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Wednesday, December 12, 2012

MGT402 Quiz


1). Fixed cost per unit decreases when:

  1. Production volume increases.
  2. Production volume decreases.
  3. Variable cost per unit decreases.
  4. Variable cost per unit increases.

2). Prime cost + Factory overhead cost is:

a.      Conversion cost.
b.     Production cost.
c.       Total cost.
d.     None of given option.

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

a.      Rs. 10,000
b.      Rs. 20,000
c.       Rs. 70,000
d.     Rs. 1,60,000

4). If Cost of goods sold = Rs. 40,000
     GP Margin = 20% of sales
     Calculate the Gross profit margin.

a.      Rs. 32,000 
b.      Rs. 48,000
c.       Rs. 8,000
d.     Rs. 10,000

5).______________ method assumes that the goods received most recently in the stores or produced recently are the first ones to be delivered to the requisitioning department.

a.                  FIFO
b.                  Weighted average method
c.                   Most recent price method
d.                 LIFO  
Fill in the blanks:                                                                                              (5 x 1)
           
1). Indirect cost that is incurred in producing product or services but which can not traced in full.


    2 Sunk cost is the cost that incurred or expended in the past which can not be retrieved.


    3). Conversion cost = Direct Labor + FOH

 4). If cost of goods sold Rs. 20,000 and Sales Rs. 50,000 then Gross Markup Rate is 150% ­­­

     5). Under Perpetual system, a complete and continuous record of movement of each inventory item is maintained.
1. Cost of production report is a _________________.

  1. Financial statement
  2. Production process report
  3. Order sheet
  4. None of given option.

2. There are ___________ parts of cost of production report.

  1. 4
  2. 5
  3. 6 ( 6th is concerned with calculation of loss)
  4. 7

3. Which one of the organization follows the cost of production report _________________?

  1. Textile unit  
  2. Chartered accountant firm
  3. Poultry forming
  4. None of the given option.

4. _____________________ part of cost of production report explains the cost incurred during the process.

  1. Quantity schedule
  2. Cost accounted for as follow
  3. Cost charge to the department
  4. None of given option

Solve the question 5 to 7. If units put in the process 7,000, units completed and transfer out 5,000. Units still in process (100% Material, 50% Conversion cost). 500 units were lost. Cost incurred during the process Material and Labor Rs. 50,000 and 60,000.

5. Find the number of units that will appear in quantity schedule

  1. 5,750
  2. 7,000
  3. 5,000
  4. 6,500


6. Find the value of per unit cost of both material and conversion cost

  1. Material 7.69; Conversion cost 10.43
  2. Material 7.14; Conversion cost 10.43
  3. Material 7.14; Conversion cost 9.23
  4. None of given option



7. Find the value of cost transferred to next department:
                       
  1. Rs. 57,500
  2. Rs. 50,000
  3. Rs. 70,000
  4. None of given option.

8. In case of second department find the increase of per unit cost in case of unit    lost. Cost received from previous department is Rs. 1,40,000.

  1. 1.43
  2. (2.13)
  3. 1.54
  4. 1.67

9. Opening work in process inventory can be calculated under

  1. FIFO and Average costing
  2. LIFO and Average costing
  3. FIFO and LIFO costing
  4. None of given option

10 _________________ needs further processing to improve its marketability.

  1. By product
  2. Joint Product 
  3. Augmented product
  4. None of the given option

1.      Jan 1; finished goods inventory of Manuel Company was $3, 00,000. During the year Manuel’s cost of goods sold was $19, 00,000, sales were $2, 000,000 with a 20% gross profit. Calculate cost assigned to the December 31; finished goods inventory.

a.      $ 4,00,000
b.      $ 6,00,000
c.       $ 16,00,000
d.     None of given options

2.      The main purpose of cost accounting is to:

a.      Maximize profits.
b.      Help in inventory valuation
c.       Provide information to management for decision making
d.     Aid in the fixation of selling price

3.      The combination of direct material and direct labor is

a.      Total production Cost
b.     Prime Cost
c.       Conversion Cost
d.     Total manufacturing Cost

4.      The cost expended in the past that cannot be retrieved on product or service

a.      Relevant Cost
b.     Sunk Cost
c.       Product Cost
d.     Irrelevant Cost

5.      When a manufacturing process requires mostly human labor and there are widely varying wage rates among workers, what is probably the most appropriate basis of applying factory costs to work in process?

a.         Machine hours
b.         Cost of materials used
c.         Direct labor hours
d.         Direct labor dollars

6.       A typical factory overhead cost is:

a.      distribution
b.      internal audit
c.       compensation of plant manager
d.     design

7.      An industry that would most likely use process costing procedures is:

a.      tires
b.      home construction
c.       printing
d.     aircraft
e.       
8. Complete the following table


Per unit
Total
Fixed cost
Increase
Constant
Variable cost


Total cost
Increase
Decrease

a.      Constant, Decrease
b.      Decrease, Decrease
c.       Increase, Increase
d.     Increase, Decrease


9. The Kennedy Corporation uses Raw Material Z in a manufacturing process. Information as to balances on hand, purchases and requisitions of Raw Material Z is given below:
Jan. 1 Balance: 200 lbs. @ $1.50
       08                Received 500 lbs. @ $1.55
      18                 Issued 100 lbs.
      25                 Issued 260 lbs.
      30                 Received 150 lbs. @ $1.60

If a perpetual inventory record of Raw Material Z is maintained on a FIFO basis, it will show a month end inventory of:
  1. $240
  2. $784
  3. $759
  4. $767
10.   A disadvantage of an hourly wage plan is that it:

a.      Provides no incentive for employees to achieve and maintain a high level of         production.
b.      [1]Is hardly ever used and is difficult to apply.
c.       Establishes a definite rate per hour for each employee.
d.     Encourages employees to sacrifice quality in order to maximize earnings.                                                 

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

Apportionment of the Accumulated Cost/Total Cost accounted for, for the month in CPR
____________ 

a.  Rs. 24,250 Approximately
b.  Rs. 56,987 Approximately
c.  Rs. 58,200 Approximately
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 labor & FOH are _________
a.  3,500 units
b.  39,500 units
c.  43,000 units
d.  None of the given options



3.  Unit cost of lost unit after adjustment (by using any method) _________
a.  Rs. 0.64
b.  Rs. 0.36
c.  Rs. 0.18
d.  None of the given options

MCQ # 4, 5 and 6 are based on the following data:

In Department No. 315 normal production losses are discovered at the end of process. During January 2007 following costs were charged to Department 315:

Particulars Rs.
Direct Materials  30,000
Direct Labor  20,000
Manufacturing overhead  10,000
Cost from preceding department  96,000

Data of production quantities is as follows:

Particulars Units
Received in   12,000
Transferred out  7,000
Normal Production Loss  1,000

Partly processed units in Department No. 315 were completed 50%.

4.  Cost of normal loss (where normal loss is discovered at the end of process)
_________: 
           
a.  Rs. 14,000
b.  Rs. 44,000
c.  Rs. 1, 12,000
d.  None of the given options

5.  Equivalent units of material __________ 

a.  2,000 units
b.  7,000 units
c.  10,000 units
d.  None of the given options

6.  Unit cost of Direct Labor__________ 
a.  Rs. 1
b.  Rs. 2
c.  Rs. 3
d.  None of the given options

7.  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.
  Equivalent units of material __________

a.  9,000 units
b.  56,500 units
c.  59,500 units
d.  None of the given options

8.  For which one of the following industry would you recommend a Job Order Costing system?

a.  Oil Refining
b.  Grain dealing
c.  Beverage production
d.  Law Cases

9.  For which one of the following industry would you recommend a Process Costing system?

a.  Grain dealer
b. Television repair shop
c. Law office
d. Auditor

10. The difference between total revenues and total variable costs is known as:

a.  Contribution margin
b.  Gross margin
c.  Operating income
d.  Fixed costs

11. Percentage of Margin of Safety can be calculated in which one of the following ways?
 a. Based on budgeted Sales
b. Using budget profit
c. Using profit & Contribution ratio
d.  All of the given options
 
12. Which of the following represents a CVP equation?

a.  Sales = Contribution margin (Rs.) + Fixed expenses + Profits
b.  Sales = Contribution margin ratio + Fixed expenses + Profits
c.  Sales = Variable expenses + Fixed expenses + profits
d.  Sales = Variable expenses – Fixed expenses + profits






13. If 120 units produced, 100 units were sold @ Rs. 200 per unit. Variable cost related to production & selling is Rs. 150 per unit and fixed cost is Rs. 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? (Cost & volume profit analysis keep in your mind while solving it)

a.  Remains constant
b.  Profits will increased
c.  Company will have to face losses
d.  None of the given options

14.  If 120 units produced, 100 units were sold @ Rs. 200 per unit. Variable cost related to production & selling is Rs. 150 per unit and fixed cost is Rs. 5,000. If the management wants to increase sales price by 10%, what will be increasing sales profit of company by increasing unit sales price. (Cost & volume profit analysis keep in your mind while solving it)

a.  Rs.2,000
b.  Rs. 5,000
c.  Rs. 7,000
d.  None of the given options


MCQ # 15, 16, 17 and 18 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 2,800,000
Contribution margin 1,200,000
Less: fixed expenses 720,000
Net income   480,000

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

15. What is the company's contribution margin ratio?
a.  30%
b.  70%
c.  150%
d.  None of given options

16. 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

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

a.  88,000 units
b.  100,000 units
c.  106,668 units
d.  None of given options 

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

a.  Rs. 480,000 
b.  Rs. 1,600,000 
c.  Rs. 2,400,000 
d.  None of given options 

19. Which of the following statement(s) is (are) true?

a.  A manufacturer of ink cartridges would ordinarily use process costing rather than job-order costing
b.  If a company uses a process costing system it accumulates costs by processing department rather than by job 
c.  The output of a processing department  must be homogeneous in order to use process costing
d.  All of the given options

20. Which of the following statements is (are) true?

a. Companies that produce many different products or services are more likely to use job-order costing systems than process costing systems
b. Job-order costing systems are used by manufactures only and process costing systems are used by service firms only
c. Job-order costing systems are used by service firms and process costing systems are used by manufacturers
d. All of the given options

21. Product cost is normally:

a.  Higher in Absorption costing than Marginal costing
b.  Higher in Marginal costing than Absorption costing
c.  Equal in both Absorption and Marginal costing
d.  None of the given options

22. Using absorption costing, unit cost of product includes which of the following combination of costs?

a. Direct materials, direct labor and fixed overhead
b. Direct materials, direct labor and variable overhead
c. Direct materials, direct labor, variable overhead and fixed overhead
d. Only direct materials and direct labor  

23. Marginal costing is also known as:

a. Indirect costing
b. Direct costing
c. Variable costing 
d. Both (b) and (c) 

MCQ # 24 & 25 are based on the following data:

The following data related to production of ABC Company:


Units produced  1,000 units
Direct materials  Rs.6
Direct labor Rs.10
Fixed overhead Rs.6000
Variable overhead Rs.6
Fixed selling and administrative Rs.2000
Variable selling and administrative Rs.2

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

a.  Rs. 22
b.  Rs. 28
c.  Rs. 30
d.  None of the given options

25. 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

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

a.  Total sales revenue equals total expenses (variable and fixed)
b.  Total contribution margin equals total fixed expenses
c.  Total sales revenue equals to variable expenses only
d.  Both a & b

27. The break-even point in units is calculated using_______ 

a.  Fixed expenses and the contribution margin ratio
b.  Variable expenses and the contribution margin ratio
c.  Fixed expenses and the unit contribution margin
d.  Variable expenses and the unit contribution margin

28. The margin of safety can be defined as:

a.  The excess of budgeted or actual sales over budgeted or actual variable expenses
b.  The excess of budgeted or actual sales over budgeted or actual fixed expenses
c.  The excess of budgeted sales over the break-even volume of sales
d.  The excess of budgeted net income over actual net income


29. The contribution margin ratio is calculated by using which one of the given formula?

a.  (Sales - Fixed Expenses)/Sales
b.  (Sales - Variable Expenses)/Sales
c.  (Sales - Total Expenses)/Sales
d.  None of the given options

30. Data of a company XYZ is given below
Particulars Rs.
Sales 15,00,000
Variable cost   9,00,000
Fixed Cost   4,00,000
 Break Even Sales in Rs. __________ 
a.  Rs. 1, 00,000
b.  Rs. 2, 00,000
c.  Rs. 13, 00,000
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.      Which one of the following cost would not be termed as Product Costs?

a)      Indirect Material
b)     Direct Labor
c)      Administrative Salaries
d)     Plant supervisor’s Salary

7.      Which of the following ratios expressed that how many times the inventory is turning over towards the cost of goods sold?

a)      Inventory backup ratio
b)     Inventory turnover ratio
c)      Inventory holding period
d)     Both A & B

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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