Q#1: Which of the following is added in purchases in order to get the value of Net purchases?
(A) Purchases returns
(B) Carriage inward
(C) Trade discount
(D) Rebates
Answer: (B) Carriage inward
Q#2: A typical factory overhead cost is:
(A) Distribution
(B) Internal audit
(C) Compensation of plant manager
(D) Design
Answer: (C) Compensation of plant manager
Q#3: Costs that change in response to alternative courses of action are called:
(A) Relevant costs
(B) Differential costs
(C) Target costs
(D) Sunk costs
Answer: (B) Differential costs
Q#4: Which of the following best describes the manufacturing costs?
(A) Direct materials, direct labor and factory overhead
(B) Direct materials and direct labor only
(C) Direct materials, direct labor, factory overhead, and administrative overhead
(D) Direct labor and factory overhead
Answer: (A) Direct materials, direct labor and factory overhead
Q#5: If, COGS = Rs. 50,000 GP Margin = 25% of sales What will be the value of Sales?
(A) Rs. 200,000
(B) Rs. 66,667
(C) Rs. 62,500
(D) Rs. 400,000
Answer: (B) Rs. 66,667
Q#6: Which of the following is correct?
(A) Units sold = Opening finished goods units + Units produced – Closing finished goods units
(B) Units Sold = Units produced + Closing finished goods units – Opening finished goods units
(C) Units sold = Sales + Average units of finished goods inventory
(D) Units sold = Sales – Average units of finished goods inventory
Answer: (A) Units sold = Opening finished goods units + Units produced – Closing finished goods units
Q#7: When prices are rising over time, which inventory method results in lowest gross margin?
(A) FIFO
(B) LIFO
(C) Weighted Average
(D) Cannot be determined
Answer: (B) LIFO
Q#8: If inventory is not properly measured:
(A) Expenses and revenues cannot be properly matched
(B) Unfair position in Financial Statements
(C) Inventory items show under or over stocking
(D) All of the given options
Answer: (D) All of the given options
Q#9: Total salary (Basic 10,000 + 5×700 pieces)?
(A) Rs. 3,500
(B) Rs. 13,500
(C) Rs. 10,000
(D) Rs. 6,500
Answer: (B) Rs. 13,500
Q#10: The term cost allocation is described as:
(A) Identifiable with specific cost centers
(B) Not identifiable with specific cost centers
(C) Distribution of FOH among cost centers
(D) None of the given options
Answer: (A) Identifiable with specific cost centers
Q#11: Cost apportionment is referred to:
(A) Costs not identifiable with cost centers
(B) Distribution of FOH among cost centers but must be divided fairly
(C) Total FOH distribution
(D) None of the given options
Answer: (B) Distribution of FOH among cost centers but must be divided fairly
Q#12: FOH Under/Over applied (Nelson Company):
(A) Under applied by Rs.1,000
(B) Over applied by Rs.1,000
(C) Under applied by Rs.11,000
(D) Over applied by Rs.38,000
Answer: (A) Under applied by Rs.1,000
Q#13: Variable cost per unit (400 units = 10,000; 800 units = 12,000):
(A) Rs. 5.00
(B) Rs. 1.50
(C) Rs. 2.50
(D) Rs. 0.50
Answer: (C) Rs. 5.00 per unit
Q#14: Expected manufacturing loss:
(A) Operating loss
(B) Abnormal loss
(C) Normal loss
(D) Extraordinary loss
Answer: (C) Normal loss
Q#15: Perpetual inventory system at year end:
(A) No closing entry passed
(B) Closing entry passed
(C) Closing value through entry only
(D) None
Answer: (A) No closing entry passed
Q#16: FOH under/over applied (machine hours question):
(A) Over applied by Rs.4,058
(B) Under applied by Rs.2,152
(C) Under applied by Rs.4,058
(D) Over applied by Rs.2,152
Answer: (A) Over applied by Rs.4,058
Q#17: Components of total factory cost:
(A) Direct Material + Direct Labor
(B) Direct Labor + FOH
(C) Prime Cost only
(D) Prime Cost + FOH
Answer: (D) Prime Cost + FOH
Q#18: FIFO perpetual assumption:
(A) First to ending inventory
(B) Last to COGS
(C) Last to ending inventory
(D) First to COGS
Answer: (D) First to COGS
Q#19: NOT assumption of EOQ model:
(A) Annual demand known
(B) Ordering cost known
(C) Carrying cost known
(D) Quantity discounts available
Answer: (D) Quantity discounts available
Q#20: NOT reason of abnormal loss:
(A) Defective material used
(B) Machine breakdown
(C) Poor workmanship
(D) Natural disaster
Answer: (D) Natural disaster
Q#21: Cost behavior table:
(A) Decrease, Decrease
(B) Increase, Increase
(C) Constant, Increase
(D) Increase, Decrease
Answer: (B) Increase, Increase
Q#22: Units sold calculation:
(A) 300 units
(B) 767 units
(C) 467 units
(D) 667 units
Answer: (D) 667 units
Q#23: COGM question:
(A) Rs. 200,000
(B) Rs. 210,000
(C) Rs. 220,000
(D) Rs. 240,000
Answer: (B) Rs. 210,000