Unit 1 Cost Accounts, Unit Costing & Reconciliation. (a) Marginal Costing (b) Job Costing (c) Batch Costing (d) Contract Costing

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1 Unit 1 Cost Accounts, Unit Costing & Reconciliation 1.Which one of the following is not a method of costing? (a) Marginal Costing (b) Job Costing (c) Batch Costing (d) Contract Costing 2. Which one of the following is a Product Cost? (a) Indirect Materials (b) Office Salaries (c) Salesman Commission (d) Int. on Bank loan 3. Which one of the following is not a costing technique? (a) Standard Costing (B) Direct Costing (c) Absorption Costing (d) Process Costing 4. In cement Industry which method is used? (a) Operating Costing (b) Process Costing (c) Unit Costing (d) Contract Costing 5. Cost unit of a dairy industry is- (a) Per Kilo (b) Per Barrel (c) Per Litre (d) Per Ton 6. Telephone expenses are- (a) Fixed Expenses (b) Variable Expenses (c) Semi Variable Expenses (d) None of these 7. Gallon-Litre is a cost unit of which industry? (a) Cement Industry (b) Rail Service (c) Paper Industry (d) Colour Chemical industry 8. Generally, in a tender sheet, factory overheads are calculated as a percentage of (a) Prime Cost (b) Factory overheads (c) Production Overheads (d) Total Cost 9. Materials Rs.6,000; Wages Rs.12,000; Total Sales Rs.43,200. Factory overheads is of factory cost and Office overheads taken at 20% of total cost. Find out the Profit. (a) 5,700 (b) 30,000 (c) 37,500 (d) 7, In Cost Sheet, Donation is shown as- (a) Factory Overheads (b) Administrative Overheads (c) Distribution Overheads(d) None of these 11. Carriage Outward will be included in (a) Labour expenses (b) Factory expenses (c) Office Expenses (d) Selling expenses 12. In Paper Industry following cost method is applied-

2 (a) Unit Costing (b) Job Costing (c) Process Costing (d) Service Costing 13. Cost of Sales is Rs.2,70,000, amount of profit is Rs.30,000,State percentage of profit on sales (a) 10% (b) 11% (c) 15% (d) 9% 14. From the following which item is not shown in the cost sheet? (a) Scrap Value of Raw material (b) WIP Stock (c) Salary (d) Amount transferred to General Reserve 15. If sales are Rs.3, 00,000 and profit is calculated at 11 1/9 % of cost of sales, profit will be- (a) Rs.30,000 (b) Rs.27,000 (c) Rs.29,700 (d) None of these 16. Expense not recorded in Financial A/c- (a) Rent of own house (b) Bank Interest (c) Office Salary (d) Commission 17. Goodwill written off is recorded in (a) Cost Accounts (b) Financial A/c (c) Both a&b (d) None of these 18. Income recorded in both Financial & Cost Accounts- (a) Interest Income (b) Income from selling scrap(c) Rent Income(d) Dividend Income 19. Loss as per financial accounts is Rs.20,000. Goodwill written off is Rs.2,000 and Dividend received is Rs.4,000. Find out loss as per Cost Accounts. (a) Rs.26,000 (b) Rs.18,000 (c) Rs.24,000 (d) Rs.22, When loss as per cost accounts is Rs.30,000 and Goodwill written off is Rs.2000, then loss as per financial books will be- (a) Rs.28,000 (b) Rs.32,000 (c) Rs.26,000 (d) None of these 21. Which item is not recorded in financial accounts - (a) Interest on Capital (b) Loss on sale of investments(c) Donations (d) Imputed factory rent 22. Which item is not recorded in cost accounts - (a) Interest on investments (b) Dividend to shareholders (c) Debenture Interest (d) All of these 23. In Cost Sheet, legal expenses are shown as (a) Factory Overheads (b) Administrative overheads (c) Selling Overheads (d) Distribution overheads

3 24. Which cost accounting method is used in Pharma Medicine industry? (a) Job Costing (b) Batch Costing (c) Unit Costing (d) Contract Costing 25. When costs are ascertained after they are already incurred, the method used is termed as- (a) Uniform Costing (b)historical Costing (c) Standard costing (d) Absorption Costing CHAPTER: MATERIAL AND LABOUR 1. Which one of the following is an accounting record? (i) Bin Card (ii) Stores ledger (iii) Bill of materials (iv) All of these 2. The economic order quantity is that order size which minimizes the: (i) annual cost of acquiring a commodity (ii) annual cost of acquiring and holding a commodity (iii) annual cost of holding commodity in inventory for one year (iv) Cost of ordering a commodity 3. The formula for danger level can be presented as follows : (i) Average consumption Maximum Delivery Time for Emergency Purchase (ii) Ordering Level Average Consumption of average delivery period (iii) Ordering Level Minimum Consumption of Minimum delivery period + Ordering Quantity (iv) Maximum Consumption Maximum Delivery Time 4. From the following information find out ordering level Maximum Procurement Time 55 days Average Procurement Time 45 days Maximum daily consumption 140 units Minimum daily consumption 110 units Economic Ordering Quantity 500 units (i) 2,075 units (ii) 4,350 units (iii) 7,700 units (iv) 5,400 units 5. A... is generally maintained to record all the details of purchase order

4 (i) Purchase order (ii) Order Register (iii) Purchase Requisition (iv) None of the above 6. Material Consumption 30,000 units Opening Stock 2,000 units Closing Stock 4,000 units then what will be material purchase (i) 32,000 units (ii) 28,000 units (iii) 24,000 units (iv) 36,000 units 7. In a factory an average usage is 1,500 units per day. Maximum usage is 2,000 units per day. Minimum usage per day is 800 units. Lead time is days and EOQ 30,000 units. Maximum stock level of the factory (i) 34,000 units (ii) 64,000 units (iii) 80,000 units (iv) 50,000 units 8. Opening stock Rs. 80,000, Purchases Rs. 2,60,000, Closing stock Rs. 40,000. Calculate stock turnover rate. (i) 4 times (ii) 5 times (iii) 3 times (iv) 6 times 9. Calculate Economic Order Quantity: Annual Consumption 5,000 units Cost per unit Rs.5 Cost of placing an order Rs. 100 Carrying cost per unit 20% (i) 500 units (ii) 1,000 units (iii) 100 units (iv) 1,500 units 10. Ordering level 3,750 units, Time required to get material : 3 to 5 weeks. What will be the maximum consumption of material? (i) 750 units (ii) 375 units (iii) 1000 units (iv) 938 units

5 11. What would be the impact on re-order point of an increase in the order size from 1000 to 2000 units? (i) It would increase the Re-order point by 500 units (ii) It would not affect the Re-order point (iii) It would increase the Re-order point by 100% (iv) It would decrease the Re-order point by 100% 12. Most profitable Quantity to purchase is called - (i) Maximum Quantity (ii) Minimum Quantity (iii) Economical Ordering Quantity (iv) Average Quantity 13. In Store Bin Card the following cost is stated : (i) Real Price of Goods (ii) Cost not stated (iii) Average Cost (iv) Standard Cost 14. If bi-monthly, consumption is 300 units, how many units should be taken in the formula of EOQ? (i) 1800 units (ii) 3600 units (iii) 300 units (iv) 1200 units 15. Which one of the following statements is correct during a period of rising prices? (i) The LIFO method will produce lower profit than the FIFO method and lower closing stock values (ii) The LIFO method will produce lower profit than the FIFO Method and higher closing stock values (iii) The FIFO method will produce lower profits than the LIFO method, and lower closing stock value (iv) The FIFO method will produce lower profits than the LIFO method and higher closing stock values 16. Which of the following is not an advantage of using LIFO Method? (i) Profits are not realistic (ii) Material cost represents actual cost, which should be charged to the products or processes (iii) It is useful under inflationary conditions (iv) Closing stock values are more realistic

6 17. In which method stock is valued at a price which is almost nearer to current market price? (i) FIFO (ii) LIFO (iii) Weighted Average (iv) Fixed Price Method 18. The following information is of material used in a factory for April, 2016 Receipts : Rs.2.50 per kg Rs.3.00 per kg Issues : kgs kgs. From the above information, what would be the value of closing stock using the Weighted Average Method? (i) Rs.600 (ii) Rs.560 (iii) Rs. 580 (iv) Rs Weighted average of 150 units is Rs.32. Out of it total cost of 60 units is Rs.2,100, what would be per unit cost of remaining units? (i) Rs.35 (ii) Rs.30 (iii) Rs. 27 (iv) Rs Weighted Average of 100 units is Rs.280. Out of it total cost of 40 units is Rs. 10,000. What would be per unit cost of remaining units? (i) Rs. 300 (ii) Rs. 250 (iii) Rs. 280 (iv) Rs Which of the following statements is not correct? (i) Overtime wages are payable at double the normal wage rate (ii) Cost of idle time, due to labour strike should be treated as factory overhead (iii) When wages are paid on piece rate basis, the quality may deteriorate (iv) Overtime premium is not considered unusual, if it is required to adhere to the schedule 22. Which of the following statements is correct? (i) In Halsey Premium Plan, time wages are guaranteed (ii) Rowan Incentive Plan distributes the benefit of times saved equally between employer and employee

7 (iii) Labour rate is inflated to cover the cost of estimated abnormal idle time (iv) Overtime premium is always treated in Halsey Premium Plan 23. In a department standard time allowed for a job is 80 hours. Actual time taken to complete the job is 60 hours and Time rate is Rs.20 per hour. What would be the amount of bonus under Halsey Premium Plan? (i) Rs.200 (ii) Rs.300 (iii) Rs. 400 (iv) Rs. Nil 24. A worker is allowed 8 hours to complete a job on time wages. He completes the job in 6 hours on piece wages. His time wage is Rs.2 per hour. Material cost of a product is Rs.15 and Factory overheads are recovered at 100% of the total direct wages. Find out the factory cost of the product under Rowan Wage Plan. (i) Rs. 47 (ii) Rs.43 (iii) Rs. 45 (iv) Rs Find out No. of workers recruited : No. of workers at the beginning of the month 1,900 No. of workers at the end of the month 1,100 No. of workers left 180 Rate of labour turnover as per flux method 23.6% (i) 174 (ii) 90 (iii) 750 (iv) 1, Standard time fixed for a job is 200 hours. A worker is paid at Rs.0.75 per hour. The actual time taken to complete the job is 100 hours. Calculate the total wages according to time wage system. (i) Rs. 160 (ii) Rs. 200 (iii) Rs. 120 (iv) Rs In a department standard time allowed for a job is 50 hours. Actual time taken to complete the job is 40 hours and wage rate is Rs.20 per hour. The amount of bonus under Halsey Premium Plan - (i) Rs. 200 (ii) Rs. 300 (iii) Rs. 100 (iv) Rs. 800

8 28. Meena completes a work in 8 hours instead of 10 hours. Labour rate per hour is Rs. 5. What he will earn as per Rowan plan? (i) Rs. 40 (ii) Rs. 48 (iii) Rs. 50 (iv) Rs In a department, standard time allowed for a job is 50 hours. Actual time taken to complete the job is 40 hours and wage rate is Rs.30 per hour. The amount of bonus under Halsey Premium Plan is - (i) Rs. 300 (ii) Rs. 450 (iii) Rs. 150 (iv) Rs. 1, Leena completes a work in 8 hours instead of 10 hours. Labour rate per hour is Rs.15. What she will earn as per Rowan Plan? (i) Rs. 150 (ii) Rs. 120 (iii) Rs. 144 (iv) Rs Standard time is 9 hours, Actual time taken is 6 hours and wage rate is Rs.2 per hour. For a job material cost is Rs.30 Wages are paid as per Rowan wage plan Factory expenses allocated 100% of wages. What would be the factory cost of the job? (i) Rs. 55 (ii) Rs. 62 (iii) Rs. 75 (iv) None of the above 32. Which of the following statements is true? (i) Per unit variable cost will vary with the volume of production (ii) Normal idle time is unavoidable and cannot be completely eliminated (iii) The LIFO method will produce lower profit and high valuation of closing stock when price are rising. (iv) All direct and indirect expenses are include in factory (production) cost. 33. Which wage system is proper where speed of the wok depends on machine not on the man? (i) Piece wages system (ii) Halsey wages system (iii) Rowan wages system (iv) Time wages system

9 34. Standard time fixed for a job is 12 hours. A worker is paid Rs.25 per hour. The actual time taken to complete the job is 10 hours. Total wages payable to worker according to piece wage system will be - (i) Rs. 120 (ii) Rs. 300 (iii) Rs. 250 (iv) Rs. 50 Overheads (1)In cost accounts, delivery expenses are included in (a) Factory cost (b) Admin cost Selling Cost (d) None of the above (2) In Cost accounts, Cost of Oil, grease is included in (a) Direct Material (b) Indirect Material Direct Labour (d) Indirect Wages (3) Contribution to Employees state Insurance will be Distributed according to (a) Direct Labour (b) Number of workers direct Labour Hour Rate (d) None of the above (4) When separate meter is not allocated, Electricity cost will be distributed as per_ (a) Area Occupied (b) Number of workers Direct wages (d) None of the above (5) When every service department is useful to other service department, then distribution of indirect cost can not done by the method of - (a) Direct redistribution method (b) Step- ladder method Repeated redistribution method (d) None of the above (6) If machine costs Rs.84,000,its scrap value is Rs.18,000 and its useful life is 6 years then what is its depreciation? (a) Rs.12,000 (b) Rs.14,000 (c) Rs.16,000 (d) Rs.10,000 (7) If prime cost is Rs 50,000 and factory expenses are Rs.10,000 then what will be percentage of factory expense on prime cost?

10 (a) 25% (b) 20% (c) 30% (d) 15% (8) Which of the following method is not the method of reciprocal method in the accounts if overheads. (a) Direct redistribution method (b) Step- ladder method Repeated redistribution method (d) None of the above (9) Basis of overheads apportioned for Plant reparing is- (a) Area occupied (b) Value of plant Plant hours (d) Dep.of plant (10) Oil engine industry is part of which department? (a) Foundry dept. (b) store dept. Casting dept. (d) casting dept. (11)Basis of Indirect wages is _ (a) Direct labour (b) store dept. No. of workers (d) Area occupied (12)Which of the following expenses is a periodical expense? (a) Depreciation (b) Office rent direct wages (d) Materials (13) Counting house expenses are considered as (a) Distribution expenses (b) Administrative expenses Selling expenses (d) Factory expenses (14) Factory expenses actually paid Rs.10,000. Rate of recovery is 30% of direct labour. Direct labour is Rs.25,000.It shall be (a) Over absorption Rs.2,500 (b) Under absorption Rs.2,500 Actual absorption Rs.10,000(d) None of the above

11 (15)Monthly factory overheads of a factory are Rs.60, workers worked for 25 days in a month for daily 8 hours. What shall be the direct lab our rate? (a)rs. 20 (b) Rs.10 (c) Rs.50 (d) Rs.60 (16) Which methods are used for distributing service expenses over production departments? (a) Comparison Method (b) Direct Method Graphics Method (d) None of the above (17)From the following which item is not relative to factory expenses? (a) Insurance of machine (b) Expenses of computer Dept. Power bill (d) Subscription of technical magazine (18) Canteen expenses can be distributed on the basis of (a) Area Occupied (b) Number of workers Direct wages (d) None of the above (19)If cost of a machine is Rs. 53,000 and scrap value is Rs.6000 and installation expense is Rs.3,000.If useful life is 10 years then what will be its depreciation? (a)rs (b) Rs.5000 (c) Rs.5600 (d) none of the above (20) Which of the following expenses is not related with factory expenses? (a) Power bill (b) Computer expenses Plant insurance (d) Direct wages (21) which expenses is not variable expenses for calculation of machine hour rate? (a) Machine Dep. (b) Machine Power Machine Repairing (d) Factory Electricity (22) The base of labour welfare expenses is - (a) Area Occupied (b) Number of workers Direct wages (d) None of the above (23) The base of Rent and Rates is - (a) Area Occupied (b) Number of workers

12 Direct wages (d) None of the above (24) The base of Technical directors fees is - (a) Area Occupied (b) Number of workers Direct wages (d) Time devoted (25) The base of Work manager salary is - (a) Area Occupied (b) Number of workers Direct wages (d) Time devoted CHAPTER CONTRACT ACCOUNTS (1) Cost plus contract means (a) Contract price fixed from the beginning (b) Contract cost increase automatic Contract expenses + Some percentage of profit (d) No change in contract cost (2) As per Contract accounts, Uncertified work means (a) Work in progress (b) work without permission Work not certified (d) Finished work (3)Contract costing is mostly used in (a) Job (b) service Construction (d) Batch (4) Total contract price Rs.20,00,000,Work certified Rs.6,00,000.Total cost of 40% work actually completed during the year Rs.6,40,000.What will be Uncertified work? (a) Rs.20,000 (b) Rs.40,000 Rs.2,00,000 (d) Rs.1,60,000

13 (5) Profit of contract account to P & L A/c is Rs.3,60,000. This amount is calculated on the basis of 2/3 of 80% cash receipt. Find out total profit of contract. (a) Rs.6,00,000 (b) Rs.2,40,000 Rs.1,40,000 (d) Rs.3,60,000 (6) Profit of contract account to P & L A/c is Rs.64,000. This amount is calculated on the basis of 2/3 of 80% cash receipt. Find out total profit of contract. (a) Rs.1,20,000 (b) Rs.80,000 Rs.1,00,000 (d) Rs.51,200 (7) Contract price is Rs.10,00,000,total cost of 50% work completed Rs.3,00,000, Work certified Rs. 4,00,000. Find out uncertified work: (a) Rs.30,000 (b) Rs.1,00,000 Rs.60,000 (d) Rs.1,50,000 (8) Which costing method is adopted by construction industry? (a) Contract costing (b) Process costing Job costing (d) Batch costing (9) Contract price is Rs.10,00,000,total cost of 80% work completed, Work certified 90%. Find out uncertified work: (a) Rs.2,00,000 (b) Rs.80,000 Rs.1,00,000 (d) Rs.72,000 (10) Profit of contract account to P & L A/c is Rs.1,00,000. This amount is calculated on the basis of 2/3 of 80% cash receipt. Find out total profit of contract. (a) Rs.80,000 (b) Rs.1,87,500 Rs.1,50,000 (d) Rs.1,75,000 (11)While preparing contract A/c,the cost of the special plant is shown in the Contract A/c.(Yes/No) (a) Yes (b) No (12) Escalation clause in the contract protects the interest of the contractee.(yes/no)

14 (a) Yes (b) No (13) Profit of contract account to P & L A/c is Rs.1,20,000. This amount is calculated on the basis of 2/3 of 80% cash receipt. Find out total profit of contract. (a) Rs.80,000 (b) Rs.2,25,000 Rs.2,00,000 (d) Rs.96,000 (14) Contract price is Rs.15,00,000,total cost of 75% work completed, Work certified 90%. Find out uncertified work: (a) Rs.1,12,500 (b) Rs. 11,25,000 Rs.1,35,000 (d) Rs.13,50,000 (15) When Proforma contract A/c is prepared? (a) At early stage of contract (b) After 50% work At the end stage (d) When estimated exp. are given (16) Which of the following statement is not correct? (a) Contract costing is variant of job costing. (b) More items of cost are direct in case of contract costing then job costing. In case of cost + contract, final contract price is determined only on completion of a contract. (d) Contractee s interest is protected by provision of Escalation clause. (17) Which of the following statement is correct? (a) Each contract is a separate cost unit. (b) The profit or loss oneach contract is computed only on completion. When percentage of cash to be received is 90% the retention money is 50% of it. (d) Loss of incomplete contract is Proportionately transferred to costing P & L A/c. (18) Which of the following statement is not correct? (a) Closing WIP appears on the credit side of a contract account. (b) Debit balance of contract A/c,even if the certified work is 25% or less is debited to costing P & L A/c.

15 contract costing is suitable to a Toy Manufacturing Firm (d) If 70% work certified,2/3 rd of notional profit multiplied by the percentage of cash received may be credited to costing P & L A/c. (19) Which of the following statement is Not correct? (a)batch costing is Suitable for Ready made garment manufacturing unit (b) Contract costing is Suitable for Printing Press. Job costing is not suitable for Textile Mill. (d) Contract costing is preferred in case of Ship building. (20)The total contract price Rs.10,00,000 ;Total cost of 40% work actually completed during the year Rs.3,20,000; Work certified Rs.3,00,000.what will be uncertified work? (a) Rs.80,000 (b) Rs. 20,000 Rs.10,000 (d) Rs.1,00,000