment
Correct answer: (A)
Unit of quantity of product, service or time in relation to which costs may be ascertained or expressed

90. Fixed cost is a cost:

  1. Which changes in total in proportion to changes in output
  2. which is partly fixed and partly variable in relation to output
  3. Which do not change in total during a given period despise changes in output
  4. which remains same for each unit of output
Correct answer: (C)
Which do not change in total during a given period despise changes in output
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