Cost and Managerial Accounting
1. Batla Ltd. is currently preparing its cash budget for the year to 31 March 2014. An extract from its sales budget for the same year shows the following sales values.
40% of its sales are expected to be for cash. Of its credit sales, 70% are expected to pay in month after sale and take a 2% discount. 27% are expected to pay in the second month after the sale, and the remaining 3% are expected to be bad debts. The value of sales budget to be shown in the cash budget for May 2013 would be how much?
2. A company manufactures 5,000 units of a product per month. The cost of placing an order is 100. Purchase price of the raw material is 10 per kg. Average consumption of raw material is 275 kgs. Per week. The carrying cost of inventory is 20% per annum. Calculate economic order quantity?
3. What is a ‘cost plus contract’? What are its disadvantages?
4. What remedial measures would you suggest to minimize the labour turnover?
5. Explain ABC analysis and Economic Order Quantity (EOQ) techniques of inventory control?
6. Why the flexible budgets are considered superior to the fixed budgets?
7. Distinguish between ‘job costing’ and ‘contract costing’?
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1. What’s the issue in the case?
2. What are the responsibilities of accountants?
3. What are the essentials to become a good accountant?
Question No. 1 Marks - 10
ABC technique refers to ………….. based costing.
Question No. 2 Marks - 10
The fixed cost which cannot be avoided during the temporary closure of a plant is known as …………… cost.
Question No. 3 Marks - 10
Any factor that causes a change in the cost of an activity or output. Forexample, the quality of parts received by an activity, or the degree of complexity of tax returns to be reviewed.
- Cost Absorption
- Cost Verification
- Cost allocation
- Cost Driver
Question No. 4 Marks - 10
The cost which varies with the level of production is called …………….. Cost.
Question No. 5 Marks - 10
Profit centres whose expenditure are reported on amarginal cost basis, are called ……………….. centres.
Question No. 6 Marks - 10
ICWA stands for The Institute of Cost and …………….. Accountants.
Question No. 7 Marks - 10
It is the process of absorbing the overhead costs (indirect costs)allocated to or apportioned over a particular cost centre.
- Cost Consumprion
- Cost Absorption
- Cost Verification
- Cost allocation
Question No. 8 Marks - 10
………………. cost represents the indirect cost which is incurred for seekingto create and stimulate demand and securing orders.
- Opportunity Cost
Question No. 9 Marks - 10
It is the cost incurred for converting the raw material into finished product
Question No. 10 Marks - 10
Sales minus total cost is called ………………. .
Question No. 11 Marks - 10
They have the capacity of contributing to the production of therevenue in the future.
- Cost Absorption
- Cost Verification
- Unexpired Cost
- Conversion Cost
Question No. 12 Marks - 10
Any segment or element for which cost information is desired is known as ……………. Object.
Question No. 13 Marks - 10
Committed resources or Resources that generate cost based on the amount acquired rather than the amount used such as Buildings and equipment are termed as ………….. Related resource.
Question No. 14 Marks - 10
………….. Products are a sub-category of joint products that have relatively insignificant sales values as a proportion of the value of the entire group from which they are derived.
Question No. 15 Marks - 10
Cost of an activity that is required or performed each time a batch of products or services is produced is called ……………. Level cost.
Question No. 16 Marks - 10
The cost of testing and inspecting both the materials and finished products is ………………. Cost.
Question No. 17 Marks - 10
Cost of one more item, unit or customer.
Question No. 18 Marks - 10
Can be increased or decreased at the discretion of the decision maker.
Question No. 19 Marks - 10
After making deductions.
Question No. 20 Marks - 10
Unstated and unrecorded cost is also called ………………. Cost.
Question No. 21 Marks - 10
Combination of budgeted profit and loss account, cash flow statement and balance sheet, created from detailed budgets brought together within a finance plan is ………………. Budget.
Question No. 22 Marks - 10
Investment projects that are competing for scarce resources, where choosing one eliminates another.
- Mutually Inclusive
- Mutually Exclusive
Question No. 23 Marks - 10
FIFO stands for First in ………… out.
Question No. 24 Marks - 10
One which is not capable of being regulated by a manager within a defined boundary of responsibility, although it may be a cost incurred so that the responsibility may be exercised.
Question No. 25 Marks - 10
The cost difference expected if one course of action is adopted instead of others is called ……. Cost.
Question No. 26 Marks - 10
In the month of January, 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 hours of active working. What was the standard cost per labour hour?
Question No. 27 Marks - 10
An activity, output, or item whose cost is to be measured.
- Cost Budgeting
- Cost Audit
- Cost Suspension
- Cost Object
Question No. 28 Marks - 10
It is a fixed cost which results from decisions of prior period andis not subject to managerial control in the present.
Question No. 29 Marks - 10
A liability that is expected to be repaid within a short period of time say 9 or 12 months.
- Capital Liability
- Net Liability
- Current Liability
- Fixed Liability
Question No. 30 Marks - 10
The way of describing and analysing the sequence of activities that bring on product/service from initial stage of production to final stage of delivery.
- Task determination
- Value Chain
Question No. 31 Marks - 10
………….. Cost is associated with an activity that would not be incurred if the activity were not performed.
Question No. 32 Marks - 10
…………… activity is performed each time a product is produced.
Question No. 33 Marks - 10
It is the indirect cost pertaining to the administrative function which involves formulation of policies, directing the organisation and controlling the operations of an undertaking is …………. Cost.
Question No. 34 Marks - 10
The sales of a business or other form of revenue from operations of the business.
Question No. 35 Marks - 10
Any materials that have no value.
Question No. 36 Marks - 10
An agenda, layout, blue print or a plan setting out the actions and resources needed to achieve a stated objective of the long-term plan.
Question No. 37 Marks - 10
It is the total cost of any product or process. For e.g.: in a costsheet, both absolute cost and cost per unit are depicted.
Question No. 38 Marks - 10
A fixed cost which increases in steps over a period of several years.
- Absorption Cost
- Step Cost
Question No. 39 Marks - 10
The amount of work achievable, at standard efficiency levels, in one hour.
- Standard Hour
- Non-Standard Hour
- Fixed Hour
- Incremental Hour
Question No. 40 Marks - 10
Those future costs which will be affected by a decision to be taken are ………….. Costs.