MGT402 – Cost & Management Accounting Online Quiz # 2

MGT402 – Cost & Management Accounting

Online Quiz # 2

January 05, 2010

Total Questions: 15

If you find any incorrect answer, kindly let everyone know about it.

Question # 1 of 15 ( Start time: 03:44:00 AM )
Which of the following is a point of differentiation between blanket rates and department rates?
Select correct option:

Blanket rate is a single overhead rate established for the entire factory

Department rates are separate overhead rates for all departments of factory through which the products pass

Department rate is a single overhead rate established for the entire factory

Blanket rates are separate overhead rates for all departments of factory through which the product passes

(I'm not 100% sure about this question, I selected option # 1, kindly see handouts, page # 105(pdf file))

Question # 2 of 15 ( Start time: 03:45:19 AM ) Total Marks: 1
Production volume of 1,200 units cost incurred Rs. 10,000 and production volume of 1,400 units cost incurred Rs.20, 000. The variable cost per unit would be?
Select correct option:

Rs. 50.00 per unit

Rs. 8.33 per unit

Rs. 14.20 per unit

Rs. 100 per unit

(I got confused in this question, what I'm getting:
variable cost per unit = total variable cost/total number of units produced

one solution could be;
in producing 1200 units, total cost incurred was 10000, and
in producing 1400 units, total cost incurred was 20000

1400 - 1200 = 200 units
20000 - 10000 = 10000 cost

which means when we produced 1200 units the total cost was 10000 but when we increased production to 1400 units, the total cost increased to 20000, so the difference (20000 - 10000 = 10000) should be of variable cost
now by dividing "total variable cost by quantity" i.e, 10000/200 = 50 per unit

but the confusion is in order to get variable cost per unit, we divide total variable cost by total number of units produced, and total number of units in the above MCQ seems to be 1400. if we divide 10000/1400 = 7.14 which is not in the options
if we divide 10000/2600 = 3.84 (not there in the options)

so i guess 50 per unit might be a correct answer. but please if anyone know about this question, kindly explain it

Question # 3 of 15 ( Start time: 03:46:42 AM ) Total Marks: 1
Cost accounting concepts include all of the following EXCEPT:
Select correct option:

Planning

Controlling

Sharing (see page # 10, this is the same MCQ on page # 10 of handouts)

Costing

Question # 4 of 15 ( Start time: 03:47:02 AM ) Total Marks: 1
The main purpose of cost accounting is to
Select correct option:

Maximize profits

Help in inventory valuation

Provide information to management for decision making (again the same MCQ is on handouts page # 9)

Aid in the fixation of selling price

Question # 5 of 15 ( Start time: 03:48:05 AM ) Total Marks: 1
Over applied FOH will always result when a predetermined FOH rate is applied and:
Select correct option:


Production is greater than defined capacity

Actual overhead costs are less than budgeted overhead

Budgeted capacity is less than normal capacity

Actual overhead incurred is less than applied Overhead


Question # 6 of 15 ( Start time: 03:48:50 AM ) Total Marks: 1
A spending variance for factory overhead is the difference between actual factory overhead cost and factory overhead cost that should have been incurred for actual hours worked and results from:
Select correct option:

Price difference of FOH costs

Quantity differences of FOH costs

Price and quantity differences for FOH costs

Difference caused by production volume variations

(not sure, see handouts page # 121)


Question # 7 of 15 ( Start time: 03:50:16 AM ) Total Marks: 1
Period costs are
Select correct option:

Expensed when the product is sold

Included in the cost of goods sold

Related to specific Period

Not expensed
The cost of goods sold was Rs. 240,000. Beginning and ending inventory balances were Rs. 20,000 and Rs. 30,000, respectively. What was the inventory turnover?
Select correct option:


8.0 times
12.0 times
7.0 times
9.6 times

Inventory turnover ratio = CGS/Average inventory
inventory turnover ratio = 240000/25000 = 9.6times
average inventory = opening inventory + closing inventory / 2


 If opening inventory of material is Rs.20,000 and closing inventory is Rs. 40,000.the Average inventory amount will be:
Select correct option:

Rs. 40,000
Rs. 30,000
Rs. 20,000
Rs. 10,000


 Which of the following is/are reported in production cost report?
Select correct option:

The costs charged to the department
How the costs were assigned to the output?
The equivalent units of production by the department
All of the given options

 An organistation sold units 4000 and have closing finished goods 3500 units and opening finished goods units were 1000.The quantity of unit produced would be:
Select correct option:

7500 units
6500 units
4500 units
8500 units

Solution:
Number of units manufactured/produced = units sold + closing balance of finished goods units - opening balance of finished goods units
number of units produced/manufactured = 4000 + 3500 - 1000 = 6500


Where the applied FOH cost is less than the actual FOH cost it is:
Select correct option:

Unfavorable variance
Favorable variance
Normal variance
Budgeted variance


Examples of industries that would use process costing include all of the following EXCEPT:
Select correct option:

Beverages
Food
Hospitality
Petroleum

The flux method of labor turnover denotes:
Select correct option:

Workers appointed against the vacancy caused due to discharge or quitting of the organization
Workers appointed in replacement of existing employees
Workers employed under the expansion schemes of the company
The total change in the composition of labor force

The flux method of labor turnover denotes the total change in the composition of labor force.While replacement method takes into account only workers appointed against the vacancy caused due to discharge or quitting of the organisation.



 A worker is paid Rs. 0.50 per unit and he produces 18 units in 7 hours. Keeping in view the piece rate system, the total wages of the worker would be:
Select correct option:

18 x 7 x 0.50 = Rs. 63
18 x 0.50 = Rs. 9
18 x 7 = Rs. 126
7 x 0.5 = Rs. 3.5

All of the following are essential requirements of a good wage system EXCEPT:

Select correct option:

Reduced overhead costs

Reduced per unit variable cost

Increased production

Increased operating costs

The components of the prime cost are:

Select correct option:

Direct Material + Direct Labor + Other Direct Cost

Direct Labor + Other Direct Cost + FOH

Direct Labor + FOH

None of the given options

If, Gross profit = Rs. 40,000 GP Margin = 25% of sales What will be the value of cost of goods sold?

Select correct option:

Rs. 160,000

Rs. 120,000

Rs. 40,000

Can not be determined

Simple Look: Opportunity cost is the best example of:

Select correct option:

Sunk Cost

Standard Cost

Relevant Cost

Irrelevant Cost

Which of the following is an example of Statutory deductions:

Select correct option:

Deduction as Income Tax

Deduction as social security

Subscriptions to a trade union

None of the given

By useing table method where---------------- is equal, that point is called Economic order quanity.

Select correct option:

Ordering cost

Carrying cost

Ordering and carrying cost

Per unit order cost

Which of the following statement is TRUE about FOH applied rates?

Select correct option:

They are used to control overhead costs

They are based on actual data for each period

They are predetermined in advance for each period

None of the given

 Annual requirement is 7800 units; consumption per week is 150 units. Unit price Rs 5, order cost Rs 10 per order. Carrying cost Rs 1 per unit and lead time is 3 week, The Economic order quantity would be:

Select correct option:

395 units

300 units

250 units

150 units

Period costs are

Select correct option:

Expensed when the product is sold

Included in the cost of goods sold

Related to specific Period

Not expensed