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 INTERMEDIATE EXAMINATION SET - 1
MODEL ANSWERS TERM – DECEMBER 2024
PAPER – 8 SYLLABUS 2022
COST ACCOUNTING
Time Allowed: 3 Hours Full Marks: 100

The figures in the margin on the right side indicate full marks.

SECTION – A (Compulsory)

1. Choose the correct option: [15 x 2 = 30]

(i) What is the primary objective of cost accounting?
a. Maximize profits
b. Record financial transactions
c. Provide financial statements
d. Facilitate cost control and decision-making

(ii) If the direct materials consumed are ₹30,000, direct labour is ₹20,000, and factory overhead is
15,000, what is the total manufacturing cost?
a. 50,000
b. 65,000
c. 35,000
d. 20,000

(iii) The sum of direct labour and factory overhead is termed __________.
a. Prime Cost
b. Conversion Cost
c. Cost of goods manufactured
d. Direct Cost

(iv) A company employs three drivers to deliver goods to its customers. The salaries paid to these
drivers are:
a. a part of prime cost
b. a direct production expense
c. a production overhead
d. a selling and distribution overhead

(v) What does CAS-11 emphasize regarding the treatment of abnormal administrative costs?
a. Inclusion in cost calculations
b. Exclusion from cost calculations
c. Separate disclosure in footnotes
d. Attestation by external auditors

(vi) Which of the following is a scientific and accurate method for calculating factory overhead
absorption?
a. Percentage of prime cost method
b. Machine hour rate method
c. Percentage of direct material cost method
d. Percentage of direct labour cost method

(vii) A company calculates the prices of jobs by adding overheads to the prime cost and adding 30%
to total costs as a profit margin. Job number Y256 was sold for ₹1,690 and incurred overheads of
₹694. What was the prime cost of the job?

1
Directorate of Studies, The Institute of Cost Accountants of India
 INTERMEDIATE EXAMINATION SET - 1
MODEL ANSWERS TERM – DECEMBER 2024
PAPER – 8 SYLLABUS 2022
COST ACCOUNTING
a. 489
b. 606
c. 996
d. 1,300

(viii) Which of the following does not form part of prime cost?
a. GST paid on raw materials (input credit can be claimed)
b. Cost of transportation paid to bring materials to factory
c. Cost of packing
d. Overtime premium paid to workers
(ix) Job costing is:
a. Suitable where similar products are produced on a mass scale
b. Method of costing used for non-standard and non-repetitive products
c. Applicable to all industries regardless of the products or services produced
d. None of the above
(x) Normal capacity of a plant refers to the difference between:
a. Maximum capacity and practical capacity
b. Maximum capacity and actual capacity
c. Practical capacity and estimated idle capacity as revealed by long term sales trend
d. Practical capacity and normal capacity
(xi) A flexible budget requires a careful study of:
a. Fixed, semi-fixed and variable expenses
b. Past and current expenses
c. Overheads, selling and administrative expenses.
d. None of these.
(xii) Marginal Costing technique follows the ____________ basis of classification of costs.
a. Element wise
b. Function Wise
c. Behaviour wise
d. Identifiability wise
(xiii) What characterizes a non-integrated cost accounting system?
a. Unified ledger system
b. Separate cost and financial accounts
c. Sole reliance on cost principles
d. Complex reconciliation processes
(xiv) Administration overheads are usually absorbed as a percentage of _____________.
a. Works Cost
b. Prime Cost
c. Cost of goods sold
d. Cost of production
(xv) If the time saved is less than 50% of the standard time, then the wages under Rowan and Halsey
premium plan on comparison gives:
a. Equal wages under two plans
b. More wages to workers under Halsey Plan than Rowan Plan
c. More wages to workers under Rowan Plan than Halsey Plan
d. None of the above

2
Directorate of Studies, The Institute of Cost Accountants of India
*

(i) -

-
(xi)
- - ----

sales I 150000

1/333
334 50 000
(tV C
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x10
.
- . .

Contr 2/3 .
100000
4 66-67%

(iii)
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-

-
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ED

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 sale = 200, 000 + 280 , 000

S 1200000

-C
V .
7 20000 But fig.
F-C . 280000
200000

Swel 300000

1- IV .
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- 14 F C
. .

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-

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(vi)

12000 608

1500

9908

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 THE INSTITUTE OF COST ACCOUNTANTS OF INDIA
COST ACCOUNTING (PAPER - 8)
MCQ BANK

SL NO QUESTIONS OPTION 1 OPTION 2 OPTION 3 OPTION 4

Prime Cost is: All costs incurred in the total of direct the material cost of a the cost of operating
1 manufacturing a costs product a department
product -
A company employs three drivers to deliver goods to its customers. a part of prime cost a direct production a production a selling & L
2 The salaries paid to these drivers are: expense overhead distribution overhead

A company has to pay a Rs. 1 per unit royalty to the designer of a Direct expense Production overhead Administrative Selling overhead
product which it manufactures and sells. The royalty charge would overhead
3 -
be classified in the company’s accounts as a ____

_______ is a method of dealing with overheads which involves overhead absorption overhead overhead allocation overhead analysis
4 spreading common costs over cost centers on the basis of benefit apportionment
received. -
Which of the following classification is meant for distinction Function Element Variability Controllability
5 -
between direct cost and indirect cost?
Which of the following is applicable for Cost Control? It is related with the It is a corrective It ends when the It challenges the
6 future function targets are achieved standards set
-
____________ is anything for which a separate measurement of Cost driver Cost centre Cost unit Cost object
7 -
cost is required
8 Ticket counter in a Metro Station is an example of Profit centre Investment centre Cost centre Revenue centre -
Which of the following is an example of functional classification Direct labour cost Direct material cost Factory overhead Indirect material cost
9
of cost? L
Absorption costing is also referred as _______ Historical costing Traditional costing Full costing All of the above
10 -
terms
to provide
to enter into price
to help in inventory information to
11 the main purpose of cost accounting is to maintain profit War with competitive
valuation management for ~
firms
decision-making

12
________is anything for which a separate measurement is required cost unit cost object - cost driver cost sentre
It is a corrective It challenges the set It ends when targets It is concerned with
13
Which of the following is true about Cost Control function standards achieved - future
Kilo - Watt-Hour Number of Electric
14 -
Cost Units used in Power Sector is : Kilo-meter (K.M.) (kWh) Points Machine Hours
-
15
Process Costing method is suitable for : Transport Sector Chemical Industries Dam Construction Furniture- making
distinction between Direct Cost and Indirect Cost is an example of -
16
_______classification. By element By Function By controllability By Variability
 THE INSTITUTE OF COST ACCOUNTANTS OF INDIA
COST ACCOUNTING (PAPER - 8)
MCQ BANK

SL NO QUESTIONS OPTION 1 OPTION 2 OPTION 3 OPTION 4

~
stock needs to be reduction in
integration of
17 The advantage of using IT in Cost Accounting does not include Single point data entry reconciled with multiplicity of
various functions
goods received note documents

A taxi provider charges minimum Rs.80 thereafter Rs. 12 per

-
18 kilometer of distance travelled ,the behaviour of conveyance Cost
is fixed cost semi-variable variable administrative cost

A Ltd. Has three Production Departments, and each department -

Machines under the Both Production
19 has machines , which of the following cannot be treated as Cost
production Production Pruction Department and
Centre for cost allocation:
Department Departments Machines A Ltd.
Which of the following is an example of functional classification Administrative
20 -
of cost? Semi -variable costs Fixed Cost overhead indirect Overheads
Cost which are ascertained after they have been incurred are -
21
known as sunk costs Imputed Costs Historical Costs Oppurtunity Costs
Generally , for the purpose of Cost sheet preparation , costs are -
22
classified on the basis of - Functions variablity relevance nature
Which of the following items is not excluded while preparing a provision for property tax on -
23
cost sheet? Goodwill written off taxation factory building Transfer to reserves
- Total Indirect Costs Total Non- Total Production
24
What is prime cost Total direct cost only only Production Costs Costs
cost of GST paid on Raw
25 w transportation paid materials (where
to bring materials to input credit cannot be overtime premium
Which of the following does not form part of prime cost Cost of Packing factory claimed) paid to workers
Determination of Assisting -
26 Ascertainment of Cost Selling Price Cost Control and Shareholders in
Which of these is not an objective of Cost Accounting? Cost reduction decision making
Which of the following are direct expenses ? (1) Cost of Special
Designs ,drawings or layout, (2) Hire of Tools or Equipment for a
27
particular job , (3) Salesman's wages , (4) Rent , rates and
-
Insurance of a factory , (1) and (2) (1) and (3) (2) and (3) (3) and (4)

28 -
Salary paid to plant Supervisor is a part of Direct expenses Factory Overheads Quality Control Cost administrative cost
Administration Research &
29 -
Depreciation of Director's Laptop is treated as a part of : Overheads Factory Overheads IT infrastructure Cost Development Cost
-
30 A manufacturing Company has set-up a lab for testing of products Quality Control Reearch &
for compliance with standards. Salary of this Lab Staff are part of : Works Overheads Cost Direct Expenses Development Cost
 THE INSTITUTE OF COST ACCOUNTANTS OF INDIA
COST ACCOUNTING (PAPER - 8)
MCQ BANK

SL NO QUESTIONS OPTION 1 OPTION 2 OPTION 3 OPTION 4

- Selling & distribution
31
Audit fees paid to external Statutory Auditors is part of Administration Cost Production Cost Costs Quality Costrol Cost
-
32
Salary paid to factory stores is a part of Factory Overheads Production Cost Direct Employee Cost Direct Material Cost

33 L
Canteen Expenses for factory workers are part of - Factory Overheads Administration cost marketing cost direct expenses
A company pays Royalty to State Government on the basis of Quality Control L
Administrative
34
production , it is treated as: Direct material cost Cost Direct Expenses Overhead
Plant Manager's Sales Manager's Product Inspector's
35 -
Which of the following is not an element of Works Overhead ? Store Keeper's Salary salary Salary Salary

Which is concerned
Where the manager with earning an
has the responsibility adequate Return on
36 A profit centre is a centre Both of the above Which manages cost
of generating and Investment
maximising profits
-

Cost Centres, Profit

Investment Centres
37 Responsibility Centre can be categorised into: Cost Centres only Profit Centres only Centres and -
only
Investment Centres

A location, person
Unit of quantity of
or an item of
product, service or Centres having the Centres concerned
equipment or a
time in relation to responsibility of with earning an
38 Cost Unit is defined as: group of these for
which costs may be generating and adequate return on
which costs are
ascertained or maximising profits investment
ascertained and used
expressed -
for cost control.

Which do not change

Which changes in which is partly fixed which remains same
in total during a given
39 Fixed cost is a cost: total in proportion to and partly variable for each unit of
period despise -
changes in output in relation to output output
changes in output

Uncontrollable costs are the costs which be influenced by the

40
action of a specified member of an undertaking. can not - can may or may not must
-Expenses only Material, Labour and
41 Element/s of Cost of a product are: Material only Labour only
expenses
 THE INSTITUTE OF COST ACCOUNTANTS OF INDIA
COST ACCOUNTING (PAPER - 8)
MCQ BANK

SL NO QUESTIONS OPTION 1 OPTION 2 OPTION 3 OPTION 4

Cost normally Cost not normally Cost which is
Cost which is
42 Abnormal cost is the cost: incurred at a given incurred at a given included in the cost
- charged to customer
level of output level of output of the product

WIP, Finished goods

Raw material, Finished goods,
43 Conversion cost includes cost of converting……….into…….. Raw material, WIP
Finished goods
- Saleable goods

Sunk costs are:

relevant for decision Not relevant for - cost to be incurred in
44 future costs
making decision making future

Calculate the prime cost from the following information: Direct

material purchased: Rs. 1,00,000
Direct material consumed: Rs. 90,000

45 Direct labour: Rs. 60,000

Direct expenses: Rs. 20,000

-
Manufacturing overheads: Rs. 30,000 Rs. 1,80,000 Rs. 2,00,000 Rs. 1,70,000 Rs. 2,10,000
Total cost of a product: Rs. 10,000
Profit: 25% on Selling Price
46 v
Profit is:
Rs. 2,500 Rs. 3,000 Rs. 3,333 Rs. 2,000

Calculate cost of sales from the following:

Net Works cost: Rs.

2,00,000
47 Rs. 2,70,000 Rs. 2,80,000 Rs. 3,00,000 Rs. 3,20,000
Office & Administration Overheads: Rs. 1,00,000 -
Opening stock of WIP: Rs. 10,000

Closing Stock of WIP: Rs. 20,000

Closing stock of finished goods: Rs. 30,000

There was no opening stock of finished goods.

Selling overheads: Rs. 10,000
 THE INSTITUTE OF COST ACCOUNTANTS OF INDIA
COST ACCOUNTING (PAPER - 8)
MCQ BANK

SL NO QUESTIONS OPTION 1 OPTION 2 OPTION 3 OPTION 4

Which of the following is considered as normal loss of material? Pilferage Loss due to accident Loss due to careless None of these
48 handling of material
-

49 The most important element of cost is- Material - Labour Overheads All of these
Direct material is a – Adiministration Cost Selling and All of these None of these
50 -
Distribution cost
51 Which of the following is considered as accounting record? Bin Card Bill of material Store Ledger - None of these
Direct material can be classified as : Fixec cost Semi-Variable cost Vaiable Cost Prime cost
52 L

In which of the following methods of pricing, costs lag behind the Replacement price Last in first out First in first out price Weighted average
53 -
current economic values? method price method method price method
In which of the following methods, issues of materials are priced Replacement price Inflated price Specific price method Standard price
54 -
at pre-determined rate? method method method
Which of the following methods smoothes out the effect of FIFO Simple Average LIFO Weighted average
55 -
fluctuations when material prices fluctuate widely?
In which of the following incentive plan of payment, wages on Halsey plan Rowan plan Taylor’s differential Gantt’s task and
56
time basis are not Guaranteed? piece rate system- bonus system
Cost of idle time arising due to non-availability of raw material is : Charged to costing Charged to factory Recovered by Ignored
57 profit and loss A/c overheads inflating the wage
- rate
When overtime is required for meeting urgent orders, overtime Charged to costing Charged to overhead Charged to respective Ignored
58 - jobs
premium should be profit and loss A/c costs
Labour turnover is measured by Number of workers Number of workers Number of workers All of these
replaced average left / number in the joining / number in
59 number of workers beginning plus the beginning of the
- number at the end period

Idle time is Time spent by Time spent by Time spent by Time spent by
60 workers in factory workers in office workers off their- workers on their job
work
Over time is : Actual hours being Actual hours being Standard hours being Actual hours being
61 more than normal more than standard more than actual less than standard
time - time hours time
Labour productivity is measured by comparing Total output with total Added value for the Actual time and All of the above
62 man-hours product with total standard time -
wage cost
If the time saved is less than 50% of the standard time, then the Equal wages under More wages to More wages to None of the above
wages under Rowan and Halsey premium plan on comparison two plans workers under workers under -
63
gives: Halsey Plan than Rowan Plan than
Rowan Plan Halsey Plan
 THE INSTITUTE OF COST ACCOUNTANTS OF INDIA
COST ACCOUNTING (PAPER - 8)
MCQ BANK

SL NO QUESTIONS OPTION 1 OPTION 2 OPTION 3 OPTION 4

Under Taylor’s differential piece rate scheme, if a worker fails to 83% of the piece 175% of the piece 67% of the piece 125% of the piece
64 complete the task within the standard time, then he is paid work rate work rate work rate work rate
-
65 Direct Expenses ________ includes imputed cost. Shall Shall not - Shall be None of these
Direct Expenses that does not meet the test of materiality can be Treated Not treated All of the these None of these
66 -
———— part of overhead.
Example of Direct Expenses. Rent Royalty charged on Bonus to employee None of these
67
production -

The allotment of whole items of cost centres or cost unit is called : Cost allocation Cost apportionment Overhead absorption None of the above
68
-
Directors remuneration and expenses form a part of: Production overhead Administration Selling overhead Distribution
69
overhead - overhead
Charging to a cost center those overheads that result solely for the Allocation - Apportionment Absorption Allotment
70
existence of that cost Center is known as
Absorption means: Charging of Charging of Charging of None of the above
overheads to cost overhead to cost overheads to cost
71
centres units centres or cost units
-
When the amount of under or over absorption is significant, it Transferring to The use of Carrying over as a None of the above
should be disposed of by: costing profit and loss supplementary rates deferred charge to the
72 -
account next accounting year

Selling and distribution overheads are absorbed on the basis of: rate per unit. percentage on works percentage on selling Any of the above
73 cost. price of each unit. -

Primary packing cost is a part of: Direct material cost Distribution Selling overhead Production cost
74 -
overhead
Normal capacity of a plant refers to the difference between: Maximum capacity Maximum capacity Practical capacity and Practical capacity
and practical capacity and actual capacity estimated idle - and normal capacity
75 capacity as revealed
by long term sales
trend
When the amount of overhead absorbed is less than the amount of Under absorption- of Over absorption of Proper absorption of None of the above
76
overhead incurred, it is called: overhead overhead overhead
_____________ is a scientific and accurate method of factory Percentage of prime Machine hour rate Percentage of direct Percentage of direct
77 overhead absorption. cost method method - material cost method labour cost method

- Control over slow

78 Fixation of raw Maintaining stores moving and non
Which of these is not a Material control technique: ABC Analysis material levels ledger moving items
 THE INSTITUTE OF COST ACCOUNTANTS OF INDIA
COST ACCOUNTING (PAPER - 8)
MCQ BANK

SL NO QUESTIONS OPTION 1 OPTION 2 OPTION 3 OPTION 4

Exploring the Preparation and -
79 Receiving purchase sources of material execution of purchase Accounting for
Out of the following, what is not the work of purchase department: requisition supply orders material received

Quantitative as well as -
Quantitative record Value wise records of
value wise records of a record of labour
80 Bin Card is a: of material received, material received,
material received, attendance
issued and balance issued and balance
issued and balance;

-
Quantitative as well as
Quantitative record Value wise records of
value wise records of a record of labour
81 Stores Ledger is a: of material received, material received,
material received, attendance
issued and balance issued and balance
issued and balance;

Maximum Minimum
consumption x -
1/2 of (Minimum +
consumption x Maximum level -
82 Re-order level is calculated as: Maximum
Maximum re-order Minimum re-order Minimum level
consumption)
period period

It can be maximum or
Economic order quantity is that quantity at which cost of holding Minimum and
83
and carrying inventory is
Maximum and equal Minimum and equal minimum depending
unequal -
upon case to case.

Inventory is Inventory is classified

classified into A, B into A, B and C
Inventory levels are and C category with Category with A
84 ABC analysis is an inventory control technique in which: Either b or c.
maintained A being the highest being the lowest
quantity, lowest quantity, highest
value. value -
Which one out of the following is not an inventory valuation -
85
method? FIFO LIFO Weighted Average EOQ
provide highest value
provide lowest value provide highest provide highest value
of profit but lowest
86 In case of rising prices (inflation), FIFO method will: of closing stock and value of closing of closing stock but
I value of closing
profit stock and profit lowest value of profit
stock
provide highest value
provide lowest value provide highest provide highest value of profit but lowest
87
of closing stock and value of closing of closing stock but value of closing
In case of rising prices (inflation), LIFO will: profit - stock and profit lowest value of profit stock
Calculate Re-order level from the following: Consumption per
88 - 1400 units
week: 100-200 units Delivery period: 14-28 days 5600 units 800 units 200 units
 THE INSTITUTE OF COST ACCOUNTANTS OF INDIA
COST ACCOUNTING (PAPER - 8)
MCQ BANK

SL NO QUESTIONS OPTION 1 OPTION 2 OPTION 3 OPTION 4

Calculate EOQ (approx.) from the following details: Annual
Consumption: 24000 units
Ordering cost: Rs. 10 per order
89
Purchase price: Rs. 100 per unit
-
Carrying cost: 5%
310 400 290 300

Calculate the value of closing stock from the following according

to FIFO method:

1st January, 2024: Opening balance: 50 units @ Rs. 4

Receipts:

5th January, 2024: 100 units @ Rs. 5

90 Rs. 765 Rs. 805 Rs. 786 Rs. 700
12th January, 2024: 200 units @ Rs. 4.50

Issues:
2nd January, 2024: 30 units
-
18th January, 2024: 150 units

Calculate the value of closing stock from the following according

to LIFO method:

1st January, 2024: Opening balance: 50 units @ Rs. 4

Receipts:

5th January, 2024: 100 units @ Rs. 5

91 12th January, 2024: 200 units @ Rs. 4.50

Issues:
-
2nd January, 2024: 30 units

18th January, 2024: 150 units

Rs. 765 Rs. 805 Rs. 786 Rs. 700

 THE INSTITUTE OF COST ACCOUNTANTS OF INDIA
COST ACCOUNTING (PAPER - 8)
MCQ BANK

SL NO QUESTIONS OPTION 1 OPTION 2 OPTION 3 OPTION 4

Calculate the value of closing stock from the following according
to Weighted Average method:

1st January, 2024: Opening balance: 50 units @ Rs. 4

Receipts:
5th January, 2024: 100 units @ Rs. 5
92
-
12th January, 2024: 200 units @ Rs. 4.50
Issues:

2nd January, 2024: 30 units

18th January, 2024: 150 units

Rs. 765 Rs. 805 Rs. 786 Rs. 700

Charged to the charged partly to the

Charged to the
93 Cost of abnormal wastage is: profit & loss- product and partly not charged at all.
product cost
account profit & loss account

Calculate re-order level from the following: Safety stock: 1000

94 units -
Consumption per week: 500 units
It takes 12 weeks to reach material from the date of ordering. 1000 units 6000 units 3000 units 7000 units

From the following information, calculate the extra cost of material

by following EOQ: Annual consumption: = 45000 units -
Ordering cost per order: = Rs. 10

95 Carrying cost per unit per annum: = Rs. 10 No saving Rs. 2,00,000 Rs. 2,22,010 Rs. 2,990
Purchase price per unit = Rs. 50

Re-order quantity at present = 45000 units

There is discount of 10% per unit in case of purchase of 45000
units in bulk.
 THE INSTITUTE OF COST ACCOUNTANTS OF INDIA
COST ACCOUNTING (PAPER - 8)
MCQ BANK

SL NO QUESTIONS OPTION 1 OPTION 2 OPTION 3 OPTION 4

Time taken by
workers to travel the Time lost between Time spent to meet -
distance between the the finish of one job their personal needs Machine break
96 Which of the following is an abnormal cause of Idle time:
main gate of factory and starting of next like taking lunch, tea downs
and place of their job etc
work

should be charged to - should be charged to

97
If overtime is resorted to at the desire of the customer, then the costing profit and loss should not be should be charged to the highest profit
overtime premium: account; charged at all the job directly making department
-
Rate of change in
Turnover generated by composition of
98 Labour turnover means: Either of the above Both of the above
labour labour force during
a specified period

Disability, making a
Which of the following is not an avoidable cause of labour Dissatisfaction with Lack of training Low wages and
99 worker unfit for
turnover: Job facilities allowances
work -
Replacement costs
100
Costs associated with the labour turnover can be categorised into: Preventive Costs only only
-
Both of the above Machine costs
Calculate workers left and discharged from the following:

Labour turnover rates are 20%, 10% and 6% respectively under

101 Flux method, Replacement method and
Separation method. No. of workers replaced during the quarter is -
80.
112 80 48 64
Calculate workers recruited and joined from the following:

102
Labour turnover rates are 20%, 10% and 6% respectively under -
Flux method, Replacement method and
Separation method. No. of workers replaced during the quarter is
80. 112 80 48 64
 THE INSTITUTE OF COST ACCOUNTANTS OF INDIA
COST ACCOUNTING (PAPER - 8)
MCQ BANK

SL NO QUESTIONS OPTION 1 OPTION 2 OPTION 3 OPTION 4

Calculate the labour turnover rate according to replacement method
from the following: No. of workers on the payroll:
- At the beginning of the month: 500 -
- At the end of the month: 600
103 4.55% 1.82% 6% 3%
During the month, 5 workers left, 20 workers were discharged and
75 workers were recruited. Of these, 10 workers were recruited in
the vacancies of those leaving and while the rest were engaged for
an expansion scheme.

Calculate the labour turnover rate according to Separation method

from the following: No. of workers on the payroll:
- At the beginning of the month: 500

- At the end of the month: 600

-
104 4.55% 1.82% 6% 3%
During the month, 5 workers left, 20 workers were discharged and
75 workers were recruited. Of these,
10 workers were recruited in the vacancies of those leaving and
while the rest were engaged for an expansion scheme.

A worker is allowed 60 hours to complete the job on a guaranteed

105 wage of Rs. 10 per hour. Under the Rowan Plan, he gets an hourly -
wage of Rs. 12 per hour. For the same saving in time, how much
he will get under the Halsey Plan? Rs.720 Rs.540 Rs.600 Rs.900
only Factory indirect Only indirect
106 Overhead refers to: Direct or Prime Cost All Indirect -
costs
costs expenses
Allotment of whole item of cost to a cost centre or cost unit is -
107
known as: Cost Apportionment Cost Allocation Cost Absorption Machine hour rate
Percentage of direct Repeated -
108
Which of the following is not a method of cost absorption? material cost Machine hour rate Labour hour rate distribution method

- None of the
109
Only Service Only Production Both Production and production and
Service departments costs should be allocated to: departments departments service departments service departments
Most suitable basis for apportioning insurance of machine would -
110
be: Floor Area Value of Machines No. of Workers No. of Machines
 THE INSTITUTE OF COST ACCOUNTANTS OF INDIA
COST ACCOUNTING (PAPER - 8)
MCQ BANK

SL NO QUESTIONS OPTION 1 OPTION 2 OPTION 3 OPTION 4

rate in which multiple
overhead rates are
One single overhead
Rate which is blank calculated for each Always a machine
111 Blanket overhead rate is: absorption rate for the
or nil rate production hour rate
whole factory
- department, service
department etc

AT Co makes a single product and is preparing its material usage

budget for next year. Each unit of product requires 2kg of material,
and 5,000 units of product are to be produced next year.
-
112 Opening inventory of material is budgeted to be 800 kg and AT co 8,000 Kg 9,840 kg 10,000 Kg 10,160 Kg
budgets to increase material inventory at the end of next year by
20%

The material usage budget for next year is:

During a period 17, 500 labour hours were worked at a standard

cost of Rs. 6.50 per hour. The labour efficiency variance was Rs. -
113 7,800 favourable.
How many standard hours were produced?
1200 16300 17500 18700
In most of the manufacturing industries ,the most important
114 -
element of cost is material Labour overheads None of the above
Loss due to
- transfering of liquid
115 materials
Which of the following is NOT considered to be Normal loss of Loss due to breaking fromcontainer to
Materials ? Loss due to accidents Pilferage the bulk another

Loss due to - Loss due to

116 evaporation due to transferring of liquid
Which of following is NOT considered as Normal loss of prevalent weather Loss due to Loss due to breaking materials from
material? conditions pilferage the bulk container to another
Ordering Cost is
At the economic ordering quantity level , the following is true on Ordering Cost is Carrying Cost is Purchase Price is
117 equal to the Carrying
an annual basis: minimum minimum - minimum
Cost

118 Continuous Stock Taking is a part of: Annual Stock Taking Perpetual Inventory ABC Analysis Bin Cards
-
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In which of the following methods, issues of materials are priced at Standard price Replacement Price
119 - Method
pre-determined rate? Inflated Price Methodmethod Market Price Method
When Material prices Fluctuate widely, the method of pricing that Weighted Average Moving Average -
120
gives absurd results is - Simple Average Price price Price Inflated Price
When prices fluctuate widely , the method that will smooth out the Weighted Average
121 -
effect of fluctuations is Simple Average Price price FIFO LIFO
Frequently of usage Criticality of the item
122 Under the FSN system of Inventory Control ,Inventory is Classified Volumne of materail of items of of inventory of Value of Items of
on the basis of : consumption inventory
- production Inventory
Form used for making a formal request to the Purchasing Purchase - Material requisition
123
Department to purchase materials is a- material transfer note Requisition Note Bill of materials note
Classification of Materials on the basis of their Importance in -
124
Value is called: EOQ Analysis Stock level analysis ABC Analysis Value analysis
For Return of Excess Materials from Production Department to -
125
stores , the document used is: Material return note Stores debit note Shop Credit Note All the above (same)
Which of the following is NOT related to a standard list of Consumption Material specification
126
materials and components? Statement - bill of materials list Material list
material received from material issued to Inter department
127 -
Which of the following is NOT recorded on a Bin card? supplier production depts transfers Loss of materials
-
128 Minimum Usage x Minimum Usage x Maximum Usage x Maximum Usage x
What is the formula for Re-order level? minimum lead time maximum lead time minimum lead time maximum lead time
(ROL+ROQ (-) minimum usage x minimum lead time ) is the -
129
computation formula for…. Maximum level Minimum level Average level danger level
130 Inventory turnover ratio is expressed in Rupees Percentage times - Any of the above
Generally , a ______ T/o and ______ days Average Inventory held
131 -
is preferable High , less Low , high Low ,low high, high
Pricing of Materials in the order in which they are purchased is
132 L
called _______ method Specific IdentificationFIFO LIFO Orderly
133 Landed cost of materials does not include….. Cost of Containers Carriage Inwards Stock Insurance - Unloading Charges
Debited to costing P Credited to Costing InCluded In Landed
134
Cost of abnormal loss of materials is &L - P&L Cost Included in OH
No output is
135 Full wages are paid to produced by the -
Idle time is the time under which workers workers Both (a) and (b) None of the above
- Idle time cost is salari is fully treated
136 When a direct Worker is paid on a monthly fixed salary basis , the There is no idle time There is no idle time separated and treated as factory overhead
following is true : lost cost as overhead cost
Time Keeping Personnel Engineering -
137
Time and Motion study is conducted by Department Department Payroll Department Department
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Time Keeping Personnel - Engineering
138
Wages sheet is generally prepared by- Department Department Payroll Department Department
For reducing the labour cost per unit ,which of the following Longer hours of Higher Productivity Strict control and
139
factors is most important? Low wage rate work or Efficiency - supervison
Time Booking refers to a method wherein __________ of an Time spent on a
140
employees is recorded Attendance book keeping details Health Status particulars job -
Allowances and Payment for -
141
Employee Cost includes wages and salaries incentives Overtime All of the above
Standard Time of a job is 60 hours and guaranteed time rate is rs
142 90 per hour. What is the amount of wages under Rowan plan if job -
is completed in 48 hours? rs 1620 rs 1728 rs 1800 rs 1440
Standard Time of a job is 60 hours and guaranteed time rate is rs
143 90 per hour. What is the amount of wages under Halsey plan if job
-
is completed in 48 hours? rs 1620 rs 1440 rs 180 rs 1728
If Overtime is required for meeting urgent orders , the Overtime -
144
premium should be charged as - Respective job Over head Cost Costing P& L a/c None of above
Keeping a rocord of total time spent by the worker inside the
145 -
factory is called Time keeping Time Booking Time Managing Time Recording
146 Wages attributable to Normal idle Time is treated as Direct Wages Producction OH - None of the above
Either of the above
In the context of Labour Turnover ,Number of Workers left and
147
discharged is called- Accession Replacement new replacement Separation -
(Hours worked X Rate per hour) is the computation of wages -
148
under Incentive System Piece rate System Attendance System Time rate System
Under Halsey System ,generally Bonus is computed as_________
149
x (Time Saved x Rate per hour) 30% 50% - 70% Actual Hrs/Std. Hrs
A worker will earn wages under Halsey and Rowan System , if L
150
time Saved equals - 50% of Std Time 50% of Actual Time 1/2 of Total Time 1/2 of Lost time
Std Time /Actual Actual time /std Idle Time /Actual
151 -
Labour Efficiency (based on time) is given by the Formula Time time Idle Time/Std time Time
If wages per day of 8 hours is rs 500, std outputis 100 units ,
152 -
Actual Output is 120 ,piece rate wages- rs 500 rs 600 rs 62.5 rs 5
If Std Time is 8 hours , Actual time is 6 hours ,rate per hour is Rs.
153 -
100 , Rwan Wages = Rs. 600 Rs. 150 Rs. 750 Rs. 700
If Actual Output in 8 hours is 700 units , Standard Output is 90
154
units per hour , Efficiency Ratio is 97.22% - 102.86% 100% 77.78%
-
155 Fixed over costs are not effected in monetary terms during a fiven Increase in Output is Increase in Output is
period by a change in Output. But this statement is valid provided not Substantial substantial Both (a) and (b) None of the above
_________ Capacity is defined as actually utilised capacity of a
156 -
plant . theoretical Installed Practical Idle
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Maximum Possible Productive Capacity of a plant when no - Capacity based on
157
operating time is lost is its : Normal Capacity Practical Capacity Theoretical Capacity Sales Expectancy
Charging of common Overheads cost to various cost centres, using -
158
appropriate bases is known as - Allocation Apportionment Absorption Re- Apportionment

-
159 Distribution of service Department Overheads Cost to production
Departments using different assumptions and methods is known as -Allocation Apportionment Absorption Re- Apportionment
It may be any of the
160 -
packing Cost is part of Production cost Selling Cost Distribution Cost above
Night Shift
apportioned allowance paid to a
Which of the following is not treated as a Manufacturing Overhead
161 Lubricants Cotton Waste administration factory Worker due
?
overheads to general work
pressure -
The difference between Actual Factory Overhead and Absorbed
162 Factory Overhead will be usually at the minimum level , provided Direct Labour -

pre-determined overhead rate is based on : Maximum capacity Hours Machine Hours Normal Capacity
When Absorbed Overhead is Higher than the amount of Overhead Under absorption of Over absorption of Proper absorption of re - absorption of
163
incurred , it is called overhead overhead - overhead overhead
Which of the following overhead cost may not be apportioned on Perquisites to L
164
the basis of Direct Wages? Worker's Holiday pay workers ESI Contribution Managerial Salaries
The following is an example of direct expenses as per CAS-10: Special raw material Travelling expenses Overtime charges Catalogue of prices
which is a substantial to site. paid to direct worker of finished products.
165
part of the prime cost - to complete work
before time.
CAS 21 stands for: Capacity Joint Cost Direct Expenses None of these
166 -
Determination
167 Standard deals with the cost of service cost center is: CAS-9 CAS-13 - CAS-16 CAS-22
Which standards deals with the principles and methods of CAS 9 CAS 12 CAS 15 CAS 16
168 -
determining depreciation and amortization cost?
Which standards deals with determination of averages/ equalized CAS 5 CAS 6 CAS 9 CAS 22
169
transportation cost? -
Which standard deals with the principles and methods of CAS 2 CAS 12 CAS 15 CAS 22
170 -
determining the manufacturing Cost of excisable goods?
_____ deals with the principles and methods of determining the CAS-3 CAS-5 CAS-9 CAS-16
171 -
production or operation overheads.
CAS 13 stands for: Joint Cost Interest and Employee Cost Cost of Service cost
172
financing charges centre X
Which of the following items is not included in preparation of cost Carriage inward Purchase returns Sales Commission Interest paid
173 -
sheet?
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Which of the following items is not excluded while preparing a Goodwill written off Provision for Property tax on- Transfer to reserves
174
cost sheet? taxation Factory building
Which of the following are direct expenses?(1) The cost of special (1) and (2) (1) and (3) (1) and (4) (3) and (4)
designs, drawings or layouts,(2) The hire of tools or equipment for
175 -
a particular job,(3) Salesman’s wages,(4) Rent, rates and insurance
of a factory
What is prime cost ? Total direct cost only Total indirect costs Total non-production Total production
176 -
only costs costs
Which of the following is not an element of works overhead? Sales manager’s Plant manager’s Factory repairman’s Product inspector’s
177 -
salary salary wages salary
For the purpose of Cost Sheet preparation , costs are classified Functions - Relevance Variability Nature
178
based on:
Salary paid to an office supervisor is a part of: Direct expenses Administration cost Quality control cost Factory overheads
179 -
Audit fees paid to cost auditors is part of Selling and Production cost Administration cost Not recorded in the
180 -
distribution cost cost sheet
A company has set up a laboratory for testing of products for Direct expenses Quality control cost Works overheads Research and
181 compliance with standards. Salary of this laboratory stuffs are part - development cost
of:
182 Canteen expenses for factory workers are part of: Administration cost Factory overhead- Marketing cost None of the above
Which of the following does not form part of prime cost? GST paid on raw Cost of Cost of packing Overtime premium
materials (input credit transportation paid paid to workers
183
can be claimed) to bring materials to
-
factory
A company pays royalty to State Government on the basis of Direct expenses Factory overheads Direct Material Cost Administration Cost
184
production, it is treated as: -
In Reconciliation Statements, expenses shown only in financial Added to financial Deducted from Ignored Added to costing
185
accounts are: profit financial profit profit -
In Reconciliation Statement, expenses shown only in cost accounts Added to financial Deducted from- Ignored Deducted from
186
are: profit financial profit costing profit
In Reconciliation Statement, transfers to reserves are: Added to financial Deducted from Ignored Added to costing
187
profit i financial profit profit
In Reconciliation Statement, incomes shown only in financial Added to financial Deducted from Ignored Deducted from
financial profit-
188
accounts are: profit costing profit
In Reconciliation Statement, Closing Stock undervalued in Added to financial Deducted from Ignored Added to costing
189 -
Financial Accounts is profit financial profit profit
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Under non-integrated accounting system: Separate ledgers are Same ledger is (A) and (B) both None of the above
maintained for cost maintained for cost
190 and financial accounts and financial
- accounts by
accountants
Under non-integrated system of accounting, purchase of raw Purchase account Material control General ledger None of the above
material is debited to: account / stores adjustment account
191
ledger control
-
account
When costing loss is Rs. 5,600, administrative overhead under- Rs.5000 Rs.5600 Rs.6200 None of the above
192 absorbed being Rs. 600, the loss as per financial accounts should -
be _______ .
Which of the following items should be added to costing profit to Income tax paid Over absorption of Interest paid on All of the above
193
arrive at financial profit? works overhead- debentures
Integral accounts eliminate the necessity of operating Cost Ledger control Store Ledger control Overhead adjustment None of the above
194 -
accoun account account
Under Non- integrated accounting system, the amount made to Work in progress General ledger
195 complete double entry is : Finished goods control account stores ledger control adjustment account
control account accounts -

Same ledger is - All transactions

Separate ledgers are Product-wise or
maintained for Cost relating to incomes ,
maintained for Cost department wise
196 Under the Non- Integrated Accounting System - and financial Expenditures , Assets
and Financial information is not
Accounts by and Liabilities are
Accounts maintained
Accountants completely recorderd

- are not accounted at

may be Included in Cannot Be included
May be included in all in Ingrated or
197 Notional Costs - Non - Integrated in Non-intergrated
Integrated Accounts Non- integrated
accounts Accounts
Accounts
General ledger
198 Which account is to be debited if materials worth rs 500 are Cost Ledger control finished goods adjustment account
returned to vendor under Non -Ingrated Accounts account control Account WIP Control Account -

-
Dr sales , Cr Dr. General Ledger
199
What is the journal Entry under Integrated System for recording General Ledger Dr. cash or bank Cr. Adjsutment , Cr
Sales made? No entry Adjustment Sales .sales

200
Which of the following items is most likely to be included in Cost - © Transfer to General
Accounts ? Notional Rent Donations Reserve Rent Receivable
201 Job costing is used in: Furniture making Repair shops Printing press All of the above -
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In a job cost system, costs are accumulated ___________. On a monthly basis By specific job By department or By kind of material
202 - process used
The most suitable cost system where the products differ in type of Operating Costing Job costing - Process costing All of these.
203
material and work performed is:
Cost Price is not fixed in case of: Cost plus contracts Escalation clause De escalation clause All of the above
204 -
205 Most of the expenses are direct in: Job costing Batch costing Contact costing ~None of the above
Cost plus contract is usually entered into those cases where Cost can be easily Cost of certified and Cost of certified Determination of
________. estimated uncertified work work, cost of contract cost with
uncertified work and reasonable accuracy
206 amount of profit is not possible
transferred to Profit
-
and Loss Account

In order to determine cost of the products or services, different Different techniques Uniform costing Different methods of None of the above
207 business firms follow: of costing costing
-

In case product produced or jobs undertaken are of diverse system, Operating Costing Process Costing Job Costing None of the above
208 -
the system of costing to be used should be:
Job Costing is: Suitable where similar Methods of costing Technique of costing Applicable to all
products are produced used for non- industries regardless
209 on mass scale standard and non- of the products or
repetitive products services provided
-
210 Batch costing is a type of: Direct Costing Process Costing job Costing - Differential Costing
Batch costing is similar to that under job costing except with the Process becomes a Job becomes a cost Batch become the None of the above
211 difference that: cost unit unit cost unit instead of a
job -
Economic batch quantity is that size of the batch of production Carrying cost is Set-up cost of Average cost is Both A. and B
212 where: minimum machine is minimum
-
minimum
Which of the following documents are used in job costing to record Purchase order Purchase requisition Goods received note Material requisition
213
the issue of direct materials to a job? -
Which of the following statements is true? Batch costing is a Job cost sheet may Job costing cannot be In cost plus
variant of jobs costing be used for used in conjunction contracts, the
214 estimating profit of with marginal costing contractor runs a risk
jobs of incurring a loss
-
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Which of the statement is true? Job costing can be Job costing cannot Job cost sheet may Neither A, nor B,
suitably used for be used in be prepared to nor C
215 concerns producing companies applying facilitate routing and
-
any specific product standard costing scheduling of the job
uniformly
The type of process loss that should not be allowed to affect the Standard Loss Normal Loss Abnormal Loss Seasonal Loss
216 -
cost of good units is called:
Spoilage that occurs under inefficient operating conditions and is Normal defectives Abnormal spoilage Normal spoilage None of the above
217
generally controllable is called _______. -
In which of the following situations an abnormal gain in a process When normal loss is When the actual When actual loss is When actual loss is
occurs: equal to actual loss output is greater more than the less than the
218
than the planned expected expected loss
output -
The value of abnormal loss is equal to : Total cost of materials Total process cost Total process cost Total process cost
less cost of scrap less realisable value less realisable value
219 of normal loss less of normal loss
value of transferred
out goods -

A process account is debited by abnormal gain, the value is Equal to the value of Equal to the value of Cost of good units Cost of good unit
220 determined as: good units less closing normal loss less realisable value less realisable value
stock of normal loss- of actual loss
In sugar manufacturing industry molasses is also produced along Joint product Common product By-product None of them
221 with sugar. Molasses may be of small value as compared with the -
value of sugar and is known as:
Method of apportioning joint costs on the basis of output of each Physical unit method Sales value method Average cost method
222 joint product at the point of split-offs is known as: Marginal cost and
-
contribution method
The main purposes of accounting of joint products and by-products Determine the Determine the Determine profit or None of the above
223 is to: replacement cost opportunity cost loss on each product
line

-
Ignored Deducted from Deducted from Added to joint cost
224 Under net realisable value method of apportioning joint costs to sales value further processing
-
joint products, the selling & distribution cost is: cost
Which of the following is an example of by-product: Mustard seeds and Diesel and Petrol in Edible oils and oil Curd and butter in a
225
mustard oil an oil refinery cakes diary
Physical units method Net realisable value Market value at spit-
method Technical estimates, off method
226
Which of following methods can be used when the joint products using market value of
are of unequal quantity and used for captive consumption: similar goods -
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Cost of a particular service under operating costing is ascertained Cost sheet Process account Job cost sheet Production account
227 -
by preparing:
Operating costing is applicable to: Hospitals Cinemas Transport All of the above
228
undertaking -
229 Composite cost unit for a hospital is: Per day Per bed Per patient day- Per patient
Cost units used in power sector is called: Number of hours Number of electric Kilowatt-hour Kilo meter (K.M.)
230 -
points (KWH)
Absolute Tonne-Km is an example of: Composite unit for Composite unit of Composite unit for oil Composite unit in
231
bus operation transport sector- and natural gas power sector

a product which is A product which is

produced - produced
a product which is simultaneously with simultaneously with a product produced
232 In process costing, a joint product is later divided into other products and other products but jointly with another
many parts is of similar value to which is of a greater organization
at least one of the value than any of the
other products. other products.

Process B had no opening inventory. 13,500 units of raw material

were transferred in at Rs. 4.50 per unit. Additional material at -
Rs.1.25per unit was added in process. Labour and overheads were
233 Rs. 6.25 per completed unit and Rs. 2.50 per unit incomplete. Rs. 6562.50 Rs. 12,250.00 Rs. 14,437.50 Rs. 25,375.00
If 11,750 completed units were transferred out, what was the
closing inventory in Process B?

A process costing system for J Co used an input of 3,500Kg of -

materials at Rs.20 per Kg and labour hours of 2,750 at Rs.25 per
234 Rs. 142,485 Rs. 146,183 Rs. 149,746 Rs. 152,986
hour. Normal loss is 20% and losses can be sold at a scrap value of
Rs.5per Kg. Output was 2,950 Kg. What is the value of the output?

-
Debited with the full Credited with the
Debited with the scrap Credited with the
In process costing, if an abnormal loss arises, the process account production cost of full production cost
235 value of the abnormal scrap value of the
is generally the abnormal loss of the abnormal loss
loss units abnormal loss units
units units
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Which of the following statements is/are correct?

1. A materials requisition note is used to record the issue of direct

material to a specific job.
236 (1) only (1) and (2) only (1) and (3) only (2) and (3) only
2. A typical job cost will contain actual costs for material, labour
and production overheads, and non –production overheads are
-
often added as a percentage of total production cost

3. The job costing method can be applied in costing batches

A job is budgeted to require 3,300 productive hours after incurring

237 Rs. 8.25 Rs. 8.80 Rs. 11.00 Rs. 14.67
25% idle time. If the total labour cost budgeted for the job is -
Rs.36,300. What is the labour cost per hour( to the nearest cent)?

A company calculates the prices of jobs by adding overheads to the

238 prime cost and adding 30% to total costs as a profit margin. Job -
number Y256 was sold for Rs.1690 and incurred overheads of Rs.
694. What was the prime cost of the job? Rs. 489 Rs. 606 Rs. 996 Rs. 1300
State which of the following are the characteristics of service
costing? -
1. High levels of indirect costs as a proportion of total costs
239 (1) only (1) and (2) only (2) only (2) and (3) only
2. Use of composite cost units
3. Use of equivalent units

-
Maintenance division
Which of the following organisations should not be advised to use A light engineering
240 Distribution service Hospital of a manufacturing
service costing? company
company

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. -
241 For cost apportionment one company has chosen Physical Quantity Rs. 1,20,000 Rs. 60,000 Rs. 1,80,000 None of the these
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 Rs. 3,60,000. Joint costs allocated to product A is:
 THE INSTITUTE OF COST ACCOUNTANTS OF INDIA
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SL NO QUESTIONS OPTION 1 OPTION 2 OPTION 3 OPTION 4

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
-
242 seating capacity. All buses ran on all days of the month. Each bus 2,81,250 1,87,500 5,62,500 None of the above
made one round trip per day.
Passenger kms are:

The cost of a product under marginal costing system includes: Prime cost plus - Prime cost plus Prime cost plus Only prime cost
243
variable overhead fixed overhead factory overhead
The difference between absorption costing and marginal costing is Direct materials Fixed overhead Prime cost
244 -
in regard to the treatment of: Variable overhead
245 Fixed costs are treated as : Overhead costs Prime costs Period costs - Conversion costs
When sales and production (in units) are same then profits under : Marginal costing is Marginal costing is Marginal costing is None of the above
246 lower than that of higher than that of equal to that of
absorption costing absorption costing -
absorption costing
When sales exceeds production (in units) then profit under: Marginal costing is Marginal costing is Marginal costing is None of the above
higher than that of
247 L equal to that of lower than that of
absorption costing absorption costing absorption costing
which of the following factors responsible for change in the break change in variable -
248
even point? change in selling price cost change in fixed cost all of the above
Variable cost - Remains fixed in total Remains fixed per Varies per unit Nor increase or
249 -
unit decrease
Marginal Costing technique follows the following basic of Element wise Function Wise Behaviour wise Identifiability wise
250 -
classification:
P/V ratio will increase if the: There is a decrease in There is an increase There is a decrease in There is a decrease
fixed cost in fixed cost selling price per unit. in variable cost per
251
unit.
-

The technique of differential cost is adopted when: To ascertain P/V ratio To ascertain To ascertain cost per To make choice
marginal cost unit between two or more
252
alternative courses of
action -

Which of the following would not be used to estimate standard The availability of Purchase contracts The forecast Performance
253 direct material prices? bulk purchase already agreed movement of prices standards in -
discounts in the market operation
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What is an attainable standard? A standard which A standard which A standard which is A standard which is
includes no allowance includes some based on currently kept unchanged, to
for losses, waste and allowance for losses, attainable operating show the trend in
inefficiencies. It waste and conditions costs
represents the level of inefficiencies. It
performance which is represents the level
254 attainable under of performance
perfect operating which is attainable
conditions under efficient
operating conditions
-

255 Budgets are shown in-Terms: Qualitative Quantitative Materialistic both (b) and (c) -
Which of the following is not an element of master budget? Capital Expenditure Production Schedule Operating Expenses All above the above
256 -
Budget Budget
Which of the following is not a potential benefit of using a budget? Enhanced More motivated Improved inter- More accurate
257 coordination of firm managers departmental external financial
activities communication statements -
258 Which of the following is a long-term budget? Master Budget Flexible Budget Cash Budget Capital Budget -
Materials become key factor, if quota restrictions exist insufficient there is low demand there is no problem
259 advertisement with supplies of
-
prevails materials
The difference between fixed cost and variable cost assumes Master Budget Flexible Budget Cash Budget Capital Budget
260 significance in the preparation of the following budget: -

Master budget Sales budget Cash Budget Capital expenditure

261 assuming that it is - budget
The budget that is prepared first of all is _________. the key factor
262 Sales budget is a ________ . expenditure budget - master budget
functional budget None of these
When a company wants to prepare a factory overhead budget in Flexible budget Fixed budget Master budget R & D budget
which the estimated costs are directly derived from the estimates of
263 -
activity levels, which of the following budget should be prepared
by the company?
Which of the following budgets facilitates classification of fixed Capital expenditure Flexible budget Cash budget Raw materials
264 -
and variable costs: budget budget
The entire budget organisation is controlled and headed by a senior General Manager Accountant Budget Controller None of the above
265 -
executive known as:
266 Which of the following is a long-term budget? Master Budget Flexible Budget Cash Budge Capital Budget -
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SL NO QUESTIONS OPTION 1 OPTION 2 OPTION 3 OPTION 4

A flexible budget requires a careful study of Fixed, semi-fixed and Past and current Overheads, selling None of these.
267 variable expenses expenses and administrative
- expenses
The basic difference between a fixed budget and flexible budget is is concerned with a Is concerned with is fixed while flexible None of these
that a fixed budget ____________. single level of activity, fixed costs, while budget changes
while flexible budget flexible budget is
268 is prepared for concerned with
different levels of variable costs
activity -

- Illness or injury to Non- availability of

269
Which of the following is not a reason for an idle time variance? Wage rate increase Machine breakdown worker material
During September, 300 labour hours were worked for a total cost
of Rs. 4800. The variable overhead expenditure variance was Rs.
600 (A). Overheads are assumed to be related to direct labour
270
hours of active working. -

What was the standard cost per labour hour? Rs. 14 Rs. 16.50 Rs. 17.50 Rs. 18
Which of the following would explain an adverse variable
production overhead efficiency variance?

1. Employees were of a lower skill level than specified in the

standard
271 (1), (2) and (3) (1) and (2) (2) and (3) (1) and (3)
2. Unexpected idle time resulted from a series of machine
breakdown u

3. Poor Quality material was difficult to process

Budgeted sales of X for March are 18000 units. At the end of the
production process for X, 10% of production units are scrapped as
L
defective. Opening inventories of X for March are budgeted to be
272 15000 units and closing inventories will be 11,400 units. All 12960 14400 15840 16000
inventories of finished goods must have successfully passed the
quality control check. The production budget for X for March, in
units is:
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CG Co manufactures a single product T. Budgeted production
output of product T during June is
200 units. Each unit of product T requires 6 labour hours for
273 completion and CG Co anticipates 20 per cent idle time. Labour is -
paid at a rate of Rs.7 per hour. The direct labour cost budget for
March is
Rs. 6,720 Rs. 8,400 Rs. 10,080 Rs. 10,500

Capital cost of a new

A Local Authority is preparing cash Budget for its refuse disposal
collection vehicle Depreciation of the Fuel for the
274 department. Which of the following items would not be included in Operatives wages
machinery collection Vehicles
the cash budget? -

The actual output of 162,500 units and actual fixed costs of Rs.
87000 were exactly as budgeted. However, the actual expenditure
275 of Rs. 300,000 was Rs. 18,000 over budget. -
What was the budget variable cost per unit?
Rs. 1.20 Rs. 1.31 Rs.1.42 Rs. 1.50
A ltd is a manufacturing company that has no production resource
limitations for the foreseeable future. The Managing Director has
asked the company mangers to coordinate the preparation of their
budgets for the next financial year. In what order should the -
following budgets be prepared?
1) Sales budget
276 (2), (3), (4), (5), (1) (1), (5), (3), (4), (2) (1), (4), (5), (3), (2) (4), (5), (3), (1), (2)
(2) Cash budget
(3) Production budget
(4) Purchase budget
(5) Finished goods inventory budget
 THE INSTITUTE OF COST ACCOUNTANTS OF INDIA
COST ACCOUNTING (PAPER - 8)
MCQ BANK

SL NO QUESTIONS OPTION 1 OPTION 2 OPTION 3 OPTION 4

S produces and sells one product, P, for which the data are as
follows: Selling price Rs. 28
Variable cost Rs. 16
Fixed cost Rs. 4

The fixed costs are based on a budgeted production and sales level
of 25,000 units for the next period.
-

277 Due to market changes both the selling price and the variable cost 10.1% decrease 11.2% decrease 13.3% decrease 16.0% decrease
are expected to increase above the budgeted level in the next
period.

If the selling price and variable cost per unit increase by 10% and
8% respectively, by how much must sales volume change,
compared with the original budgeted level, in order to achieve
the original budgeted profit for the period?

A company makes a single product and incurs fixed costs of Rs.

30,000 per annum. Variable cost per unit is Rs. 5 and each unit
278 -
sells for Rs. 15. Annual sales demand is 7,000 units. The
breakeven point is : 2,000 units 3,000 units 4,000 units 6,000 units

A company manufactures a single product for which cost and

selling price data are as follows: Selling price per unit - Rs. 12
Variable cost per unit - Rs. 8
Fixed cost for a period - Rs. 98,000
279 -
Budgeted sales for a period - 30,000 units

The margin of safety, expressed as a percentage of budgeted

sales,is:
20% 25% 72% 125%
A company's break even point is 6,000 units per annum. The
280 selling price is Rs. 90 per unit and the variable cost is Rs. 40 per -
unit. What are the company's annual fixed costs? Rs. 120 Rs. 2,40,000 Rs. 3,00,000 Rs. 5,40,000
 THE INSTITUTE OF COST ACCOUNTANTS OF INDIA
COST ACCOUNTING (PAPER - 8)
MCQ BANK

SL NO QUESTIONS OPTION 1 OPTION 2 OPTION 3 OPTION 4

After inviting tenders for supply of raw materials, two quotations

are received as follows—
281
Supplier P Rs. 2.20 per unit, Supplier Q Rs. 2.10 per unit plus Rs. -
2,000 fixed charges irrespective of the units ordered. The order
quantity for which the purchase price per unit will be the same—
22,000 units 20,000 units 21,000 units None of the above.
The cost per unit of a product manufactured in a factory amounts
to Rs. 160 (75% variable) when the production is 10,000 units. -
282 Rs. 145 Rs. 150 Rs. 152 Rs. 140
When production increases by 25%, the cost of production will be
Rs. per unit.
In ‘make or buy’ decision, it is profitable to buy from outside only -
283
when the supplier’s price is below the firm’s own Fixed Cost Variable Cost Total Cost Prime Cost
A budget which is prepared in a manner so as to give the budgeted -
284
cost for any level of activity is known as: Master budget Zero base budget Functional budget Flexible budget
___________ is a summary of all functional budgets in a capsule -
285
form. Functional Budget Master Budget Long Period Budget Flexible Budget

286
-
______ is a detailed budget of cash receipts and cash expenditure Capital Expenditure
incorporating both revenue and capital items. Cash Budget Budget Sales Budget Overhead Budget
Following information is available of XYZ Limited for quarter
ended June, 2023

Fixed cost Rs. 5,00,000 -

287 Variable cost Rs. 10 per unit Rs. 2,50,000 Rs. 10,00,000 Rs. 5,00,000 Rs. 17,50,000
Selling price Rs. 15 per unit
Output level 1,50,000 units

What will be amount of profit earned during the quarter using the
marginal costing technique?

-
288 The P/v ratio of a company is 50% and margin of safety is 40%. If
present sales is Rs. 30,00,000 then Break Even Point in Rs. will be: Rs. 9,00,000 Rs. 18,00,000 Rs. 5,00,000 None of the above
 THE INSTITUTE OF COST ACCOUNTANTS OF INDIA
COST ACCOUNTING (PAPER - 8)
MCQ BANK

SL NO QUESTIONS OPTION 1 OPTION 2 OPTION 3 OPTION 4

Following information is available of PQR for year ended March,
2013: 4,000 units in process,
3,800 units output, 10% of input is normal wastage, Rs. 2.50 per
289 unit is scrap value and Rs. 46,000 incurred towards total process Rs. 2,500 Rs. 2,000 Rs. 4,000 Rs. 3,500
cost then amount on account of abnormal gain to be transferred to
-
Costing P&L will be:-

In element-wise classification of overheads, which one of the L

290
following is not included — Fixed overheads Indirect labour Indirect materials Indirect expenditure.
When the sales increase from Rs. 40,000 to Rs. 60,000 and profit
291 increases by Rs. 5,000, the P/V ratio is: -
20% 30% 25% 40%
In activity based costing , costs are accumulated by activity. Such Cost Benefits
292
Accumulated Amounts are called -
Cost drivers Cost objects Cost pools - Analysis
Identification of cost
Allocation of
Driver of each
Identification of Overhead Cost to
activity and
293 Steps in ABC Include - activities and their products /services all of the above
computation of an
respective costs based on the activities L
allocation rate per
involved
activity
Accurate cost Improved decision Better control on reduction of prime
294 -
Which of the following is not a benefit of ABC ? allocation making activity and costs cost

295 Type of Activity to be Quantity of activity Cost of activity to be -

The key elements of Activity Based Budgeting are - performed to bee performed performed all of the above