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MGT402 – Cost & Management Accounting
Online Quiz # 2
January 05, 2010
Total Questions: 15
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
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
Question # 8 of 15 ( Start time: 03:51:29 AM ) Total Marks: 1
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
Question # 9 of 15 ( Start time: 03:52:19 AM )
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 (the formula to calculate average inventory is given above)
Rs. 20,000
Rs. 10,000
Question # 10 of 15 ( Start time: 03:52:59 AM ) Total Marks: 1
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
Question # 11 of 15 ( Start time: 03:53:24 AM ) Total Marks: 1
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
Question # 12 of 15 ( Start time: 03:54:38 AM ) Total Marks: 1
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
Question # 13 of 15 ( Start time: 03:55:10 AM ) Total Marks: 1
Examples of industries that would use process costing include all of the following EXCEPT:
Select correct option:
Beverages
Food
Hospitality (see page # 131)
Petroleum
Question # 14 of 15 ( Start time: 03:56:19 AM ) Total Marks: 1
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
Question # 15 of 15 ( Start time: 03:57:43 AM ) Total Marks: 1
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
MGT402 – Cost & Management Accounting
Online Quiz # 2
January 04, 2010
Total Questions: 15
It is a quiz of some student, not my quiz. Kindly verify the answers, if you find any incorrect answer, do let everyone know about it.
1 Merrick Differential Piece Rate System:
Select correct option:
.worker is not penalized even if his performance does not exceed 80 per cent of the High Task. (Page # 93, handouts hardcopy, in pdf file, the same topic is on page # 94)
.worker is not penalized even if his performance does not exceed 70 per cent of the High Task.
.worker is not penalized even if his performance does not exceed 50 per cent of the High Task.
.worker is not penalized even if his performance does not exceed 30 per cent of the High Task.
2 Which of the following statement measures the financial position of the entity on particular time?
Select correct option:
.Income Statement
.Balance Sheet
.Cash Flow Statement
.Statement of Retained Earning
3 Generally, the danger level of stock is fixed ________ the minimum level.
Select correct option:
.Below
.Above (page # 52)
.Equal
.Danger level has no relation to minimum level
4 The Process of cost apportionment is carried out so that:
Select correct option:
.Cost may be controlled
.Cost unit gather overheads as they pass through cost centers
.Whole items of cost can be charged to cost centers
.Common costs are shared among cost centers
(Not sure about this question)
5 The appropriate journal entry to transfer the cost of completed units from the Work in Process account would involve a credit to Work in Process and a debit to which of the following accounts?
Select correct option:
.Income Summary
.Raw Materials Inventory
.Finished Goods
.Manufacturing Summary
I'm not 100% sure. But i think the answer to the above MCQ should be Finished Goods account. Coz the cost of completed units is transfered from Work in process account to Finished Goods account by debiting Finished Goods a/c and crediting WIP a/c. According to me Finished Goods seems most appropriate option
6 In which of the following center FOH cost NOT incurred
Select correct option:
.Production Center
.Service Center
.General Cost Center
.Head Office (not 100% sure)
7 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 (not 100% sure)
8 Direct materials cost is Rs. 80,000. Direct labor cost is Rs. 60,000. Factory overhead is Rs. 90,000. Beginning goods in process were Rs. 15,000. The cost of goods manufactured is Rs. 245,000. What is the cost assigned to the ending goods in process?
Select correct option:
.Rs. 45,000
.Rs. 15,000
.Rs. 30,000
.There will be no ending Inventory
Solution:
Direct Material ---- 80,000 (Given)
Direct labor ------- 60,000 (Given)
Prime Cost -------- 140000
FOH -------------- 90,000 (Given)
Factory cost ----- 230000
Add: WIP o/b ---- 15,000 (Given)
Less: WIP c/b --- 0 (zero)(to be found)
CGM ------------ 245,000 (Given)
9 Sales are Rs. 450,000. Beginning finished goods were Rs. 23,000. Ending finished goods are Rs. 30,000. The cost of goods sold is Rs. 300,000. What is the cost of goods manufactured?
Select correct option:
.Rs. 323,000
.Rs. 330,000
.Rs. 293,000
.None of the given options
10 Under Periodic Inventory system Purchase of inventory is treared as:
Select correct option:
.Assets
.Expense
.Income
.Liability
11 When prices are rising over time, which of the following inventory costing methods will result in the lowest gross margin/profits?
Select correct option:
.FIFO
.LIFO
.Weighted Average
.Cannot be determined
12 The main difference between the profit center and investment center is:
Select correct option:
.Decision making
.Revenue generation
.Cost in currence
.Investment
I think its answer should be option # 4 "Investment", not sure…
13 Which of the following is a characteristic of process cost accounting system?
Select correct option:
.Material, Labor and Overheads are accumulated by orders
.Companies use this system if they process custom orders
.Opening and Closing stock of work in process are related in terms of completed units
.Only Closing stock of work in process is restated in terms of completed units
14 The Inventory Turn over ration is 5 times and numbers of days in a year is 365.Inventory holding period in days would be
Select correct option:
.100 days
.73 days
.50 days
.10 days
15 Which of the following manufacturers is most likely to use a job order cost accounting system?
Select correct option:
.A soft drink producer
.A flour mill
.A textile mill
.A builder of offshore oil rigs
(see page # 131 of handouts (pdf file) under "Examples of industries using process costing include". Bottling, flour, textile industries will use process costing, so the last option "A builder of offshore oil rigs" should be correct as this industry will use job order)
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