I B.Com PA [ ] Semester II Core: Management Accounting - 218A Multiple Choice Questions.

1 of 23 1/27/2018, 11:53 AM Dr.G.R.Damodaran College of Science (Autonomous, affiliated to the Bharathiar University, recognized by the UGC)Reaccredited at the 'A' Grade Level by the NAAC and ISO 9001:2008 Certified CRISL rated 'A' (TN) for MBA and MIB Programmes I B.Com PA [2017-2020] Semester II Core: Management Accounting - 218A Multiple Choice Questions. 1. Cost accounting is A. an instrument of management control B. not needed if prices are beyond the control of the firm C. nothing more than a detailed analysis of expenditure D. useful only in such organizations which have profit as the aim 2. The main purpose of cost accounting is to A. maximize profits B. helps in inventory valuation C. provide information to management for decision - making D. aid in the fixation of the selling price 3. The term 'cost' refers to A. the present value of future benefits B. the value of the sacrifice made to acquire goods or services C. an asset that has given benefit and is now expired D. the price of products sold or services rendered 4. Cost accounting differs from financial accounting in respect of A. reporting of cost B. ascertaining cost C. control of cost D. recording cost 5. The principal factor to be considered in designing a costing system includes A. company organization structure B. nature of business C. manufacturing process D. all of the above

2 of 23 1/27/2018, 11:53 AM 6. An important feature of a cost centre is that A. it must be one specific location only B. it has clearly defined boundaries C. it uses only monetary information D. it must be an area of the business through which product pass 7. Which one of the following is the most important tool in cost planning? A. Budgeting B. Cost unit C. Cost statement D. Direct cost 8. Job costing is applied in A. textile mills B. printing press C. paper mills D. chemical works 9. Fixed cost per unit increases when A. production volume decreases B. production volume increases C. variable cost per unit increases D. variable cost per unit decreases 10. Which of the following is a cost behaviour - oriented approach to production costing? A. job order costing B. process costing C. marginal costing D. absorption costing 11. Which one of the following constitutes the cost of sales? A. Works cost + Administration overheads B. Cost of production + Selling and distribution overheads C. Prime cost + works overheads D. Work cost + Selling and distribution overheads 12. Cluster sampling, stratified sampling and systematic sampling are types of A. Direct sampling B. Indirect sampling C. Random sampling D. Non - random sampling

3 of 23 1/27/2018, 11:53 AM 13. Type of sampling in which each element of population has equally likely chance of occurrence in a random sample is classified as A. Regular and Irregular sampling B. Error free sampling C. Inertia sampling D. Simple random sampling 14. Quota sampling, judgment sampling and convenience sampling are classified as types of A. Random sampling B. Non - random sampling C. Direct sampling D. Indirect sampling 15. -------------- is a set of elements taken from a larger population according to certain rules A. Sample B. Population C. Statistics D. Element 16. Which of the following sampling methods is the best way to select a group of people for a study if you are interested in making statements about the larger population? A. Convenience sampling B. Quota sampling C. Purposive sampling D. Random sampling 17. The process of drawing a sample from a population is known as A. Sampling B. Census C. Survey Research 18. The type of sampling in which each member of the population selected for the sample is returned to the population before the next member is selected is called A. Sampling without replacement B. Sampling with replacement C. Simple random sampling D. Systematic sampling 19. Which of the following would usually require the smallest sample size because of its efficiency?

4 of 23 1/27/2018, 11:53 AM A. One stage cluster sampling B. Simple random sampling C. Two stage cluster sampling D. Quota sampling 20. Direct Material is a A. Selling and distribution cost B. Administration cost C. Manufacturing cost D. Any of the above 21. A written request to a supplier for specified goods at an agreed upon price is called a A. Receiving report B. Purchase order C. Material requisition form D. Purchase requisition 22. A purchase requisition is prepared by A. Store keeper B. Supplier C. Foreman D. Purchase manager 23. The storekeeper should initiate a purchase requisition when stock reaches A. Average stock level B. Minimum stock level C. Maximum stock level D. Re-order level 24. Economic Order Quantity is computed so that A. The cost of materials are least B. The ordering and stock-out costs are least C. The ordering and carrying costs are least D. The ordering and back ordering costs are least 25. In which of the following methods of pricing, costs lag behind the current economic values? A. LIFO B. Weighted average price C. FIFO D. Replacement price

5 of 23 1/27/2018, 11:53 AM 26. If the raw material prices are suffering from inflation, which of the following methods of valuing stocks will give the lowest gross profit? A. FIFO B. LIFO C. Simple average D. Replacement cost 27. Which of the following material losses should be transferred to costing profit and loss account? A. Loss due to breaking the bulk B. Loss by evaporation C. Loss due to improper storage of materials D. All of these 28. Direct labour means A. Labour which can be conveniently associated with a particular cost unit B. Labour which completes the work manually C. Permanent labour in the production department D. Labour which is recruited directly and not through contractors 29. Labour productivity is measured by comparing A. Total output with the total man hours B. Actual time with standard time C. Added value for the product with total wage cost D. All of the above 30. Wage sheet is prepared by A. Cost accounting department B. Payroll department C. Personnel department D. Time - keeping department 31. The time wage system A. Satisfies trade unions B. Increases cost of production C. Benefits the less efficient workers 32. The straight piece rate system A. Is opposed by trade unions B. Recognises individual efficiency C. Benefits the employer

6 of 23 1/27/2018, 11:53 AM 33. Differential piece rate systems A. Are complicated B. Are discriminatory C. Pay workers in proportion to their efficiency 34. Which of the following incentive methods of wage payment should be used for indirect workers? A. Gantt's task and bonus plan B. Rowan plan C. Taylor's differential piece rate system 35. The Halsey plan A. Is intended to improve the quality of work B. Pays higher bonus at higher levels of efficiency C. Divides the benefit of time saved equally between the employer and the employee 36. The Rowan plan A. Is the best for efficient workers B. Pays lower bonus that that of Halsey beyond 50% saving in time C. Pays increased bonus at an increasing rate as the efficiency 37. In which of the following incentive plans of wage payment, wages on time basis are not guaranteed? A. Gantt's task and bonus system B. Halsey plan C. Rowan plan D. Taylor's differential piece rate system 38. Which of the following is a service department? A. Finishing department B. Refining department C. Receiving department D. Machining department 39. Absorption means A. Charging of overheads to cost centres or cost units B. Charging the overheads to cost units C. Charging of overheads to cost centres

7 of 23 1/27/2018, 11:53 AM 40. Number of workers employed is used as a basis for the apportionment of A. Personnel department expenses B. Canteen expenses C. Time office costs D. Any of these 41. Information regarding depreciation is obtained from A. Plant register B. Invoice C. Cash book D. Stores requisition 42. The most suitable cost system where the products differ in type or materials and work performed is A. Process costing B. Job costing C. Operating costing 43. Job costing is used in A. Brick making B. Cycle manufacturing C. Repair shops D. Road repairs 44. In job costing system, costs are accumulated A. By specific job B. On a monthly basis C. By kind of material used D. By department or process 45. A job order cost sheet normally does not contain which of the following? A. Direct materials B. Direct labour C. Actual factory overheads D. Applied factory overheads 46. Tyres and tubes manufacturing company adopts A. Batch costing B. Job costing

8 of 23 1/27/2018, 11:53 AM C. Output costing D. Contract costing 47. Classification and accumulation of costs by fixed and variable cost is of special importance in A. Output costing B. Process costing C. Operating costing D. Batch costing 48. The TamilNadu Transport Corporation must use A. Job costing B. Contract costing C. Process costing D. Operating costing 49. Cinema houses must adopt A. Contract costing B. Operating costing C. Batch costing D. Job costing 50. Marginal cost is A. Prime cost B. Variable cost C. Works cost D. Cost of production 51. Absorption costing takes into account A. Total cost B. Fixed cost C. Variable cost D. Works cost 52. Contribution is A. Excess of sales over total cost B. Excess of cost of sales over sales C. Excess of sales over fixed cost D. Excess of sales over variable cost 53. P/V ratio is A. Price volume ratio

9 of 23 1/27/2018, 11:53 AM B. Price variance ratio C. Contribution to sales ratio D. Total cost to sales ratio 54. Break even point is A. Sales at which profit is high B. Sales at which there is loss C. Sales at which there is no profit or loss 55. Margin of safety is A. Sales at which there is profit B. Sales at which there is loss C. Sales in excess of BEP 56. Break even chart is a chart of A. Sales B. Total cost C. Profit D. Sales and Total cost 57. A key factor is A. Budget factor B. Limiting factor C. Cost factor 58. Angle of Incidence is A. Angle between sales and fixed cost lines B. Angle between sales and variable cost lines C. Angle between sales and total cost lines 59. Budgeting is A. A Technique B. A method of costing C. Maintaining ledger accounts 60. Consumption of raw material is based on

10 of 23 1/27/2018, 11:53 AM A. Production B. Sales C. Cash D. Market 61. A flexible budget is A. Budget for different capacity levels B. Budget for different departments C. Budget for receipts and payments 62. Control ratios are calculated for A. Comparison of actual performance with budgets B. Planning of activities C. Financial performance measurement 63. Sales budget is A. Budget of output to be sold B. Budget for selling expenses C. Budget of revenue and expenses D. A list of incentives to salesmen 64. Purchase budget refers to A. Purchase of fixed assets B. Purchase of raw materials C. Purchase of advertising and distribution materials D. Purchase of office supplies 65. A production budget is based on A. Cash budget B. Overheads budget C. Sales budget D. Purchase budget 66. A master budget is A. Budget for assets and liabilities B. Budget of Profit or Loss C. Budget for managerial remuneration D. Budget for operations of the entire organization

11 of 23 1/27/2018, 11:53 AM 67. Performance budget is A. Laying down of objectives B. Measurement of output in relation to input C. Flexible budgeting D. Fixed budget 68. Zero base budgeting refers to A. Short term and Long term budgeting B. Performance reporting C. Responsibility accounting D. Justification of every item in the budget afresh 69. Capital Budgeting deals with A. Working capital B. Long term investments C. Short term investments 70. Payback period is ascertained on the basis of A. Cash flows before depreciation and tax B. Cash flows after depreciation and tax C. Cash flow after tax before depreciation 71. Accounting rate of return is calculated with the help of A. Income before depreciation and tax B. Income after depreciation before tax C. Income after depreciation and tax 72. Net Present Value is the difference between A. Cash received and paid B. Investment and Income C. Present value of cash inflows and outflows 73. IRR is the rate of return at which A. NPV is nil B. NPV is positive C. NPV is negative

12 of 23 1/27/2018, 11:53 AM 74. Capital budgeting decides investment in ------- term projects A. Short B. Medium C. Long D. Short - Medium 75. Standard costing is a A. Method of costing B. Technique for cost reduction C. Cost control technique 76. Variance analysis involves A. Dividing variance according to causes B. Fixing responsibility for loss C. Identifying gains in working 77. Material Price Variance is loss or gain A. Due to using more or less material B. Due to wastage of material C. Due to payment of higher or lower price than what is specified 78. Usually standards are set up on the basis of A. Past performance B. Ideal performance C. Normal performance D. Attainable high performance 79. Standard Hour represents A. Time taken by workers for production B. Expected number of hours the factory should work C. Output of different kinds expressed in terms of hours 80. Standard costing involves A. Setting of budgeted costs B. Determination of standard cost C. Fixation of estimated cost

13 of 23 1/27/2018, 11:53 AM 81. Standard costing can be used along with A. Marginal costing B. Absorption costing C. Job and Process costing D. All of the above 82. The cost of a product as determined under standard costing is A. Predetermined cost B. Direct cost C. Fixed cost D. Historical cost 83. Standard cost are useful in all of the following, except A. Costing inventories B. Establishing records C. Speeding up preparation of operating reports D. Reducing cost 84. The type of standard that is best suited from cost control point of view A. Basic standard B. Normal standard C. Expected standard D. Theoretical standard 85. Which one of the following standards can be attained under the most favourable conditions possible? A. Basic standard B. Normal standard C. Expected standard D. Theoretical standard 86. The difference between actual cost and standard cost is known as A. Loss B. Profit C. Differential cost D. Variance 87. Material cost variance is due to A. Change in material mix B. Change in price of material C. Change in quantity used

14 of 23 1/27/2018, 11:53 AM D. All of the above 88. Material mix variance is a sub variance of A. Material yield variance B. Material quantity variance C. Material price variance D. Material cost variance 89. Labour rate variance is due to A. Poor working conditions B. Defective material C. Overtime allowance 90. Idle time variance is a sub variance of A. Labour efficiency variance B. Labour rate variance C. Labour cost variance D. Labour mix variance 91. Difference between budgeted fixed overheads and actual fixed overheads is known as A. Fixed overhead volume variance B. Fixed overhead budget variance C. Fixed overhead expenditure variance D. both B & C 92. Production cost under marginal costing includes A. Prime cost only B. Prime cost and Fixed overhead C. Prime cost and Variable overhead D. Prime cost, Variable overhead and Fixed overhead 93. One of the primary differences between marginal costing and absorption costing is regarding the treatment of A. Prime cost B. Fixed overheads C. Variable overheads D. Direct materials 94. Absorption costing differs from marginal costing is the A. fact that standard costs can be used with absorption costing but not with marginal costing

15 of 23 1/27/2018, 11:53 AM B. Amount of costs assigned to individual units of products C. Kind of activities for which each can be used D. Amount of fixed costs that will be incurred 95. Contribution margin is also known as A. Marginal income B. Gross profit C. Net profit 96. Period costs are A. Overhead costs B. Prime cost C. Variable cost D. Fixed costs 97. Contribution margin is equal to A. Fixed cost - Loss B. Profit + Variable cost C. Sales - Fixed Cost - Profit 98. P/V ration is an indicator of A. The rate at which goods are sold B. The volume of sales C. The volume of profit D. The rate of profit 99. Margin of safety is the difference between A. Planned sales and planned profit B. Actual sales and Break even sales C. Planned sales and actual sales 100. An increase in variable costs A. Increases P/V ratio B. Increases the profit C. Reduces contribution 101. An increase in selling price

16 of 23 1/27/2018, 11:53 AM A. Increases the break even point B. Decreases the break even point C. Does not affect the break even point 102. Break even point is calculated by the formula A. Marginal cost/standard cost * Sales B. Fixed / Marginal contribution * sales C. Fixed cost / Total cost * Sales 103. A large margin of safety includes A. Over production B. Over capitalization C. The soundness of the business 104. The budget is A. A post - mortem analysis B. A substitute of management C. An aid to management 105. One of the most important tools of cost planning is A. Budget B. Direct cost C. Unit cost D. Cost sheet 106. Sales budget is a A. Functional budget B. Expenditure budget C. Master budget D. Flexible budget 107. Which of the following is usually a long - term budget? A. Fixed budget B. Cash budget C. Sales budget D. Capital expenditure budget

17 of 23 1/27/2018, 11:53 AM 108. The fixed - variable cost classification has a special significance in the preparation of A. Capital budget B. Cash budget C. Master budget D. Flexible budget 109. The budget which is prepared first of all is A. Master budget B. Cash budget C. Budget for key factor 110. Preparing budget figures for different levels of activity within a range under flexible budgeting is A. Formula method B. Multi activity method C. Budget cost allowance method 111. What type of budget is designed to take into account forecast change in costs, prices, etc? A. Master budget B. Rolling budget C. Flexible budget D. Functional budget 112. Operation budgets normally cover a period of A. One to ten years B. One to two years C. One to five years D. One year or less 113. Survey is a process of ------------ of data A. Classification B. Collection C. Tabulation 114. The data collected for the first time is called as A. Primary data B. Secondary data C. Elementary data D. All of the above

18 of 23 1/27/2018, 11:53 AM 115. The data that have already been collected is called as A. Primary data B. Secondary Data C. Constant data D. Elementary data 116. -------------- of data are suitable for the purpose of investigation A. Adequacy B. Suitability C. Reliability 117. ---------------- of data can be tested A. Suitability B. Adequacy C. Reliability 118. ---------- are create interest in the mind of the readers A. Tables B. Diagrams C. Charts 119. ------------- bar diagram can be drawn either or horizontal vertical bars A. Multiple B. Simple C. Sub - divided 120. ---------------- Diagram ranks high in understanding A. Circle B. Square C. Rectangular D. Pie 121. Pie diagram is called as -------------- diagram A. Square B. Circle C. Angular D. All of the above

19 of 23 1/27/2018, 11:53 AM 122. Component graph also known as --------------- graph A. Band B. Range C. Net balance 123. ---------- determines median, quartiles, percentiles A. Ogives B. Frequency curve C. Histograms D. Silhouette 124. ----------------- population is the number of observations can be counted A. Infinite B. Finite C. Real 125. ------------ population is the member of observations cannot be measured A. Finite B. Infinite C. Real D. All of the above 126. The universe containing persons is known as ----------- population A. Real B. Finite C. Infinite 127. Theoretical population is also known as ------------- universe A. Existent B. Hypothetical C. Null 128. --------------- is possible to intensive study A. Sample method B. Census method C. Discretion method

20 of 23 1/27/2018, 11:53 AM D. All of the above 129. Analysis which is used to find out an unknown variable from the known variable is A. Regression B. Correlation C. Skewness 130. The known variable which is used to estimate an unknown variable is called A. Independent variable B. Dependent variable C. Regression 131. The unknown variable which is used to be predicted is called A. Explained variable B. Explanatory variable C. Independent variable 132. When the regression lines are expressed in an algebra terms it is known as A. Regression equation B. Regression analysis C. Correlation 133. Standard error of regression is also called as A. Standard error of estimate B. Standard error C. Standard error of determination D. All of the above 134. Index number is a measure by studying the relationship between A. Two variable B. Three variable C. Three variable D. Three or more variable 135. An index number which is used for measuring the changes of prices of commodities over a period of time is A. Price Index number

21 of 23 1/27/2018, 11:53 AM B. Value Index number C. Quantity Index number D. Quality Index number 136. Historically the first index was constructed in A. 1864 B. 1774 C. 1764 D. 1788 137. ----------------- method is the easiest method for calculating seasonal variations A. Simple averages method B. Ratio to trend method C. Link relative method D. All of the above 138. ------------- method is an improvement over the method of simple average method A. Link relative method B. Ratio to moving average method C. Ratio to trend method 139. -----------method is also known as the percentage of moving average method A. Ratio to trend method B. Ratio to moving average method C. Link relative method 140. -------------- method requires complex mathematical calculations A. Simple average method B. Ratio to trend method C. Ratio to moving average method 141. -------------- method is the most difficult one among the methods of measuring seasonal variation A. Link relatives method B. Simple average method C. Ratio to trend method 142. Minimal rate of return that shareholders demands from firm is classified as

22 of 23 1/27/2018, 11:53 AM A. Cost of capital B. Cost of marketing C. Cost of share issuance D. Economic earnings 143. Statistical model which is used to identify benefits and expenses related to human resource activities is classified as A. Utility analysis B. Investment analysis C. Cost benefit analysis D. both a and c 144. Operating profit held with firm after deducting cost of capital is classified as A. benefits added into salaries B. investments added C. capitals added D. economic value added 145. Operating cost for new system is added into implementation cost and is then divided by gains by improvements in productivity is called A. economic value added B. analysis of benefits C. return on investment D. return on public offering 146. Which best describes the process of benchmarking? A. Comparison of actual performance with budget B. Comparison of the costs of one product with another C. Comparison of direct competitors performance D. Comparison of the performance on one operation or business with another 147. In which of the four perspectives of a balanced scorecard would Return on Capital Employed be likely to appear? A. Financial B. Customer C. Internal processes D. Learning and growth 148. In which of the four perspectives of a balanced scorecard is the objective reduce staff turnover most likely to be? A. Financial B. Customer

23 of 23 1/27/2018, 11:53 AM C. Internal processes D. Learning and growth 149. What is strategy mapping in the balanced score A. Identifying casual links between the four perspectives B. Mapping the business processes C. Setting the mission D. Agreeing the strategy with the director of the business 150. Which costing system is often used to calculate customer profitability? A. Absorption costing B. Marginal costing C. Activity based costing D. Variable costing Staff Name Jayanthi.M.