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Wednesday, December 12, 2012

mgt402 Quiz 02 Special Semester 2007


Cost & Management Accounting (mgt402)               Solution to Quiz 02
Special Semester 2007



(Total Marls 1 x 15 = 15)
Find out correct option from given MCQs & put your answer in above table:

1.  A manufacturing company manufactures a product which passes through two
departments. 10,000 units were put in process. 9,400 units were completed &
transferred to department-II. 400 units (1/2 complete) were in process at the end of
month. Remaining 200 units were lost during processing. Costs incurred by the
department were as follows:

Particulars  Rs.
Direct Materials  19,400
Direct Labor  24,250
Factory overhead   14,550

Equivalent units of material, for the month in CPR ____________ 

a.  200 units
b.  9400 units  
c.  9600 units
d.  None of the given options

MCQ # 2 and 3 are based on the following data:

Allied chemical company reported the following production data for its department:

Particulars  Units
Received in from department –1  55,000
Transferred out department –3  39,500
In process (1/3 labor & overhead)  10,500

All materials were put in process in Department No. 1. Costing department collected
following figures for department No. 2:

Particulars  Rs.
Unit cost received in   1.80
Labor cost in department No.2  27,520
Applied overhead in Department No. 2  15,480

2.  Equivalent units of Material are _________
a.  3,500 units
b.  39,500 units
c.  43,000 units
d.  None of the given options Cost & Management Accounting (mgt402)               Solution to Quiz 02
Special Semester 2007 
3.  Unit cost used for transferred out  _________
a.  Rs. 0.64
b.  Rs. 0.36
c.  Rs. 0.18
d.  None of the given options

4.  During January, Assembling department received 60,000 units from preceding department at a unit cost of Rs. 3.54. Costs added in the assembly department were:

Particulars  Rs.
Materials  41,650
Labor  101,700
Factory overheads  56,500

There was no work in process beginning inventory. 

Particulars  Units
Units from preceding department   60,000
Units transferred out   50,000
Units in process at the end of month  
(all materials, 2/3converted)

9,000
Units lost (1/2 completed as to materials & conversion cost )  1,000

The entire loss is considered abnormal & is to be charged to factory overhead.
  Cost transferred to next department __________

a.  Rs. 55,703.3 App.
b.  Rs. 356,546.6 App.
c.  Rs. 412,249.9 App.
d.  None of the given options


MCQ # 5, 6, 7 and 8 are based on the following data:

The following is the Corporation's Income Statement for last month:

Particulars  Rs.
Sales  4,000,000
Less: variable expenses  1,800,000
Contribution margin  2,200,000
Less: fixed expenses  720,000
Net income   1480,000Cost & Management Accounting (mgt402)               Solution to Quiz 02
Special Semester 2007

The company has no beginning or ending inventories. A total of 80,000 units were
produced and sold last month. 


5.  What is the company's contribution margin ratio?
a.  30%
b.  50%
c.  150%
d.  None of given options

6.  What is the company's break-even in units?

a.  48,000 units 
b.  72,000 units 
c.  80,000 units
d.  None of the given options

7.  How many units would the company have to  sell to attain target profits of Rs.600,000?

a.  48,000 units
b.  88,000 units
c.  106,668 units
d.  None of given options 

8.  What is the company's margin of safety in Rs?

a.  Rs. 1,600,000 
b.  Rs. 2,400,000 
c.  Rs. 25,60,000
d.  None of given options 




MCQ # 9 & 10 are based on the following data:

The following data related to production of ABC Company:


Units produced  2,000 units
Direct materials  Rs.6
Direct labor  Rs.10
Fixed overhead  Rs.20,000
Variable overhead  Rs.6 Cost & Management Accounting (mgt402)               Solution to Quiz 02
Special Semester 2007
Fixed selling and administrative  Rs.2000
Variable selling and administrative  Rs.2

9.  Using the data given above, what will be the unit product cost under absorption
costing?

a.  Rs. 32
b.  Rs. 30
c.  Rs. 25
d.  None of the given options

10. Using the data given above, what will be the unit product cost under marginal
costing?

a.  Rs. 22
b.  Rs. 24
c.  Rs. 28
d.  None of the given options

1.      Mr. Zahid received Rs. 100,000 at the time of retirement. He has invested in a profitable Avenue. From Company A, he received the dividend of 35% and from Company B he received the dividend of 25%. He has selected Company A for investment.  His opportunity cost will be:

a)      35,000
b)     25,000
c)      10,000
d)     55,000
2.      In increasing production volume situation, the behavior of Fixed cost & Variable cost will be:

a)      Increases, constant
b)     Constant, increases
c)      Increases, decreases
d)     Decreases, increases
3.      While calculating the finished goods ending inventory, what would be the formula to calculate per unit cost?

a)      Cost of goods sold / number of units sold
b)     Cost of goods to be manufactured / number of units manufactured
c)      Cost of goods manufactured / number of units manufactured
d)     Total manufacturing cost / number of units manufactured 

4.      If the direct labor is Rs. 42,000 and FOH is 40% of conversion cost. What will be the amount of FOH?

a)      63,000
b)     30,000
c)      28,000
d)     16,800
5.      Which one of the following centers is responsible to earns sales revenue?
a)      Cost center
b)     Investment center
c)      Revenue center
d)     Profit center
6.      While preparing the Cost of Goods Sold and Income Statement, the over applied FOH is;
a)      Add back, subtracted
b)     Subtracted, add back
c)      Add back, add back
d)     Subtracted, subtracted
7.      Which of the following ratios expressed that how many times the inventory is turning over towards the cost of goods sold?
a)      Net profit ratio
b)     Gross profit ratio
c)      Inventory turnover ratio
d)     Inventory holding period
8.      When opening and closing inventories are compared, if ending inventory is more than opening inventory, it means that:

a)      Increase in inventory
b)     Decrease in inventory
c)      Both a and b
d)     None of the given options
9.      The total labor cost incurred by a manufacturing entity includes which one of the following elements:

a)      Direct labor cost
b)     Indirect labor cost
c)      Abnormal labor cost
d)     All of the given options

10.  If,
Opening stock                                                  1,000 units
Material Purchase                                            7,000 units
Closing Stock                                                      500 units
Material consumed                                             Rs. 7,500

What will be the inventory turnover ratio?

a)      10 Times
b)     12 times
c)      14.5 times
d)     9.5 times

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