MGT402 Quiz # 3

 Another Cost Quiz 

Working hours of labor can be calculated with the help of all except:
Select correct option:



Smart card

Time sheet

Clock card

Store card


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


In order to ensure efficient functioning of the stores department and steady flow of materials to the production departments, the restocking of stores is duty of:
Select correct option:



Managers

Storekeeper

Production In charge

Sales supervisor


While constructing production budget, numbers of units manufactured are calculated by which of the following formula?
Select correct option:



Number of units to be sold + closing units – opening units

Number of units to be sold - closing units + opening units

Number of units to be sold - closing units – opening units

Number of units to be sold + closing units + opening units


If labor is satisfied with high wages it may ultimately lead to:
Select correct option:



Increased production and productivity

Increased efficiency

Reduced labor and overhead costs

All of the given options


Janet sells a product for Rs.6.25 each. The variable cost is Rs.3.75 per unit. Janet's break-even units are 35,000. What is the amount of fixed costs?
Select correct option:



Rs. 87,500

Rs. 35,000

Rs. 104,750

Rs.131,250


A method by which the first goods to be received are said to be the first to by sold
Select correct option:



LIFO

AVCO

FIFO

WASH



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


Overtime that is necessary in order to fulfill customer orders is called:
Select correct option:



Avoidable overtime

Unavoidable overtime

Premium Overtime

Flex time



The Economic order quantity can be calculated by:
Select correct option:



Formula Method

Table Method

Graph Method

All of the given


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

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


A cost centre is
Select correct option:



A unit of product or service in relation to which costs are ascertained

An amount of expenidure attributable to an activity

A production or service location,function,activity or item of equipment for which costs are accumulated

A centre for which an indvidual budget is drawn up


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



Ordering cost

Carrying cost

Ordering and carrying cost

Per unit order cost


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NEW Cost quiz # 3

 

Question # 1 of 15 ( Start time: 04:38:18 PM )        Total Marks: 1

Reduction of labor turnover, accidents, spoilage, waste and absenteeism are the results of which of the following wage plan?

Select correct option:

       Piece rate plan

       Time rate plan

       Differential plan

       Group bonus system

in the process costing when Cost of units transferred to the next department -II. What would be the journal entry Passed?

Select correct option:

       W.I.P (Dept-II) a/c To W.I.P (Dept-I)

       Finish Goods To W.I.P (Dept-I)

       W.I.P (Dept-II) To FOH applied

       W.I.P (Dept-I) To Payroll a/c

EOQ is the order quantity that _______ over our planning horizon

Select correct option:

       Minimizes total ordering costs

       Minimizes total carrying costs

       Minimizes total inventory costs

       Minimize the required safety stock

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

When a budget is administered wisely, it will

Select correct option:

       Discourage managers and employees

       Provide a framework for performance evaluation

       Eliminate coordination and communication between subunits

       Discourage strategic planning

Cost accounting department prepares ___________ that helps the in preparing final accounts.

Select correct option:

       Cost sheets

       Cost of goods sold statement

       Cost of production Report

       Material requisition form

Contribution margin contributes to meet which one of the following options?

Select correct option:

       Variable cost

       Fixed cost

       Operating cost

       Net Profit

Contribution margin contributes to meet the fixed cost. Once the fixed cost has been met the incremental contribution margin is the profit.

Income Statement as per the marginal costing system is used as a Standard format of Income Statement to analyze the Cost-Volume-Profit relationship.

if, COGS = Rs. 70,000 GP Margin = 30% of sales What will be the value of Sales?

Select correct option:

       Rs. 200,000

       Rs. 66,667

       Rs. 100,000

       Rs. 62,500

Which of the following cost is used in the calculation of cost per unit?

Select correct option:

       Total production cost

       Cost of goods available for sales

       Cost of goods manufactured

       Cost of goods Sold

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

Select correct option:

       395 units

       300 units

       250 units

       150 units

Which of the following is to be called product cost

Select correct option:

       Material cost

       Labor cost

       FOH cost

       All of the given options

The main purpose of cost accounting is to

Select correct option:

       Maximize profits

       Help in inventory valuation

       Provide information to management for decision making

       Aid in the fixation of selling price

 The purpose of cost accounting is to provide information to the management. Management need to know cost per unit as a basis for valuing inventory and for decision making.

 which of the following would there be a difference between financial and managerial accounting?

Select correct option:

       Users of the information

       Purpose of the information

       Flexibility of practices

       All of the given options

 Period cost

Select correct option:

       Expensed when the product is sold

       Included in the cost of goods sold

       Related to specific Period

       Not expensed

The point at which the cost line intersects the sales line will be called:

Select correct option:

       Budgeted sales

       Break Even sales

       Margin of safety

       Contribution margin

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MGT402 Quiz # 3

 MC080401549

Question # 1 of 15 ( Start time: 12:21:33 PM ) Total Marks: 1

On a cost-volume-profit chart (break-even graph), where are the total fixed costs shown?

Select correct option:

At the point where the sales line intersects the cost line

At the point where the sales line crosses the total cost line

At the point where the total cost line intersects the cost line

At the point where the total cost line intersects the volume line

LIFO method the value of issues is close to:

Select correct option:

Second hand price

Current market price

Historical cost

All of given options

Question # 3 of 15 ( Start time: 12:23:23 PM ) Total Marks: 1

The difference over the period of time between actual and applied FOH will usually be minimal when the predetermined overhead rate is based on:

Select correct option:

Normal capacity

Designed capacity

Direct Labor hours

Machine hours

A method by which the good used are priced out at average cost is known as:

Select correct option:

BCVO

AVCO

c.FIFO

LIFO

A store ledger card is similar to the ________ .

Select correct option:

Stock ledger

Bin card

Material card

Purchase requsition card

The current sales price is Rs. 25 per unit and the current variable cost is Rs. 17 per unit. Fixed costs are Rs. 40,000. If the sales price is increased by Rs. 2 and all other costs remain unchanged, what will happen to the break-even point in units?

Select correct option:

It will increase by 1,000 units

It will decrease by 1,000 units

It will decrease by 2,000 units

It will not change

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

Select correct option:

Reduced overhead costs

Reduced per unit variable cost

Increased production

Increased operating costs

Which of the following items of expense are to be add in FOH cost

Select correct option:

Rent of factory + Head office rent + salaries to factory watchman

Rent of factory + factory lighting bill + Directors salaries

Rent of factory + factory lighting bill + Factory employees salaries

Head office rent + Factory property tax + Factory small tools

EOQ is a point where:

Select correct option:

Ordering cost is equal to carrying cost

Ordering cost is higher than carrying cost

Ordering cost is lesser than the carrying cost

Total cost is maximum

The main difference between the profit center and investment center is:

Select correct option:

Decision making

Revenue generation

Cost incurrence

Investment

When 10,000 ending units of work-in-process are 30% completed as to conversion, it means:

Select correct option:

30% of the units are completed

70% of the units are completed

Each unit has been completed to 70% of its final stage

Each of the unit is 30% completed

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

The Economic order quantity can be calculated by:

Select correct option:

Formula Method

Table Method

Graph Method

All of the given

Jones, Industries uses process costing system. In October, the finishing department had 30,000 units in beginning work-in-process, 45,000 units in ending inventory and had 95,000 units transferred in from the previous department. Material is added at the end of the process and conversion costs are added uniformly throughout the process. Beginning work-in-process was 20% complete with respect to conversion costs; ending inventory was 40% complete with respect to conversion costs. If Jones uses FIFO, the equivalent units of production for transferred-in costs, direct material, and conversion costs are:

Select correct option:

Material 125,000 units Conversion cost 98,000 units

Material 125,000 units Conversion cost 45,000 units

Material 125,000 units Conversion cost 80,000 units

None of the given options

Alpha company purchased a machine worth Rs 200,000 in the last year.Now that machine can be use in a new project which company has received this year. Now the cost of that machine is to be called:

Select correct option:

Project cost

Sunk cost

Opportunity cost

Relevant cost

 
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MGT 402 Ass # 1

 

Solution:
Bell Computers, LTD.,
Cost of Production Report
For the Month of Jan
1. Quantity Schedule
Units of open work in process 10,000
Units put into the process 58,000
68,000
Units of closing work in process 8,000
Units completed and transferred 60,000
68,000

2. Cost Accumulated in the process
Material Cost (18,000+114,000) 132,000
Conversion Cost (8,800+61,600) 70,400
Total Cost 202,400
3. Equivalent unit Produced
Material Cost (60,000+8000*75%) 66,000
Conversion Cost (60,000+8000*50%) 64,000
4. Per Unit Cost
Material Cost (132,000/66,000) = 2
Conversion Cost (70,400/64,000) = 1.1
Total per Unit Cost 3.1
5. Cost Apportionment
Units completed and transferred
(60,000*3.1) 186,000
Closing work in process
Material Cost (6,000*2) 12,000
Conversion Cost (4000*1.1) 4,400 16,400
202,400

Required:
1. How many units were started and completed during January?
Answer:
Unit Started in Jan. = 58,000
Unit Completed in Jan. = 60,000
2. What were the equivalent units for January for material and conversion costs?
Answer:
Equivalent units for January for material costs = 66,000
Equivalent units for January for conversion costs = 64,000

3. What were the costs per equivalent unit for January?
Answer:
Material Cost (132,000/66,000) = 2
Conversion Cost (70,400/64,000) = 1.1
Total per Unit Cost 3.1

4. Verify the accountant’s ending work in process inventory figure (£16,400) given in the report.
Answer:
Closing work in process
Material Cost (6,000*2) 12,000
Conversion Cost (4000*1.1) 4,400 16,400
5. What criticism can be made of the unit costs that have been computed weighted –Average Method by the company and which method is superior computing unit cost under process costing based on your criticism?
Answer:
Comparison of Both methods is under as equivalent production and per unit costs.
Weighed Average Method FIFO Method
Equivalent production per unit costs Equivalent production per unit costs
Material Cost (60,000+8000*50%)
66,000 (132,000/66,000)
2 (1000+50,000+6000)
57,000 (114,000/57,000)
2
Conversion Cost (60,000+8000*75%)
64,000 (70,400/64,000)
1.1 (2000+50,000+4000)
56,000 (61,600/56,000)
1.1
Total 130,000 3.1 113,000 3.1
In comparison we see that the equivalent unit in both methods is different but per unit cost has same. FIFO method is complex than Weighted Average method, so Average method is superior because of less complexity and due to:
1. There are fewer chances to complete the unit which produced first it means first in first, because Authorities prefer to complete the open units and there may be delay in new units to put into the process.
2. Accountants will refer to Average method due to less time consuming and complexity.

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