Cost and Management Accounting Multiple Choice Questions#9



NOTE: Attempt all Questions to see the Result at the bottom of this page.


  1. 1)

    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
       2. Unexpected idle time resulted from a series of machine breakdown
       3. Poor Quality material was difficult to process


    • A) (1), (2) and (3)
    • B) (1) and (2)
    • C) (2) and (3)
    • D) (1) and (3)

  2. 2)

    A Local Authority is preparing cash Budget for its refuse disposal department. Which of the following items would not be included in the cash budget?


    • A) Capital cost of a new collection vehicle
    • B) Depreciation of the machinery
    • C) Operatives wages
    • D) Fuel for the collection Vehicles

  3. 3)

    The actual output of 162,500 units and actual fixed costs of Rs. 87000 were exactly as budgeted. However, the actual expenditure of Rs 300,000 was Rs. 18,000 over budget. What was the budget variable cost per unit?


    • A) Rs 1.20
    • B) Rs 1.31
    • C) Rs 1.42
    • D) Rs 1.50

  4. 4)

    In process costing, if an abnormal loss arises, the process account is generally


    • A) Debited with the scrap value of the abnormal loss units
    • B) Debited with the full production cost of the abnormal loss units
    • C) Credited with the scrap value of the abnormal loss units
    • D) Credited with the full production cost of the abnormal loss units

  5. 5)

    A job is budgeted to require 3,300 productive hours after incurring 25% idle time. If the total labour cost budgeted for the job is Rs36,300. What is the labour cost per hour( to the nearest cent)?


    • A) Rs 8.25
    • B) Rs 8.80
    • C) Rs 11.00
    • D) Rs 14.67

  6. 6)

    Which of the following organisations should not be advised to use service costing?


    • A) Distribution service
    • B) Hospital
    • C) Maintenance division of a manufacturing company
    • D) A light engineering company

  7. 7)

    Capital gearing ratio is ___________.


    • A) Market test ratio
    • B) Long-term solvency ratio
    • C) Liquid ratio
    • D) urnover ratio

  8. 8)

    In ‘make or buy’ decision, it is profitable to buy from outside only when the supplier’s price is below the firm’s own ______________.


    • A) Fixed Cost
    • B) Variable Cost
    • C) Total Cost
    • D) Prime Cost

  9. 9)

    A budget which is prepared in a manner so as to give the budgeted cost for any level of activity is known as:


    • A) Master budget
    • B) Zero base budget
    • C) Functional budget
    • D) Flexible budget

  10. 10)

    _________ is also known as working capital ratio.


    • A) Current ratio
    • B) Quick ratio
    • C) Liquid ratio
    • D) Debt-equity ratio