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MCQ’s and 1 Markers

1. XYZ Co. Ltd. is having 400 workers at the beginning of the year and 500 workers
at the end of the year. During the year 20 workers were discharged and 15 workers
left the company. The Labour Turnover rate under ‘separation method’ is:
(a) 22.20%
(b) 7.78%
(c) 4.00%
(d) 14.40%

2. A factory operates a standard cost system, where 2000 kgs of raw materials @ ₹ 12
per kg were used for a product, resulting in price variance of ₹ 6000 (F) and usage
variance of ₹ 3000 (A). Then standard material cost of actual production was
(a) ₹ 20,000
(b) ₹ 30,000
(c) ₹ 25,000
(d) ₹ 27,000

3. A company maintains a margin of safety of 25% on its current sales and earns a
profit of ₹ 30 lakhs per annum. If the company has a p/v ratio of 40%, its current
sales amount to
(a) ₹ 200 lakhs
(b) ₹ 300 lakhs
(c) ₹ 325 lakhs
(d) None of the above

4. The annual demand of a certain product is 8000 units, ordering cost per order is ₹
40, carrying cost is 10% of average inventory value and purchase cost is ₹ 10 per
unit. The EOQ for the product is
(a) 1200
(b) 1000
(c) 900
(d) 800

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5. Sales for two consequtive months of a company are ₹ 3,80,000 and ₹ 4,20,000. The
company’s net profits for these months amounted to ₹ 24,000 and ₹ 40,000
respectively. There is no change in P/V ratio or fixed costs. The P/V ratio of the
company is
(a) 33-1/3 %
(b) 40%
(c) 25%
(d) None of the above

6. After inviting tenders for supply of raw materials, two quotations are received as
follows— Supplier A ₹ 2·20 per unit, Supplier B ₹ 2·10 per unit plus ₹ 2,000 fixed
charges irrespective of the units ordered. The order quantity for which the purchase
price per unit will be the same—
(a) 22,000 units (c) 20,000 units
(b) 21,000 units (d) None of the above.

7. Normal rate per hour for worker A in a factory is ₹ 5.40. Standard time per unit for
the worker is one minute. Normal piece rate per unit for the worker is
(a) ₹ 0·90 (c) ₹ 0·11
(b) ₹ 0·09 (d) None of the above

8. In case of joint products, the main objective of accounting of the cost is to apportion
the joint costs incurred up to the split off point. For cost apportionment one company
has chosen Physical Quantity Method. Three joint products ‘A’, ‘B’ and ‘C’ are
produced in the same process. Up to the point of split off the total production of A,
B and C is 60,000 kg, out of which ‘A’ produces 30,000 kg and joint costs are ₹
3,60,000. Joint costs allocated to product A is
(a) ₹ 1,20,000 (c) ₹ 60,000
(b) ₹ 1,80,000 (d) None of the these

9. A transport company is running five buses between two towns, which are 50 kms
apart. Seating capacity of each bus is 50 passengers. Actually passengers carried by
each bus were 75% of seating capacity. All buses ran on all days of the month. Each
bus made one round trip per day. Passenger kms are
(a) 2,81,250 (c) 1,87,500

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(b) 5,62,500 (d) None of the above

10. The cost per unit of a product manufactured in a factory amounts to ₹ 160 (75%
variable) when the production is 10,000 units. When production increases by 25%,
the cost of production will be ₹ per unit.
(a) ₹ 145 (c) ₹ 150
(b) ₹ 152 (d) ₹ 140

11. If the ordering cost per order is ₹ 40, carrying cost is 10% of average inventory
value, purchase cost is ₹ 10 per unit and Economic Order Quantity (EOQ) for the
product is 800 units; what is the expected annual demand for the product?
(a) 8,000 units
(b) 10,000 units
(c) 20,000 units
(d) None of the above

12. Depreciation charged in cost accounts is ₹ 12,500 and in financial books is ₹ 11,200.
What will be the financial profit/loss, when profit as per cost accounts is ₹ 5,000?
(a) Profit ₹ 3,700
(b) Loss ₹ 3,700
(c) Profit ₹ 6,300
(d) Loss ₹ 6,300

13. Standard time is 60 hours and guaranteed time rate is ₹ 50 per hour. Under Rowan
Plan, what is the amount of wages, if job is completed in 48 hours?
(a) ₹ 2,480
(b) ₹ 2,680
(c) ₹ 2,880
(d) None of the above

14. A truck capable of carrying 5 tonnes of goods normally carries 80% of the load on
the outward journey and 40% of the load on inward journey. The journey is 300
kms for one side. It takes two days to complete the return trip. In a year of 300
days compute the tonnes-km.
(a) 2,70,000

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(b) 3,00,000
(c) 3,30,000
(d) 3,50,000

15. Selling price of a product is ₹ 5 per unit, variable cost is ₹ 3 per unit and fixed cost
is ₹ 10,000. Then B.E. point in units will be:
(a) 10,000
(b) 5,000
(c) 7,500
(d) None of the above

16. T Ltd. uses pre-determined overhead rate of ₹ 15 per labour hour. The actual labour
hours are 5750 and the actual overhead cost is ₹ 85,000. There is
(a) ₹ 1,250 over absorption (c) ₹ 1,000 over absorption
(b) ₹ 1,250 under absorption (d) ₹ 1,000 under absorption

17. A chemical process has a normal yield of 90%. In a period, 5000 kgs of material
were introduced and there was an abnormal loss of 150 kgs. The quantity of good
production is
(a) 4850 kgs (c) 4500 kgs
(b) 4650 kgs (d) 4350 kgs

18. If break-even sales is 60% of current sales and profit is ₹ 60,000, then the amount
of contribution will be
(a) ₹ 1,00,000 (c) ₹ 1,50,000
(b) ₹ 36,000 (d) ₹ 1,86,000

19. The following information is given for the next year: Budgeted Sales = 5,00,000
units Finished Goods: Closing Stock = 1,50,000 units; Opening Stock = 80,000 units.
Equivalent units of WIP: Closing Stock= 60,000 units; Opening Stock = 50,000units.
The number of equivalent units produced would be
(a) 5,80,000 units (c) 5,00,000 units
(b) 5,50,000 units (d) 5,75,000 units

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20. A production process has the capacity to produce either 4,000 units of A or 3,500
units of B or 5,000 units of C. Only one product can be made in a production period.
The contributions per unit of A, B and C are Rs. 10, Rs. 11 and Rs. 8 respectively.
The opportunity cost of A would be
(a) ₹ 44,000 (c) ₹ 50,000
(b) ₹ 38,500 (d) ₹ 40,000

21. Total cost of 2000 units is ₹ 32000 and for 3200 units is ₹38,000. Fixed cost will
be
(a) ₹32,000
(b) ₹22,000
(c) ₹20,000
(d) ₹6,000

22. The BEP is 15,000 units, Fixed Cost is ₹22,500, variable cost per units ₹45 the
P/V ratio will be
(a) 33-1/3%
(b) 55%
(c) 15%
(d) 25%

23. The standard and actual data for product 'MNP' are given as under: Standard 40
hours @ ₹20 per hour. Actual 45 hours @ ₹22 per hour, so labour efficiency variance
is
(a) ₹90 Adverse
(b) ₹ 100 Favourable
(c) ₹90 Favourable
(d) ₹ 100 Adverse

24. If the capacity usage ratio of a production department is 90% and activity ratio is
99%, then efficiency ratio is
(a) 120%
(b) 110%
(c) 90%
(d) 100%

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25. Monthly demand of a product is 500 units. Set up cost per batch is ₹60 cost of
manufacturing per unit is ₹20 Rate of Interest is 10% p .a. Based on these parameter,
the Economic Batch Quantity would be
(a) 600 units
(b) 500 units
(c) 1500 units
(d) 1000 units

26. The annual demand for an item is 3200 units. The unit cost is ₹6 and the inventory
carrying cost is 25% per annum. If the cost of one procurement is ₹150, determine
the time between two consecutive orders, assuming procurement is at EOQ.

27. Calculate the direct expenses as per CAS-10 from the following information: Royalty
paid on sales: ₹1,25,000; Royalty paid on production: ₹ 1,00,000; Design charges
₹ 26,000; Machine shop expenses ₹45,000; Software development charges related
to production: ₹55,000;

28. In a certain week, the time allowed to a worker for Job X was 48 hours. He took
30 hours for the job. If the hourly effective rate of earnings of the worker under
Rowan Plan is ₹ 55, find the normal hourly rate of wages.

29. The following information is given:

The total number of operators working in a Department = 300.
The number of working days per year = 300 and the number of hours per day = 8.
The total Departmental overhead is ₹3,42,000. 5% of the total number of days is
normal idle time.
Find the overhead rate per direct labour hour.

30. How should packing costs be treated in Cost Accounts?

31. The opening stock, closing stock and purchases of materials were respectively
10,000,16,000 and 84,000 during a production period. Compute the inventory
turnover ratio.

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32. The P/V ratio of Delta Ltd., is 50% and the MOS is 40%. The company sold 500
units for ₹ 5,00,000. Calculate BEP.
(a) 500 units (c) 400 units
(b) 300 units (d) None of these

33. When material used in production being 1,000 units @ ₹ 5 per unit of which 100
units scraped is sold @ ₹ 0.50 per unit after incurring additional cost of ₹ 200, the
effective cost per unit will be
(a) ₹ 6.00 (c) ₹ 5.72
(b) ₹ 5.60 (d) ₹ 5.90

34. A company buys in lots of 6,250 units, which is a 3 months supply. The cost/unit
is ₹ 2.40. Each order costs ₹ 45 and the inventory carrying cost is 15% of the average
inventory value. Calculate the EOQ.
(a) 3,000 units (c) 2,500 units
(b) 2,000 units (d) None of these

35. Product Z has a P/V ratio of 28%. Fixed operating costs directly attributable to
Product Z during the Quarter II of the financial year will be ₹ 2,80,000. Calculate
the Sales Revenue required to achieve a quarterly profit of ₹ 70,000.
(a) ₹ 10 Lakhs (c) ₹ 15 Lakhs
(b) ₹ 12.50 Lakhs (d) None of these

36. X executes a piece of work in 120 hrs. as against 150 hrs. allowed to him. His hourly
rate is ₹ 10 and he gets a Dearness Allowance of ₹ 30 per day of 8 hrs. worked in
addition to his wages. You are required to calculate the Total Wages Payable under
the Rowan Premium Plan.
(a) ₹ 1,890 (c) ₹ 1,900
(b) ₹ 2,000 (d) None of these

37. Material with invoice value ₹ 10,000 was received in the Stores Dept. The transport
cost was ₹ 200. Since the material leaked in transit, damage to other goods of ₹ 350
had to be paid to the transporter. What would be the material cost?

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38. Bonus at 10% of salary is paid to the foreman who supervises five different
production shops producing five different products. How will the bonus be treated in
the Cost Accounts?

39. A, B, C and D are products produced by a company. Power is supplied to these

production units from the in-house power generator. Cost of power generated for a
certain period was ₹ 1,00,000. Additionally, the committed cost of standby power
shop utilities was ₹ 25,000. The sales value of A, B, C and D were equal and the
units produced were in the ratio [Link]. What amount of power cost will be part
of cost of production for each of A, B, C and D? One unit of power is consumed per
unit of production of A, B, C & D.

40. Products X, Y and Z are manufactured by XYZ Company. Special permit charges of
₹12,00,000 are paid for X and renewable every 4 years. How will the permit charges
be treated in Cost Accounts?

41. Prime Cost = ₹ 12,50,000; Works Cost = ₹ 20,00,000 and office overheads are
30% of factory overheads. What is the Cost of Production?

42. The variable and semi variable costs of producing 50,000 units are ₹ 6 per unit and
₹12 per unit respectively. If at 20,000 units, these total costs add up to ₹ 4,80,000,
what is the amount of fixed cost component of the semi variable cost?

43. A hospital is open for 365 days, but bed occupancy is 25 patients per day for 120
days and 20 beds occupied for another 80 days. Extra beds occupied during the year
is 400. The patient-days of the hospital is
(a) 4,000 (c) 3,500
(b) 5,000 (d) 4,600

44. A company manufactures two products using common handling facility. The total
budgeted material handling cost is ₹ 60,000. Other details are:
Particulars Product A Product B
Number of units produced 30 30
Material moves per product line 5 15

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Under Activity Based Costing System, material handling cost to be allocated to

Product A per unit is
(a) ₹ 1,000 (c) ₹ 1,500
(b) ₹ 500 (d) ₹ 2,500

45. A Ltd. has fixed costs of ₹ 6,00,000 per annum. It manufactures a single product
which sells for ₹ 200/unit. Its contribution is to Sales ratio is 40%. A Ltd.’s breakeven
in units is
(a) 7,500 (c) 3,000
(b) 8,000 (d) 1,500

46. The following data are given for an industry using batch costing.
Annual consumption of components – 2400 units
Setting up cost per batch – ₹ 100
Manufacturing cost/unit – ₹ 200
Carrying cost/unit – 6% per annum
Economic Batch Quantity would be
(a) 300 units (c) 200 units
(b) 400 units (d) 250 units

47. A worker has a time rate of ₹ 15/hour. He has taken 48 hours to finish a job where
Standard time is 60 hours. His total wages including Rowan Bonus for the week is
(a) ₹ 792 (c) ₹ 840
(b) ₹ 820 (d) ₹ 864

48. Fixed cost is ₹ 2,25,000; Profit is ₹ 1,85,000; BEP is ₹ 9,00,000 then margin of
safety will be
(a) ₹ 7,15,000 (c) ₹ 4,90,000
(b) ₹ 6,75,000 (d) ₹ 7,40,000

49. A JBC machine was used on a contract site for the period of 7 months and
depreciation on it was charged to the contract ₹ 78,750. If the working life of JBC
Machine is 5 years and salvage value is ₹ 25,000 then cost of JBC Machine will be
(a) ₹ 7,00,000 (c) ₹ 6,75,000
(b) ₹ 4,18,750 (d) ₹ 3,93,750

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50. In a factory the monthly requirement for a material is 20000 units; Ordering cost
₹ 225 per order, Purchase price ₹ 20 per unit and annual carrying cot is 15%, then
economic order quantity will be
(a) 3,000 units (c) 6,000 units
(b) 2,683 units (d) 1,732 units

51. A worker has completed his job within 35 hours instead of 40 standard hours. The
earnings under rowan bonus plan of the worker will be, if the wages rate per hour
is ₹ 36:
(a) ₹ 1,350 (c) ₹ 1,417.50
(b) ₹ 1,440 (d) ₹ 1,260

52. The standard wage rate is ₹ 40 per hour, Actual wage rate is ₹ 45 per hour,
standard time is 500 hours and actual hours worked is 480 hours. If wages paid for
505 hours then labour idle time variance will be
(a) ₹ 200 (A) (c) ₹ 1,125 (A)
(b) ₹ 1,000 (A) (d) ₹ 225 (F)

53. Calculate the variable overhead per hour and the amount of fixed overheads from
the following information:
Activity level (Hours) Total Budgeted overhead (₹)
21,000 1,25,000
28,000 1,53,000

54. Direct materials and direct labour cost of job No. 111 are ₹760 and ₹550
[Link] are charged @ 60% of direct labour. If the profit is included
@ 20% of the price charged to customer, then calculate the price of job No. 111.
Ascertain the future value of annuity of ₹25,000 at the end of 6 years at 9% p.a.
compounded annually. Assume that the amount is deposited at the beginning of every
year.

55. Average collection period is 2 months, Cash sales and average receivables are
₹5,00,000 and ₹6,50,000 respectively. Find the amount of total sales.

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56. Cost of a machine is ₹30,000. Estimated scrap value at the end of 10 years ₹6,000.
Running hours of the machine 24,000 p.a. Find out the depreciation per hour.

57. In a factory, a worker produced 14 units in a day of 8 hours. Wage rate per hour
is ₹40. Standard output per hour is 2 units. Under differential piece rate system, a
worker is paid at 83% when his performance is below standard and 125% of piece
rate when his performance is at or above standard. Find out the labour cost of the
worker for the day.

58. The number of employees at the beginning and end of year 2014 was 380 and
420. During the year,18 employees resigned, 6 were terminated and there were 16
replacements. Find the Labour Turnover ratio under the Flux Method.

59. A JBC machine was used on a contract site for the period of 7 months and
depreciation on it was charged to the contract ₹78,750. If the working life of the
machine is 5(five) years and salvage value is ₹25,000, then the cost of JBC machine
will be:
(a) ₹7,00,000
(b) ₹4,18,750
(c) ₹6,75,000
(d) ₹3,93,750

60. In a factory the monthly requirement for a material is 20,000 units, ordering cost
₹225 per order, purchase price ₹20 per unit and annual carrying cost is 15%, then
economic order quantity will be:
(a) 3,000 units
(b) 2,683 units
(c) 6,000 units
(d) 1,732 units
61. In a company, opening stock of material was 14,000 units, closing stock required
to be maintained. 14,000 units and sale is expected to be maintained at 28,000
units, what would be the production units during the period?
(a) 56,000
(b) 14,000
(c) 28,000

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(d) 30,000

62. When in a company, sale price per unit is ₹69.50, Variable cost ₹35.50 and Fixed
cost is 18,02,000, the break-even volume would be:
(a) 58,500 units
(b) 53,000 units
(c) 63,250 units
(d) 28,750 units

63. The actual machine hours worked in June’ 2014, is for 35,000 units and the
predetermined overhead recovery is @ ₹3 per unit, when actual overhead is
₹1,57,500, the outcome will be:
(a) ₹ 52,500 under absorbed
(b) ₹ 53,500 over absorbed
(c) ₹1,57,500 over absorbed
(d) ₹1,05,000 under absorbed

64. Under Rowan Plan, calculate the total earnings and effective rate of earnings per
hour of three operators X, Y and Z from the following particulars: The actual time
taken by three operators are as follows:
X 90 hours
Y 80 hours
Z 60 hours
The standard time fixed for producing 1 dozon articles is 100 hours. The rate of
wages is ₹2 per hour.

65. The average annual consumption of a spare part is 18250 units at a price of ₹
36.50 per unit. The storage cost is 20% on an average inventory and the cost of
placing an order is ₹ 50. Find out the quantity required to be purchased at a time.

66. List out the objectives of CAS-4.

67. What are the advantages of Cost-Control?

68. M/S Sky Ltd. furnished you the following details:

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Number of employees at the beginning of 2013 250

Number of employees at the end of 2013 400
Employees resigned 40
Employees discharged 10
Employees replaced due to resignation and discharges 40
From the above calculate Labour Turnover Rate for the factory by Separation Method
and Replacement Method.

69. List out the items to be included for the purpose of measuring employee cost.

70. The following particulars are furnished to you by M/S Limelight & Co. Ltd in respect
of a current machine:
Cost of Machine ₹30,000
Estimated scrap value ₹3,000
Working life of the machine is 5 years
The machine is treated as obsolete after three years of service and sold for ₹6,000.
How would you treat the loss of the transaction in cost Account?

71. What are the advantages of computation of overhead absorption rate before
incurrence of overhead?

72. A worker has produced 154 units in 10 hours instead of 15 hours. If the normal
wages rate is ₹30 per hour find his remuneration under Rowan Premium Plan.

73. Factory cost is ₹3,80,000 and cost of production is ₹4,10,000. Office and
administrative overheads are 20% of factory overheads. What would be amount of
prime cost? Assume no stock adjustments.

74. State two main differences between scrap and spoilage.

75. In the specimen cost sheet of a production centre, how would you arrive at the cost
of sale from the prime cost?

76. If a factory worked 3 shifts/day for 365 days it can produce 8,03,000 units.
52 Sundays during the year are holidays. There are 12 festival holidays. Breakdown of

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machine normally happens for 6 days. Labour shortage/Inventory taking etc. consume
8 clays per annum. In the forthcoming year as well as in future, the market share of
the company's product will be sufficient to demand only lesser quantities due to
competition. Hence it is estimated that two shift working will be enough for the future.
Determine the practical capacity and the normal capacity for the forthcoming year.

77. An examination centre has many rooms. 800 students are allotted seats @ 50
students per room. Every room requires two invigilators at ₹2,000/- per invigilator.
Based on cost behavior, under which type of cost will you classify the invigilator costs,
if the cost object is (i) an individual student (ii) a batch of 50 students?

78. Calculate the reorder level from the following date: Lead time: 3weeks; Safety stock:
100 units; Annual uniform usage: 2,600 units.

79. Standard time for a job = 20 hours. Rate per hour = 2. The actual time taken by a
worker is 15 hours. Calculate his earning under Barth Variable Sharing Plan.

80. A Ltd. uses pre-determined overhead absorption rates. In a certain period, actual
overheads incurred were 5 lacs and not mostly related to time. Overheads
absorbed were 1.5 lacs, 50% of unabsorbed overheads was due to faulty planning.
How will such under absorption due to defective planning be treated in Cost
Accounts?

81. The average quarterly consumption of a material is 5200 units. Unit cost is ₹ 65.
Storage cost is 15% p.a. and the ordering cost is ₹150 per order. Find the Economic
Order Quantity (EOQ).

82. At the level of 60,000 units of output, factory overheads were ₹ 3,75,000 out of
which 40% was fixed. Find the amount of factory overheads at 78,000 units of
output.

83. Standard Time allowed = 3 minutes per unit. Normal time rate = ₹ 30 per hour;
Taylor's differential piece rate basis: 80% and 120% for below and above standard
respectively. Worker W produces 225 units in an eight hour day. Calculate his
earnings for the day

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84. In a factory, number of employees at the beginning of 2015 was 380 and at the
end 420. During the year 18 employees resigned, 6 were discharged and out of
them 16 were replaced. Find the Labour Turnover Ratio of the factory under Flux
Method.

85. At EOQ total ordering cost per annum is ₹ 4,000. Find EOQ in units if carrying
cost per unit per annum is ₹ 2.

86. Find the actual overhead for the month of October 2016, when actual machine
hours worked is 10000 and there is under-recovery of overhead of ₹ 30,000 by
using machine hour rate of ₹30.

87. In process, conversion cost means

(a) Cost of direct materials, direct labour, direct expenses
(b) Direct labour, direct expenses, indirect material, indirect labour, indirect
expenses
(c) Prime cost plus factory overheads
(d) All costs up to the product reaching the consumer, less direct material costs

88. At the economic ordering quantity level, the following is true:

(a) The ordering cost is minimum
(b) The carrying cost is minimum
(c) The ordering cost is equal to the carrying cost
(d) The purchase price is minimum

89. When a direct worker is paid on a monthly fixed salary basis, the following is true:
(a) There is no idle time lost.
(b) There is no idle time cost.
(c) Idle time cost is separated and treated as overhead.
(d) The salary is fully treated as factory overhead cost.

90. The following is an example of direct expenses as per CAS-10:

(a) Special raw material which is a substantial part of the prime cost.
(b) Travelling expenses to site.

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(c) Overtime charges paid to direct worker to complete work before time.
(d) Catalogue of prices of finished products.

91. The following is not treated as a manufacturing overhead:

(a) Lubricants
(b) Cotton waste
(c) Apportioned administration overheads
(d) Night shift allowance paid to a factory worker due to general work pressure

92. When you attempt a reconciliation of profits as per Financial Accounts and Cost
Accounts, the following is done:
(a) Add the under absorption of overheads in Cost Accounts if you start from the
profits as per Financial Accounts.
(b) Add the under absorption of overheads in Cost Accounts if you start from the
profits as per Cost Accounts.
(c) Add the over absorption of overheads in Cost Accounts if you start from the
profits as per Financial Accounts.
(d) Add the over absorption of overheads in Cost Accounts if you start from the
profits as per Cost Accounts.

93. Batch Costing is applied effectively in the following situation:

(a) paper manufacturing
(b) drug manufacturing
(c) designer clothes manufacturing
(d) oil refining

94. In the context of Contract a/c, work completed and not yet certified will beshown
(a) at cost plus + 2/3rd of the notional profit under 'Completed Work'.
(b) at cost plus notional profit less retention money under 'Completed Work'.
(c) at cost under 'Completed Work'.
(d) at cost under WIP a/c.

95. A certain process needed standard labour of 24 skilled labour hours and 30
unskilled labour hours at ₹ 60 and 40 respectively as the standard labour rates.
Actually, 20 and 25 labour hours were used at ₹ 50 and 50 respectively. Then, the

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labour mix variance will be

(a) Adverse
(b) Favourable
(c) Zero
(d) Favourable for skilled and unfavourable for unskilled

96. If an organization has all the resources it needs for production, then the principal
budget factor is most likely to be
(a) non-existing
(b) sales demand
(c) raw materials
(d) labour supply

97. Daily consumption of a material is 64 to 80 units. It takes 30 to 40 days for receipt

of material after initiating the order and re-order quantity is 4000 units. Calculate
the maximum stock level if the re-order level is 3200 units.

98. P Ltd. issues 1000000,12% debentures of ₹ 100 each at a premium of 20 per cent.
The debentures are redeemable after the expiry of a fixed period of 10 years at 40
per cent premium. Calculate the cost of debt after tax if corporate tax rate is 30%.

99. A worker has produced 144 units in place of 120 units in 10 hours and normal
wage rate is ₹ 75 per hour. Find his total earnings under Rowan Plan.

100. Cost of idle time arising due to non-availability of raw material is

(a) recovered by inflating the raw material rate.
(b) recovered by inflating the wage rate.
(c) charged to factory overheads.
(d) charged to costing profit and loss account.

101. Selling and distribution overheads are absorbed on the basis of

(a) rate per unit.
(b) percentage on works cost.
(c) percentage on selling price of each unit.
(d) Any of the above

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102. What entry will be passed under integrated system for purchase of stores on
credit?
(a) Dr. Stores Cr. Creditors
(b) Dr. Purchases Cr. Creditors
(c) Dr. Stores Ledger Control A/c Cr. Creditors
(d) Dr. Stores Ledger Control A/c Cr. General Ledger Adjustment A/c

103. In a process 800 units are introduced during 2016-17. 5% of input is normal loss.
Closing work-in-progress 60% complete is 100 units. 660 completed units are
transferred to next process. Equivalent production for the period is
(a) 760 units
(b) 744 units
(c) 540 units
(d) 720 units

104. _________ deals with the principles and methods of determining the production or
operation overheads.
(a) CAS-3
(b) CAS-5
(c) CAS-9
(d) CAS-16

105. There is a loss as per financial accounts Rs.10,600, donations not shown in cost
accounts Rs. 6,000. What would be the profit or loss as per cost accounts?
(a) Loss Rs. 16,600
(b) Profit Rs. 16,600
(c) Loss Rs. 4,600
(d) Profit Rs. 4,600

106. A hotel having 100 rooms of which 80% are normally occupied in summer and
25% in winter. Period of summer and winter be taken as 6 months each and normal
days in a month be assumed to be 30. The total occupied room days will be
(a) 1525 Room days
(b) 18900 Room days

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(c) 36000 Room days

(d) None of the above

107. A firm has fixed expenses Rs. 90,000, sales Rs. 3,00,000 and profit Rs. 60,000.
The P/V ratio of the firm is
(a) 10%
(b) 20%
(c) 30%
(d) 50%

108. Marginal costing technique follows the following basis of classification:

(a) Element-wise
(b) Function-wise
(c) Behaviour-wise
(d) Identifiability-wise

109. Which of the following is not a potential benefits of using a budget?

(a) More motivated managers
(b) Enhanced co-ordination of firm activities
(c) Improved inter-departmental communication
(d) More accurate external financial statements

110. 10000 units of material 'X' are consumed per year having per unit cost of Rs. 20.
Cost of processing an order is Rs. 50 while annual interest rate is 5%. If annual
carrying cost per unit of material 'X' is 15% (other than interest), Calculate the EOQ
and number of orders per year.

111. Following information is furnished by the Dhoora Ltd: Production and Sales are
50000 units and 42000 units respectively. Royalty paid on units produced @ Rs. 5
per unit and @ Rs. 7.50 per unit sold. Hire charges of equipment used for production
on Rs. 1,80,000 and Design charges 48,000. Compute the direct expenses according
to CAS-10.

112. A work measurement study was carried out in a firm for 10 hours. The
information generated was: Units produced 350; Idle time 15%; Performance rating

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120%; and Relaxation Allowance 10% of standard time. What is the standard time
for each unit produced?

113. Batch costing is suitable for

(a) Oil Industry
(b) Sugar Industry
(c) Chemical Industry
(d) Pharmaceutical Industry

114. Idle time is

(a) Time spent by workers in office
(b) Time spent by workers in factory
(c) Time spent by workers off their work
(d) Time spent by workers on their job

115. Warehouse expense is an example of

(a) Production overhead
(b) Administration overhead
(c) Selling overhead
(d) Distribution overhead

116. Standard deals with the principles and methods of determining depreciation and
amortization cost is
(a) CAS-8
(b) CAS -11
(c) CAS-16
(d) CAS-20
117. In Reconciliation Statement expenses shown only in cost accounts are
(a) Added to financial profit
(b) Deducted from financial profit
(c) Ignored
(d) Deducted from costing profit
118. In a job cost system, costs are accumulated
(a) On a monthly basis
(b) By specific job

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(c) By department or process

(d) By kind of material used

119. In a process 6,000 units are introduced during a period. 5% of input is normal
loss. Closing work-in-process 60% complete is 800 units. 4,900 completed units are
transferred to next process. Equivalent production for the period is
(a) 6,800 units
(b) 5,700 units
(c) 5,680 units
(d) 5,380 units

120. Which of the following best describes a fixed cost?

(a) It may change in total where such change is unrelated to changes in
production.
(b) It may change in total where such change is related to changes in
production.
(c) It is constant per unit of change in production.
(d) It may change in total where such change depends on production
within the relevant range.

121. Z Ltd. is planning to sell 1,00,000 units of product A for Rs. 12.00 per unit. The
fixed costs are Rs.2,80,000. In order to realize a profit of Rs. 2,00,000, what would
the variable costs be?
(a) Rs. 4,80,000
(b) Rs. 7,20,000
(c) Rs. 9,00,000
(d) Rs. 9,20,000
122. Sales budget is an example of
(a) Expenditure budget
(b) Functional budget
(c) Capital budget
(d) Master budget
123. Joint Cost is suitable for
(a) Oil Industry
(b) Fertilizer Industry

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(c) Ornament Industry

(d) Infrastructure Industry

124. Cost of idle time arising due to non-availability of raw materials is

(a) recovered by inflating the raw materials cost.
(b) recovered by inflating the wage rate.
(c) charged to factory overheads.
(d) charged to costing profit and loss account.

125. Charging to a cost center those overheads that result solely for the existence of
that cost center is known as
(a) Allotment
(b) Allocation
(c) Absorption
(d) Apportionment

126. Standard deals with the cost of service cost center is

(a) CAS-9
(b) CAS-13
(c) CAS-16
(d) CAS-22

127. In Reconciliation Statement income shown only in financial accounts is

(a) added to financial profit.
(b) deducted from financial profit.
(c) ignored.
(d) deducted from costing profit.

128. The most suitable cost system where the products differ in type of material and
work performed is
(a) Process Costing
(b) Batch Costing
(c) Job Costing
(d) Operating Costing

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129. In a process 10000 units are introduced during a period. 10% of input is normal
loss. Closing work-in-process 70% complete is 1500 units. 7500 completed units
are transferred to next process. Equivalent production for the period is
(a) 9550 units
(b) 9000 units
(c) 8550 units
(d) 8500 units

130. The sales and profit of a firm for the year 2016 are Rs.1,50,000 and Rs.20,000
and for the year 2017 are Rs.1,70,000 and Rs.25,000 respectively. The P/V Ratio
of the firm is
(a) 15%
(b) 20%
(c) 25%
(d) 30%

131. Standard quantity of material for one unit output is 10 kg @ Rs.8 per kg. Actual
output during a given period is 600 units. The standard quantity of material for
actual output is
(a) 1200 kg
(b) 6000 kg
(c) 4800 kg
(d) 48000 kg

132. Which of the following is a long-term Budget?

(a) Master Budget
(b) Production Budget
(c) Flexible Budget
(d) Capital Budget

133. The main purpose of Cost Accounting is

(a) to maximise profit.
(b) to help in inventory valuation.
(c) to help in the fixation of selling price.
(d) to provide information to management for decision making.

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134. Which of the following is considered to be a normal loss of material?

(a) Loss due to accident
(b) Pilferage
(c) Loss due to breaking the bulk
(d) Loss due to careless handling of material

135. In Reconciliation Statement expenses shown only in financial accounts are

(a) added to financial profit.
(b) added to costing profit.
(c) ignored.
(d) deducted from financial profit.

136. Which of the following is a service department?

(a) Refining department
(b) Machining department
(c) Receiving department
(d) Finishing department

137. Which of the following items is not included in preparation of cost sheet?
(a) Purchase returns
(b) Carriage inwards
(c) Sales commission
(d) Interest paid

138. In job costing to record the issue of direct materials to a job which of the following
document is used?
(a) Purchase order
(b) Goods receipt note
(c) Material requisition
(d) Purchase requisition

139. In a process 4000 units are introduced during a period. 5% of input is normal loss.
Closing work-in-progress 60% complete is 500 units. 3300 completed units are
transferred to next process. Equivalent production for the period is

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(a) 3550 units

(b) 3600 units
(c) 3800 units
(d) 3950 units

140. Product A generates a contribution to sales ratio of 40%. Fixed cost directly
attributable to A amount Rs. 60,000. The sales revenue required to achieve a profit
of Rs.15,000 is
(a) Rs 2,00,000
(b) Rs 1,85,000
(c) Rs 1,87,500
(d) Rs 2,10,000

141. During a period 13600 labour hours were worked at a standard rate of Rs. 8 per
hour. The direct labour efficiency variance was Rs. 8,800 (Adv). How many
standard hours were produced?
(a) 12000 hours
(b) 12500 hours
(c) 13000 hours
(d) 13500 hours

142. Cash Budget of ABC Ltd. forewarns of a short-term surplus. Which of the following
would be appropriate action to be taken in such a situation?
(a) Purchase new fixed assets
(b) Repay long-term loans
(c) Write off preliminary expenses
(d) Pay creditors early to obtain a cash discount

143. Costs which are ascertained after they have been incurred are known as
(a) Sunk Costs
(b) Imputed Costs
(c) Historical Costs
(d) Opportunity Costs

144. Prime cost plus variable overheads is known as

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(a) Factory Cost

(b) Marginal Cost
(c) Cost of Production
(d) Total Cost

145. In which of thefollowing methods, issue of materials are priced atpre-determined

rate?
(a) Specific price method
(b) Standard price method
(c) Inflated price method
(d) Replacement price method

146. For reducing the labour cost per unit, which of the following factors is the most
important?
(a) Low wage rates
(b) Longer hours of work
(c) Higher input-output ratio
(d) Strict control and supervision

147. Maximum possible productive capacity of a plant when no operating time is lost
is its
(a) Normal capacity
(b) Practical capacity
(c) Theoretical capacity
(d) Capacity based on sales expectancy

148. In job costing, which of the following documents is used to record the issue of
direct materials to a job?
(a) Goods Receipt Note
(b) Purchase Order
(c) Purchase Requisition Note
(d) Material Requisition Note

149. The main purpose of accounting of joint products and by-products is to

(a) determine the profit/loss on each product line.

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(b) determine the selling price.

(c) comply with the statutory requirements.
(d) identify the cost and load it on the main product.

150. During a period 2560 labour hours were worked at a standard rate of Rs. 7.50
per hour. The direct labour efficiency variance was Rs. 825 (A). How many standard
hours were produced?
(a) 2400
(b) 2450
(c) 2500
(d) 2550

151. PQR Ltd. manufactures a single product which it sells forRs.40per unit. Fixed cost
is Rs. 60,000 per year. The contribution to sales ratio is 40%. PQR Ltd.’s Break Even
Point in units is
(a) 3500
(b) 3700
(c) 3750
(d) 4000

152. The fixed-variable cost classification has a special significance in the preparation of
(a) Cash budget
(b) Master budget
(c) Flexible budget
(d) Capital budget

153. Cost units used in power sector is called:

(a) Number of hours
(b) Kilo meter (K. M)
(c) Number of electric points
(d) Kilowatt-hour(KWH)

154. Cost units of Automobile Industry is .

(a) Cubic meter
(b) Number of vehicle

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(c) Bed Night

(d) Number of call

155. Which of the following most appropriately defines 'Idle time'?

(a) Time spent by workers in factory
(b) Time spent by workers in office
(c) Time spent by workers off their work
(d) Time spent by workers on their job

156. The allotment of whole items of cost of centers or cost unit is called
(a) Overhead absorption
(b) Cost allocation
(c) None of these
(d) Cost apportionment

157. If an organization has all the resources it needs for production, then the principal
budget factor is most likely to be
(a) labour supply
(b) sales demand
(c) raw materials
(d) non-existing

158. Time and motion study is conducted by the

(a) Time –keeping department
(b) Payroll department
(c) Personnel department
(d) Engineering department

159. Sales budget is an example of

(a) Functional budget
(b) Master budget
(c) Expenditure budget
(d) Capital budget

160. Absolute Tonne-km. is an example of:

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(a) Composite unit in power sector

(b) Composite unit for oil and natural gas
(c) Composite unit for bus operation
(d) Composite unit of transport sector

161. Which of the following is not an element of master budget?

(a) Capital Expenditure Budget
(b) Production Schedule
(c) Operating Expenses Budget
(d) All of these

162. Selling and distribution overheads are absorbed on the basis of

(a) rate per unit
(b) Any of these
(c) percentage on selling price of each unit
(d) percentage on works cost.

163. Standards deals with the principles and methods of determining depreciation and
amortization cost
(a) CAS 12
(b) CAS 9
(c) CAS 16
(d) CAS 15

164. Which of the following is a service department?

(a) Machining department
(b) Finishing department
(c) Refining department
(d) Receiving department

165. Batch Costing is a type of . Which word(s) according to you appropriately fills in
the above blank?
(a) Direct Costing
(b) Process Costing
(c) Job costing

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(d) Differential Costing

166. Audit fees paid to cost auditors is part of:

(a) Administration Cost
(b) None of these
(c) Selling & Distribution cost
(d) Production cost

167. Which of the following is not an element of works overhead?

(a) Sales manager’s salary
(b) Factory repairman’s wages
(c) Product inspector’s salary
(d) Plant manager’s salary

168. In Reconciliation Statement expenses shown only in cost accounts are

(a) Deducted from financial profit
(b) Ignored
(c) Added to financial profit
(d) Deducted from costing profit

169. From cost control point of view the standard most commonly used is:
(a) Theoretical standard
(b) Expected standard
(c) Normal standard
(d) Basic standard

170. Which of the following is generally a long term budget?

(a) Sales budget
(b) Cash budget
(c) Research and Development budget
(d) Capital expenditure budget

171. Which method of absorption of factory overheads do you suggest in a concern

which Produces only one uniform time of product?
(a) Direct labour rate

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(b) Percentage of direct wages basis

(c) Machine hour rate
(d) A rate per units of output

172. In the context of Contract a/c, work completed and not yet certified will be shown
(a) at cost under 'Completed Work'
(b) at cost under WIP a/c
(c) at cost plus notional profit less retention money under 'Completed Work'
(d) at cost plus + 2/3rd of the notional profit under 'Completed Work'

173. If actual loss in a process is less than normal loss, the difference is known as

174. Profit volume ratio with increase in fixed cost.

175. VED analysis is primarily used for control of .

176. What is the name the type of loss for which a Process Account is credited with
value for such loss when scrap value is zero?

177. When raw material is accounted at standard cost, variances due to normal reasons
will be treated as cost.

178. CAS stands for cost of service cost centre.

179. Notional remuneration to owner is expense debited only in .

180. Historical costing uses post period costs while standards costing uses costs.

181. leads to budgeting and budgeting leads to budgetary control.

182. Fixed cost is Rs 30,000 and P/V ratio is 20%. Compute breakeven point.

183. The amount of sales of a product is Rs 1,00,000. Its variable cost is Rs 40,000
and fixed cost is Rs . 50,000. The amount of BEP sales will be

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184. A labour cost standard is based on estimates of the to produce a unit of product
and the cost of labour per unit.

185. A factory has to produce and supply 24000 units of a component annually to a
customer. The carrying cost per unit is Rs 2 per component per month. The
production run set up cost is Rs 1,800 per production run. Find out the economic
batch size that must be produced to minimize total cost based on the above
information.

186. Standard Costing is one of the techniques.

187. Cost variance is the difference between .

188. A work measurement study was carried out in a firm for 10 hours. The
information generated was: Units produced 600; Idle time 15%; Performance rating
120%; and Relaxation Allowance 10% of standard time. What is the standard time
for each unit produced?

189. Differential cost is the change in the cost due to change in from one level to another.

190. In Absorption costing, cost is added to inventory.

191. Match the items in Column I with the most appropriate items in Column II. State
the item no. only
Escalation clause sunk cost
Notional cost contract cost
Imputed cost

192. Margin of safety is

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