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FINALTERM EXAMINATION
Spring 2010
MGT402- Cost & Management Accounting (Session - 3)
Ref No: 1671354
Time: 90 min
Marks: 69
Student Info
StudentID:
MC090407235
Center:
OPKST
ExamDate:
19 Aug 2010
For Teacher's Use Only
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Question No: 1
( Marks: 1 )
- Please choose one
A
forecast set of final accounts is also known as:
► Cash budget
► Capital budget
► Master budget
► Sales budget
Question No: 2
( Marks: 1 )
- Please choose one
Which
of the following product cost is Included in prime cost and conversion cost?
► Direct labor
► Manufacturing overhead
► Direct material
► Work in Process
Question No: 3
( Marks: 1 )
- Please choose one
Net
sales were Rs. 360,000. The cost of goods sold was Rs. 180,000. Operating expenses were Rs.
120,000. The ending balance of the Accounts Receivable was Rs. 20,000. The merchandise turnover
ratio was 12.75. What was the Net profit ratio?
► 16.67%
► 20.0%
► 40.0%
► 33.3%
Question No: 4
( Marks: 1 )
- Please choose one
The
salary of factory clerk is treated as:
► Direct labor cost
► Indirect labor cost
► Conversion cost
► Prime cost
Question No: 5
( Marks: 1 )
- Please choose one
If EOQ
= 360 units, order costs are Rs. 5 per order, and carrying costs are Rs. 0.20 per unit, what is the
usage in units?
► 2,592 units
► 25,920 units
► 18,720 units
► 129,600 units
Question No: 6
( Marks: 1 )
- Please choose one
If,
Basic Salary
Rs.10,000
Per Piece commission
Rs. 5
Unit sold
700 pieces
Amount of commission received will be:
► Rs. 3,500
► Rs. 13,500
► Rs. 10,000
► Rs. 6,500
Question No: 7
( Marks: 1 )
- Please choose one
According to Rowan premium plan, which of the following formula is used to calculate the bonus
rate?
► (Time saved/time allowed) x 100
► (Time allowed/time saved) x 100
► (Actual time taken/time allowed) x 100
► (Time allowed/actual time taken) x 100
Question No: 8
( Marks: 1 )
- Please choose one
In a
repeated distribution method:
► Each service department in turn and allocates its costs to all departments
► Only one service department in turn and re-allocates its costs to all departments
► Each service department in turn and not re-allocates its costs to all departments
► Each service department in turn and re-allocates its costs to all departments
Question No: 9
( Marks: 1 )
- Please choose one
Which
of the following is the best define a by-product?
► A by-product is a product arising from a process where the wastage rate is higher than a
defined level
► A by-product is a product arising from a process where the sales value is insignificant by
comparison with that of the main product or products
► A by-product is a product arising from a process where the wastage rate is unpredictable
► A by-product is a product arising from a process where the sales value is significant by
comparison with that of the main product or products
Question No: 10
( Marks: 1 )
- Please choose one
When
production is equal to sales, which of the following is TRUE?
► No change occurs to inventories for either use absorption costing or variable costing methods
► The use of absorption costing produces a higher net income than the use of variable costing
► The use of absorption costing produces a lower net income than the use of variable costing
► The use of absorption costing causes inventory value to increase more than they would
though the use of variable costing
Question No: 11
( Marks: 1 )
- Please choose one
Firm
"A" has the following information with regard to the production and sales of product XIT: selling
price per unit is Rs. 15, total variable cost per unit is Rs. 9, total fixed costs are Rs.15, 000. What is
the contribution margin percentage for XIT?
► 25%
► 40%
► 60%
► 67%
Question No: 12
( Marks: 1 )
- Please choose one
The
break-even point in units is calculated using which of the following factors?
► Fixed expenses and the contribution margin ratio
► Variable expenses and the contribution margin ratio
► Fixed expenses and the unit contribution margin
► Variable expenses and the unit contribution margin
Question No: 13
( Marks: 1 )
- Please choose one
Company A's fixed costs were Rs. 42,000, its variable costs were Rs. 24,000 and its sales were Rs.
80,000 (8,000 units). What is the company's break-even point in units?
► 1,400 units
► 5,000 units
► 6,000 units
► 7,000 units
Question No: 14
( Marks: 1 )
- Please choose one
Company A's fixed costs were Rs. 45,000, its variable costs were Rs. 24,000 and its sales were Rs.
80,000. What is the company's break-even point in sales Rs?
► Rs. 33,000
► Rs. 57,000
► Rs. 79,000
► None of the given options
Question No: 15
( Marks: 1 )
- Please choose one
In
process costing, a joint product is
► A product which is later divided in to many parts
► A product which is produced simultaneously with other products and is of similar value to at
least one of the other products
► A product which is produced simultaneously with other products but which is of a greater
value than any of the other products
► A product produced jointly with another organization
Question No: 16
( Marks: 1 )
- Please choose one
Éclair
Ltd manufactured three products,JP,1,JP2,JP,3 with the following cost of raw material 10,000 kg
,cost Rs. 24,000 and conversion cost is Rs. 28,000.
Out-Put
Production,Kg
sales price, per Kg
JP,1
4,000
11
JP,2
3,000
10
JP,3
1,000
26
Process costs are apportioned on a sales value basis.
Required: What was the apportioned cost for JP1.
► Rs. 22,880
► Rs. 15,600
► Rs. 13,520
► Rs. 52,000
Question No: 17
( Marks: 1 )
- Please choose one
If, fixed
cost is Rs. 1,000 and variable cost is Rs. 6 per unit. The sales price is Rs. 10 per unit. 100 units have
been produced. But no unit has been yet sold. Keeping in view the Sales level, our total cost will be
equal to which of the following?
► Zero
► Rs. 1,000
► Rs. 6,000
► Rs. 7,000
Question No: 18
( Marks: 1 )
- Please choose one
Production cost budget is based on which of the following cost?
► Market value
► Predetermined cost
► Future value
► Fair value
Question No: 19
( Marks: 1 )
- Please choose one
If a
firm is using activity-based budgeting, the firm would use this in place of which of the following
budgets?
► Direct labor budget
► Direct materials budget
► Revenue budget
► Manufacturing overhead budget
Question No: 20
( Marks: 1 )
- Please choose one
A
budget that requires management to justify all expenditures, rather than just changes from the
previous year is referred to as:
► Self-imposed budget
► Participative budget
► Perpetual budget
► Zero-based budget
Question No: 21
( Marks: 1 )
- Please choose one
Which
of the following is a process by which managers analyze options available to set courses of action by
the organization?
► Heuristics method
► Decision making
► The Delphi technique
► Systematic error
Question No: 22
( Marks: 1 )
- Please choose one
If the
materials have no resale value and no other possible use, then what would be the relevant cost of
using them for the opportunity under consideration?
► Equal to replacement cost
► Equal to opportunity cost
► It would be nil
► Equal to its historical cost
Question No: 23
( Marks: 1 )
- Please choose one
In short
term decision making which of the following is not concerned?
► Cash flows
► Time value of money
► Pay back period
► Capital investments
Question No: 24
( Marks: 1 )
- Please choose one
Which
of the following costs are always relevant in decision-making
► Avoidable costs
► Fixed costs
► Sunk costs
► None of the given options
Question No: 25
( Marks: 1 )
- Please choose one
If an
item of overhead expenditure is charged specifically to a single department this would be an
example of:
► Apportionment
► Allocation
► Re-apportionment
► Absorption
Question No: 26
( Marks: 1 )
- Please choose one
Equivelant units of production:
► Is a measure of productive activity.
► Represent work done on units still in process as well as units completed during the period
► Are used as basis for computing per unit cost in most process cost accounting systems
► All of the given options
Question No: 27
( Marks: 1 )
- Please choose one
Which
of the following is NOT a base of cost allocation under joint products?
► Physical quantity ratio
► Selling price ratio
► Hypothetical market value ratio
► Inventory turnover ratio
Question No: 28
( Marks: 1 )
- Please choose one
Which
of the following is(are) base(is) of cost allocation under joint products?
► Physical quantity ratio
► Selling price ratio
► Hypothetical market value ratio
► All of given options
Question No: 29
( Marks: 1 )
- Please choose one
If units
started in process are 25,000, units still in process are 5,000 and degree of completion is 100%
materials & 40% conversation cost. Which of the following is Equivalent Production quantity of
FOH cost?
► 25,000 units
► 22,000 units
► 15,000 units
► 15,000 units
Question No: 30
( Marks: 1 )
- Please choose one
All of
the followings are included in Fixed FOH Cost Budget EXCEPT:
► Building rent
► Insurance
► Supervisor’s salary
► Heating and lighting
Question No: 31
( Marks: 1 )
- Please choose one
All of
the followings are the importance of direct labor cost budget EXCEPT:
► It provides the Human Resource Department about numbers & categories of the workforce
required.
► It helps Human Resource Department for new recruitments or to identify surplus workforce.
► It helps Human Resource Department to hold worker training programs.
► It is helpful for knowing the maximum and minimum stock level.
Question No: 32
( Marks: 1 )
- Please choose one
Ahmed
Corporation has sales of Rs. 500,000 for the period. The selling expenses are estimated as 12% of
sales. The gross profit for the period is amounting to Rs. 150,000.
Calculate the amount of selling expenses for the period?
► Rs. 60,000
► Rs. 45,000
► Rs. 90,000
► Rs. 210,000
Question No: 33
( Marks: 1 )
- Please choose one
Which
of the following is the best example of a fixed administrative expense?
► Rent of building used for office
► Commission paid
► Repair and maintenance
► Stationery expense
Question No: 34
( Marks: 1 )
- Please choose one
Which
of the following is an example of financial expense?
► Salaries of employees
► Utility bills
► Interest paid
► Depreciation of office equipment
Question No: 35
( Marks: 1 )
- Please choose one
Which
of the following statement is TRUE about the relevant cost?
► It is a sunk cost
► It is an opportunity cost
► It do not affect the decision making process
► All costs are relevant
Question No: 36
( Marks: 1 )
- Please choose one
Which
of the following cost (‘s) will be considered as controllable cost (‘s)?
► Direct material
► Direct labor
► Variable overhead
► All of the given options
Question No: 37
( Marks: 1 ) - Please choose one
A
company produced a desired level of product ‘A’ in 5,000 Hours. The standard hours required to
produce the same product are 5,500 hours. What would be the amount & nature of variance?
► 500 hours (Favorable)
► 500 hours (Unfavorable)
► 5,000 hours (Favorable)
► 5,000 hours (Unfavorable)
Question No: 38
( Marks: 1 )
- Please choose one
A
contract will be accepted in which of the following condition?
► If it reduces the contribution margin
► If it increases the contribution margin
► If it increases the fixed cost
► If it decreases sales revenue
Question No: 39
( Marks: 1 )
- Please choose one
Complete the following table when activity level increases above the normal level:
Per unit
Total
Fixed cost
Increase
Constant
Variable cost
?Decrease
Decrease?
Total cost
Increase
Decrease
► Decrease, Decrease
► Increase, Increase
► Constant, Increase
► Increase, Decrease
Question No: 40
( Marks: 1 )
- Please choose one
If
management decides to buy in large quantities by placing few orders, it means
► Higher carrying cost and lower ordering cost
► Lower carrying cost and lower ordering cost
► Higher carrying cost and higher ordering cost
► Lower carrying cost and higher ordering cost
Question No: 41
( Marks: 1 )
- Please choose one
Consider the given data and calculate effective wage rate. Gross pay of Mr. A was Rs. 330 and time
allowed for completion of job was 15 hrs but he saved 5 hrs.
► Rs. 44/hr
► Rs. 22/hr
► Rs. 33/ hr
► Rs 66/hr
Question No: 42
( Marks: 1 )
- Please choose one
Budgeted FOH for actual volume = Fixed FOH + (Actual Volume X
?)
► Applied rate
► Blanket rate
► Variable rate
► Departmental rate
Question No: 43
( Marks: 1 )
- Please choose one
Job
ABC requires 380 active hours to complete job. It is assumed that there will be no idle time. The
wage rate per hour is Rs. 10. The labor cost of job ABC is:
► Rs. 390
► Rs. 370
► Rs. 3800
► Cannot be determined with the help of given data
Question No: 44
( Marks: 1 )
- Please choose one
Job
Code XYZ required total cost direct labour was Rs. 3,500 and direct labour was paid hourly @ Rs.
18. Production overhead was estimated at rate of Rs. 15 per direct labour hour.
Required:
Identify factory overhead cost with the help of above data.
► Rs. 2917 Approximately
► Rs. 194 Approximately
► Rs. 233 Approximately
► Rs. 270Approximately
Question No: 45
( Marks: 1 )
- Please choose one
By
products can be sold in which of the following condition(s).
► At split off point
► After further processing
► Both at split off point and after further processing
► None of the given options
Question No: 46
( Marks: 1 )
- Please choose one
Information concerning Label Corporation’s Product A is as follows:
Sales price
Variable cost
Fixed Cost
Rs.
300,000
240,000
40,000
Assuming that Label increased sales of Product A by 20%, the profit of the product A would be
which of the following?
► Rs. 20,000
► Rs. 24,000
► Rs. 32,000
► Rs. 80,000
Question No: 47
( Marks: 1 )
- Please choose one
Income
Statement Budget include(s) all of the following EXCEPT:
► Selling & distribution expenses budget
► General & administrative expenses budget
► Financial charges budget
► Cash budget
Question No: 48
( Marks: 1 )
- Please choose one
Cash
budget is prepared in the form of:
► Receipt and payment
► Debit and credit
► Asset and liability
► Cost and expenses
Question No: 49
( Marks: 3 )
XYZ
st
manufacturing company expects the following sales in units for the 1 quarter of next year:
Month
December
Sales in units
January
500
February
560
620
March
820
April
600
The company desires an ending inventory of finished units of 30% of the next month's sales.
Required:
Prepare budgeted production for the month January
Question No: 50
( Marks: 3 )
Your
Company regularly uses material X and currently has in stock 500 Kg for which it paid Rs. 1,500
two weeks ago. If this ever to be sold as raw material, it could be sold today for Rs. 2.00 per Kg.
You are aware that the material can be bought in open market for Rs. 3.25 per Kg but it must be
purchased in quantities of 1,000 Kg. What would be the relevant cost for material X?
Cost of purchase = 1500
Cost as of toady 2*500= 1000
Cost in open market 3.25*500=1625
Relevant Cost 1625-1000=625
Question No: 51 ( Marks: 5 )
A study
has been conducted to determine if one of the departments of Sparrow Company should be
discontinued. The contribution margin in the department is Rs. 150,000 per year. Fixed expenses
charged to the department are Rs. 130,000 per year. It is estimated that Rs. 120,000 of these fixed
expenses could be eliminated if the department is discontinued.
v If the department is discontinued, what will be the impact on the company’s overall net
operating income?
v Which costs are irrelevant to this decision?
Ans. If the departments is discontinued then the impact would be;
a. 150000 – (130000- 120000)=40000 net operating income would increase
Question No: 52
( Marks: 5 )
Production component Rates
Per unit Rate
Direct material
Direct Labor
VOH
Fixed FOH
Actual Output
Rs. 10.00
Rs. 8.00
Rs. 2.00
Rs. 2.50
2.5 lbs @ Rs. 4.00
.5 hr @ Rs. 16.00
.5 hr @ Rs. 4.00
Rs. 40,000
16,000 units
Variable S&A
Fixed S&A
Selling price
Rs. 6.00 per unit
Rs. 60,000
Rs. 40
Required: What do the income statements look like under Absorption costing approaches if actual
sales equal 16,000 units?
Question No: 53
( Marks: 5 )
A
Company manufacturers two products A and B. Forecasts for first 7 months is as under:
Month
January
February
March
April
May
June
July
Sales in Units
A
B
1,000
2,800
1,200
2,800
1,610
2,400
2,000
2,000
2,400
1,600
2,400
1,600
2,000
1,800
No work in process inventory has been estimated in any moth however finished goods inventory
shall be on hand equal to half the sales to the next month, in each month. This is constant practice.
Budgeted production and production costs for the year 1999 will be as follows:
Production units
Direct Materials (per unit)
Direct Labor (per unit)
F.O.H. (apportioned)
22,500
12.5
4.5
Rs. 66,000
24,000
19
7
Rs 96,000
Prepare for the six months period ending June 1999, a production budget for ‘’Product B”