MGT402 Solved MCQs from new quizzes 25/6/2010

MGT402 Solved MCQs from new quizzes 25/6/2010
1-In cost Accounting, abnormal loss is charged to:

>Factory overhead control account
>Work in process account
>Income Statement
>Entire production

2-Cost of goods sold can be calculated as follow

>Cost of goods manufactured Add Opening finished goods inventory Less Closing finished goods inventory
>Cost of goods manufactured Less Opening finished goods inventory Less Closing finished goods inventory
>Cost of goods manufactured Less Opening finished goods inventory Add Closing finished goods inventory
>Cost of goods manufactured Add Opening finished goods inventory Add Closing finished goods inventory

3-PVC company has ordering quantity 10,000 units. They have storage capacity 20,000 units, The average inventory would be:
>20,000
>5,000
>10,000
>25,000

4-Which of the following best describes piece rate system?
>The increased volume of production results in decreased cost of production
>The increased volume of production in minimum time
>Establishment of fair standard rates
>Higher output is a result of efficient management

5-A high inventory turnover may indicate:
>An efficient use of the investment in inventory
>A high risk of stock-outs
>Stock position of store room
>All of the given options

6-If, Gross profit = Rs. 40,000 GP Margin = 25% of sales What will be the value of cost of goods sold?
>Rs. 160,000
>Rs. 120,000
>Rs. 40,000
>Can not be determined

7-Which of the following is the best characteristic of a by product:
> Is produced from material that would otherwise be of no value
>Has a lower selling price than the main product
>Is created along with the main product, but its sales value does not cover its production cost
> Usually produces a smaller amount of revenue than the main product

8-Net Income before Interest and tax is also called:
>Operating Income/Profit
>Gross Profit
>Marginal Income
>Other Income

9-Cost of goods sold Rs. 30,000,opening Inventory Rs. 9,000,Closing inventory Rs. 7,800.What was the inventory turnover ratio?
>3.57 times
>3.67 times
>3.85 times
>5.36 times

10-Factory Over head cost includes
> Factory Rent
> Property Tax
> Salaries of Factory Clerk
>All of the given

11-A Blanket Rate is:
>A single rate which used throughout the organisation departments
>A double rates which used throughout the organisation departments
>A single rates which used in different departments of the organisation
> None of the given options

12-When FOH is under applied and charged to Net profit , the treatment would be:
> Under applied Add net profit
> Under applied Less net profit
> Under applied Less operating expense
> None of the given options

13-Which of the following statements is/are correct?
>A by-product is a product produced at the same time as other products which has a elatively low volume compared with the other products.
>Since a by-product is a saleable item it should be separately costed in the rocess ccount,and should absorb some of the process costs.
>Cost incurred prior to the point of separation are known as common or joint costs.
>A by-product is a product produced at the same time as other products which has a relatively high volume compared with the other products.

14-Which of the following cost is used in the calculation of cost per unit?
>Total production cost
>Cost of goods available for sales
>Cost of goods manufactured
>Cost of goods Sold

15- Merrick Differential system uses----------- rates.
>Two
>Three
>Four
>Five

16-Which of the following is considered as basic systems of remunerating labor?
>Time rate system
>Piece rate system
>Halsey Premium plan
> Both time rate and piece rate system

17-All of the following are essential requirements of a good wage system EXCEPT:
> Reduced overhead costs
> Reduced per unit variable cost
>Increased production
>Increased operating costs

18-In comparing common cost and joint cost:
> The terms can be correctly used interchangeably
> Both have the same objective of assigning production cost to cost center
> They differ since common cost products or services have been obtained separately
> Common cost is sometime used as Joint cost

19-If opening inventory of material is Rs.20,000 and closing inventory is Rs. 40,000.the Average inventory amount will be:
>Rs. 40,000
>Rs. 30,000
>Rs. 20,000
>Rs. 10,000

20-FOH absorption rate is calculated by the way of
>Estimated FOH Cost/Direct labor hours
>Estimated FOH Cost/No of units produced
>Estimated FOH Cost/Prime Cost
>All of the given options

21-If a predetermined FOH rate is not applied and the volume of production is reduced from the planned capacity level, the cost per unit expected to:
>Remain unchanged for fixed cost and increase for variable cost
>Increase for fixed cost and remain unchanged for variable cost
>Increase for fixed cost and decrease for variable cost
>Decrease for both fixed and variable costs

22-If, COGS = Rs. 50,000 GP Margin = 25% of sales What will be the value of Sales?
Rs. 200,000
Rs. 66,667
Rs. 62,500
None of the given options


Which of the following is/are reasons of abnormal loss?
Select correct option:

Defective material used
Machine breakdown
Poor workmanships
All of the given

Which of the following cannot be used as a base for the determination of overhead absorption rate?
Select correct option:

Number of units produced
Prime cost
Conversion cost
Discount Allowed

In comparing common cost and joint cost:
Select correct option:

The terms can be correctly used interchangeably
Both have the same objective of assigning production cost to cost center
They differ since common cost products or services have been obtained separately
Common cost is sometime used as Joint cost

All of the following are cases of labor turnover EXCEPT:
Select correct option:

Workers appointed against the vacancy caused due to discharge or quitting of the organization
Workers employed under the expansion schemes of the company
The total change in the composition of labor force
Workers retrenched

________ is the time worked over and above the employee's basic working week.


Flex time
Overtime
Shift allowance
Commission

Weighted average cost per unit is calculated by which of the following formula?
Select correct option:

Cost of goods issued/number of units issued
Total cost/total units
Cost of goods manufactured/closing units
Cost of goods sold/total units

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 weighted average, the equivalent units of production for transferred-in costs, direct material and conversion costs are:
Select correct option:

Material 125,000 units Conversion cost 45,000 units
Material 125,000 units Conversion cost 98,000 units
Material 125,000 units Conversion cost 18,000 units
Material 125,000 units Conversion cost 80,000 units

Units completed as per material are 100% opening + closing
95,000 + 30,000
1, 25,000

The flux method of labor turnover denotes:
Select correct option:

Workers appointed against the vacancy caused due to discharge or quitting of the organization
Workers appointed in replacement of existing employees
Workers employed under the expansion schemes of the company
The total change in the composition of labor force

The flux method of labor turnover denotes the total change in the composition of labor force. While replacement method takes into account only workers appointed against the vacancy caused due to discharge or quitting of the organization.

Taylor's Differential Piece Rate Plan uses-----------piece rates.
Select correct option:

Three
Two
Four
Five

Closing work in process Inventory of last year:
Select correct option:

Is treated as Opening inventory for current year
Is not carried forward to next year
Become expense in the next year
Charge to Profit & Loss account

The Term Mimimum Level Represents.
Select correct option:

This represents the quantity below which the stock of any item should not be allowed to fall
This represents the quantity below which the stock of any item should be allowed to fall
This is the estimated time period in number of days or in weeks or in months.
This is the Lead time period in number of days or in weeks or in months.


Taking steps for the fresh purchase of those stocks which have been exhausted and for which requisitions are to be honored in future” is an easy explanation of:
Select correct option:

Overstocking
Under stocking
Replenishment of stock
Acquisition of stock

Replenishment of stock therefore implies as ‘taking steps for the fresh purchase of those stocks which have been exhausted and for which requisitions are to be honored in future’.(P#50)

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

What will be the impact of normal loss on the overall per unit cost?
Select correct option:

Per unit cost will increase
Per unit cost will decrease
Per unit cost remain unchanged
Normal loss has no relation to unit cost

Reference:
(Lesson 10)

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 Reference: (Page # 82)

Which of the following is called Non Statutory deductions:
Select correct option:

Subscriptions to a trade union
Contributions by the employee to a pension scheme
Contributions by the employer to a pension scheme
All of the given

Costs which are constant for a relevant range of activity and rise to new constant level once that range exceeded is called:
Select correct option:

A fixed cost
A variable cost
A mixed cost
A step cost

Wright Company had, at the beginning of 2001, a work in process of 10,000 units. During 2001, 57,500 additional units were started into production. Ending work in process on December 31, 2001, was 7,500 units. The beginning work in process was 100% complete as to direct materials and 75% complete as to conversion costs. The ending work in process was 100% complete as to direct materials and 50% complete as to conversion costs. Total direct material put into process cost Rs. 57,500. Total conversion cost put into process cost Rs. 84,375. Beginning work in process cost Rs.21,250; Rs. 13,250 for materials and Rs. 8,000 for conversion. All materials are added at the start of the production process, and conversion costs are incurred uniformly throughout manufacturing. Wright Company uses a weighted-average process cost system. The cost per equivalent unit for conversion cost for 2001 was:
Select correct option:

Rs. 1.00
Rs. 1.23
Rs. 1.33
Rs. 1.45

Under Periodic Inventory system Purchase of inventory is treared as:
Select correct option:

Assets
Expense
Income
Liability

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

While deducting Income Tax from the gross pay of the employee, the employer acts as a (an) _________________for Income Tax Department.
Select correct option:

Agent of his own Company
Paid tax collection agent
Unpaid tax collection agent
None of the given options

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

Gross pay includes which of the following items?
Select correct option:

Basic pay + bonus pay
Overtime payment + shift allowances
Rent and conveyance allowances
All of the given options

Cost of finished goods inventory is calculated by:
Select correct option:

Multiplying units of finished goods inventory with the cost per unit
Dividing units of finished goods inventory with the cost per unit
Dividing per unit cost with finished goods inventory
Deducting total cost from finished goods inventory

Byer produced 20,000 units and their total factory cost was Rs. 450,000,other cost like property tax on factory bulding was Rs. 10,000 included in that cost till year ended the cost of per unit would be:
Select correct option:

Rs.22.5
Rs.23.5
Rs.24.5
Rs.26.5

The Inventory Turn over ration is 5 times and numbers of days in a year is 365.Inventory holding period in days would be
Select correct option:

100 days
73 days
50 days
10 days

Which of the following best describes the manufacturing costs?
Select correct option:

Direct materials, direct labor and factory overhead
Direct materials and direct labor
Direct materials, direct labor, factory overhead, and administrative overhead
Direct labor and factory overhead

The cost of goods sold was Rs. 240,000. Beginning and ending inventory balances were Rs. 20,000 and Rs. 30,000, respectively. What was the inventory turnover?
Select correct option:

8.0 times
12.0 times
7.0 times
9.6 times

Which of the following would be considered a major aim of a job order costing system?
Select correct option:

To determine the costs of producing each job or lot
To compute the cost per unit
To include separate records for each job to track the costs
All of the given options

A company produces two chemicals in a joint process. Chemical A can be sold at split off while chemical B currently cost Rs. 2 per gallon for disposal. If chemical B is further processed, it would cost Rs. 5 per gallon. At what sales price would the company be in different between disposing of chemical B at split off and further processing the chemical?
Select correct option:

Rs.3
Rs.5
Rs.4
Rs.7 not sure

Which of the following cannot be used as a base for the determination of overhead absorption rate?
Select correct option:

Number of units produced
Prime cost
Conversion cost
Discount Allowed

A standard rate is paid to the employee when he completed his job:
Select correct option:

In time less than the standard
In standard time
In time more than standard
Both in standard time and more than the standard time
All of the following are terms used to denote Factory Overheads EXCEPT:
Select correct option:

Factory burden
Factory expenses
Manufacturing overhead
Conversion costs


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

Merrick Differential Piece Rate System:
Select correct option:

worker is not penalized even if his performance does not exceed 80 per cent of the High Task.
worker is not penalized even if his performance does not exceed 70 per cent of the High Task.
worker is not penalized even if his performance does not exceed 50 per cent of the High Task.
worker is not penalized even if his performance does not exceed 30 per cent of the High Task.

In which of the following center FOH cost NOT incurred
Select correct option:

Production Center
Service Center
General Cost Center
Head Office

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
In furniture manufacturing use of nail, pins, glue, and polish which use to increase its esteem value that cost is treated as:
>Direct material cost
> Indirect material cost
>FOH cost
.> Prime cost
Cost of goods sold can be calculated as follow

> Cost of goods manufactured Add Opening finished goods inventory Less Closing finished goods inventory
> Cost of goods manufactured Less Opening finished goods inventory Less Closing finished goods inventory
> Cost of goods manufactured Less Opening finished goods inventory Add Closing finished goods inventory
> Cost of goods manufactured Add Opening finished goods inventory Add Closing finished goods inventory

Examples of industries that would use process costing include all of the following EXCEPT:
Select correct option:
> Beverages
> Food
> Hospitality
> Petroleum
Which of the following would be considered a major aim of a job order costing system?
Select correct option:
> To determine the costs of producing each job or lot
> To compute the cost per unit
> To include separate records for each job to track the costs
> All of the given options
The danger Level can be calculated ?
Select correct option:
> Average consumption x Lead time to get urgent supplies
>Normal consumption x Lead time to get urgent supplies
> Maximum consumption x Lead time to get urgent supplies
> Minimum consumption x Lead time to get urgent supplies
The Economic order quantity can be calculated by:
Select correct option:
>Formula Method
>Table Method
>Graph Method
>All of the given
Which of the following manufacturers is most likely to use a job order cost accounting system?
Select correct option:
>A soft drink producer
> A flour mill
> A textile mill
> A builder of offshore oil rigs
The FIFO inventory costing method (when using a perpetual inventory system) assumes that the cost of the earliest units purchased is allocated in which of the following ways?
Select correct option:
>First to be allocated to the ending inventory
> Last to be allocated to the cost of goods sold
>Last to be allocated to the ending inventory
> First to be allocated to the cost of good sold

Which of the following statements concerning job order costing systems is incorrect?
Select correct option:

Cost drivers are those items which cause actual overhead to exceed applied overhead
Job order costing systems are appropriate to both manufacturing and service businesses
Traditionally, direct labor has been a very popular overhead application base
In a service business, indirect costs of providing a service are treated as overhead and applied in a manner similar to that for factory overhead
A chemical process has normal wastage of 10% of input. In a period, 2,500 Kg of material were input and there was abnormal loss of 75 Kg. What quantity of good production was achieved?
Select correct option:

>2,175 kg
>2,250 kg
>2,425 kg
>2,500 kg
Which of the following cannot be used as a base for the determination of overhead absorption rate?
Select correct option:

>Number of units produced
>Prime cost
>Conversion cost
>Discount Allowed
EOQ is a point where:
>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
In a repeated distribution method:
Select correct option:
>Each service department in turn does not re-allocate its costs to all departments
>Each service department in turn and re-allocates its costs to all departments
>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
If opening inventory of material is Rs.20,000 and closing inventory is Rs. 40,000.the Average inventory amount will be:
Select correct option:

>Rs. 40,000
>Rs. 30,000
>Rs. 20,000
>Rs. 10,000
If joint products are to be processed further beyond the point of separation, costs should be assigned to the products on the basis of:
Select correct option:

>Adjusted sales value
>Ultimate sales value
>A physical unit of measure
>An engineering analysis
Which of the following is sales force payroll incentive?
Select correct option:

>Commission
>Shift allowance
>Over time payment
>Bonus
opening WIP 3500 units that was 70%completed. completed during the month was19,000 units.Closing WIP 6500 units that was 30%completed. How many units were started during January?
Select correct option:

>19,000 units
>22,000 units
>16,000 units
>25,500 units