Objective Questions
I.
MULTIPLE CHOICE QUESTIONS
Chapter – 1 : Introduction to Cost Accounting
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
Cost accounting is an important system developed for
i) shareholders
ii)
government
iii) management
iv)
financial institutions
The resources that have been used for attaining a particular objective is
i) revenue
ii)
cost
iii) profit
iv)
investment
Cost accounting is a reporting system
i) internal
ii)
external
iii) government
iv)
financial
The costing which determines cost after it has been actually incurred is
i) historical
ii)
standard
iii) estimated
iv)
marginal
A cost centre is a
i) location for which cost is incurred
ii)
an organisation
iii) a unit of cost
iv)
profit centre
A segment of a business entity to which both revenue & costs are assigned is a
i) cost centre
ii)
revenue centre
iii) profit centre
iv)
production centre
A cost centre which is engaged in production activity is called
i) production cost centre
ii)
process cost centre
iii) impersonal cost centre
iv)
production unit
One of the following is not a costing system
i) marginal costing
ii)
uniform costing
iii) absorption costing
iv)
process costing
Cost ascertainment involves
i) ascertainment of cost
ii)
control of cost
iii) estimation of cost
iv)
fixation of price
Product cost means
i) Variable cost
ii)
Fixed cost
iii) Prime cost
iv)
Indirect cost
Notional cost is also known as
i) Imputed cost
ii)
Opportunity cost
iii) Out of pocket cost
iv)
Variable cost
Cost which can be identified with the output is called as
i) Product cost
ii)
Direct cost
iii) Fixed cost
iv)
Variable cost
Cost of designing is
i) Production cost
ii)
Indirect cost
iii) Direct material
iv)
Direct charges
Interest on capital is
i) Imputed cost
ii)
Sunk cost
iii) Direct cost
iv)
Indirect cost
Payment to other parties is called as
i) Out of pocket cost
ii)
Book cost
iii) Future cost
iv)
Postponable cost
Cost which is relevant for decision-making is
i) Relevant cost
ii)
Past cost
iii) Opportunity cost
iv)
Imputed cost
1
2
Cost Accounting (T.Y.B.Com.-Sem.-V)
17. Overheads which are incurred in connection with factory are
i) Factory overheads
ii)
Office overheads
iii) Selling overheads
iv)
Prime cost
18. Cost which does not require current cash payment is
i) Book cost
ii)
Product cost
iii) Cash cost
iv)
Opportunity cost
19. The cost which remains constant irrespective of output upto capacity limit is
i) Fixed cost
ii)
Product cost
iii) Variable cost
iv)
Sunk cost
20. Variable cost is also known as
i) Product cost
ii)
Period cost
iii) Indirect cost
iv)
Semi fixed cost
21. The cost which is directly chargeable to the product is
i) Indirect cost
ii)
Direct cost
iii) Overheads
iv)
Period cost
22. Primary packing is a
i) Direct Materials
ii)
Indirect material
iii) Overheads
iv)
Selling cost
23. Cost of Grease & oil is a
i) Direct cost
ii)
Indirect material
iii) Packing cost
iv)
Indirect labour
24. Cost of designing the product is
i) Chargeable expenses
iii)
Sunk cost
ii) Indirect cost
iv)
Fixed cost
25. Cost determined in advance on the basis of scientific analysis of circumstances is
i) Estimated cost
ii)
Standard cost
iii) Pre–determined cost
iv)
Past cost
26. Conversion cost includes
i) Direct labour
iii) Selling overheads
ii) Direct labour & factory overheads
iv) Administrative overheads
27. The cost which does not involve any cash outlay is
i) Sunk cost
ii)
Relevant cost
iii) Imputed cost
iv)
Book cost
28. Raw material directly identifiable with the product is
i) Direct materials
ii)
Indirect materials
iii) Process materials
iv)
Production materials
29. Cost which can be identified easily is called as :
i) Indirect cost
ii)
Direct cost
iii) variable cost
iv)
fixed cost
30. Wages paid to the workers in machinery department in an engineering industry is
called as :
i) Indirect labour
ii)
Direct labour
iii) Actual labour
iv)
production labour
31. Cost of designing and layout is an example of :
i) Direct expenses
ii)
Direct materials
iii) Indirect cost
iv)
Production Cost
32. Royalty paid on use of patents is called as :
i) Direct expenses
ii)
Indirect expenses
iii) Production expenses
iv)
Distribution expenses
33. Variable cost per unit remains ______.
i) constant
ii)
flexible
iii) (i) & (ii)
iv)
none of the above
Objective Questions
3
34. The cost which relates to the inputs like materials, labour and expenses directly
connected with the product is known as :
i) Engineered cost
ii)
Relevant cost
iii) Product cost
iv)
Urgent cost
35. Cost which is related to capacity is called :
i) Fixed cost
ii)
Capacity cost
iii) Plant cost
iv)
none of the above
36. Cost which is unaffected by the change in output is called as :
i) Fixed cost
ii)
Variable cost
iii) Period cost
iv)
None of the above
Chapter – 2 : Material Cost
1.
The most important element of cost is
i) material
ii) labour
iii) overheads
2. The function of Purchase Department is
i) purchase of materials
ii) sale of scrap
iii) production of goods
3. Purchase order is a
i) request to the supplier to supply materials
ii) request to the supplier to verify the stock
iii) acknowledgement of goods
4. Goods received note is normally prepared in
i) six copies
ii) five copies
iii) four copies
5. Stock levels are fixed to
i) control inventory
ii) purchase material
iii) control cost of scrap
6. Maximum level indicates
i) maximum inventory to be kept
ii) minimum inventory to be kept
iii) average inventory to be kept
7. EOQ is
i) economical size of order
ii) economical size of production
iii) economical size of production
8. EOQ is also known as
i) economic size of order
ii) economic order to be placed
iii) maximum level of stock to be fixed
9. Minimum inventory level is
i) minimum stock to be maintained
ii) maximum stock to be maintained
iii) average stock to be maintained
10. Material control encompasses :
i) Purchasing
ii)
iii) Issue
iv)
Storing
All of the above
4
Cost Accounting (T.Y.B.Com.-Sem.-V)
11. The essentials of sound material control procedure include :
i) Coordination
ii)
Internal check
iii) Reporting
iv)
All of the above
12. The objective of material control is :
i) Adequacy of inventory
ii)
Use of space
iii) Effective storage
iv)
All of the above
13. Scientific purchasing begins with :
i) Indenting for materials
ii)
Ordering
iii) Inspection
iv)
Selection of the supplier
14. Purchase order is prepared generally in :
i) 4 copies
ii)
5 copies
iii) 7 copies
iv)
2 copies
15. The function of Receiving Department is to :
i) Open the packages
ii)
Check the quantity received
iii) Prepare goods received note
iv)
All of the above
16. Material requisition is signed :
i) production department
ii)
purchase department
iii) foreman
iv)
accountant
17. Bill of material is signed by :
i) Production planning department
ii)
Purchase department
iii) Stores department
iv)
All of the above
18. Material inspection note is signed by the :
i) Inspector
ii)
Storeskeeper
iii) Cost accountant
iv)
All of the above
19. Goods received note is prepared by :
i) purchase department
ii)
stores department
iii) sales department
iv)
finance department
20. Material transfer note is prepared when :
i) Material is transferred from one department to another department
ii) Material is returned by the department to stores
iii) Material is returned to the supplier
iv) All of the above
21. Bin card shows :
i) Receipt of stores
ii)
Issue of stores
iii) Closing Balance of stores
iv)
All of the above
22. EOQ is :
i) Most economical size of order
ii)
Most minimum size of order
iii) Quantity to be order
iv)
All of the above
23. EOQ is decided on the basis of :
i) Carrying cost of inventory
ii)
Ordering cost of Inventory
iii) Cost of purchases
iv)
both (i) & (ii)
24. Order should be placed with the supplier when the inventory touches :
i) maximum level
ii)
Re–order level
iii) minimum level
iv)
Danger level
25. Minimum Inventory level shows :
i) Maximum inventory
ii)
Minimum inventory
iii) Both (i) & (ii)
iv)
None of the above
26. Maximum inventory locks up :
i) More working capital
ii)
Less working capital
iii) Average working capital
iv)
None of the above
Objective Questions
5
27. Average inventory is :
i) Opening inventory
ii)
Closing inventory
iii) Opening inventory + closing inventory iv)
None of the above
28. Minimum inventory is to ensure :
i) minimum working capital
ii)
Safety of production process
iii) maximum profitability
iv)
None of the above
29. ABC analysis is a technique developed for :
i) Inventory management
ii)
Inventory control
iii) WIP control
iv)
Finished stock control
30. EOQ is the _____ size of the order at that point ordering and carrying costs are
minimised.
i) Optimum
ii)
Maximum
iii) Minimum
iv)
None of the above
31. In ABC analysis ‘C’ class items require :
i) Loose control
ii)
Tight control
iii) Moderate control
iv)
None of the above
32. In ABC analysis ‘A’ class items require :
i) Loose control
ii)
Tight control
iii) Moderate control
iv)
None of the above
33. The objective of inventory management is to :
i) Optimise investment in current assets
ii) Optimise investment in inventory
iii) Reduce inventory levels
iv) None of the above
34. Average annual consumption of material is 20,000 kgs at a price of ` 2 per kg. The
holding cost is 16% and ordering cost is ` 50. How much should be EOQ?
i) 2500 kgs
ii)
3000 kgs
iii) 2000 kgs
iv)
1000 kgs
Chapter – 3 : Material Cost : Documentatiom
1.
2.
3.
4.
5.
Purchase requisition is
i) an order for supply of materials.
ii) a requirement of material.
iii) a request to return the material.
Purchase order is
i) sent by the purchase officer to supplier.
ii) a request to return the material.
iii) a request to inspect the material.
Material Inspection Note is
i) prepared and forwarded to the Stores Department.
ii) signed by the store keeper.
iii) signed by the supplier.
Bin Card is
i) a inspection note.
ii) a continous record of stock stored.
iii) a statement of delivery of materials.
A store ledger is
i) an evidence of delivery of materials.
ii) a ledger of the supplier.
iii) a ledger which shows movement of each item of materials.
6
Cost Accounting (T.Y.B.Com.-Sem.-V)
6.
Bill of materials
i) is an invoice sent by the supplier.
ii) helps to calculate the cost of materials of a job.
iii) is an inpection record of materials.
7. Material control includes
i) inventory control.
ii) control over labour.
iii) control over overheads.
8. Under periodic inventory control
i) stock is verified at the end of a certain period.
ii) stock is verified continuously.
iii) stock is verified everyday.
9. Under perpetual inventory control
i) stock is verified continuously.
ii) stock is verified periodically.
iii) stock is verified at the end of every quarter.
10. ABC Analysis is
i) analysis of A, B and C type of material.
ii) a technique of selective control.
iii) a technique under which control is always best.
Chapter – 4 : Inventory Accounting
1.
2.
3.
4.
5.
6.
7.
8.
Issue of materials during a period of time is priced at the latest purchase cost under
i) FIFO
iii)
Simple Average
ii) LIFO
iv)
Weighted Average
Stores Department maintains a record in which a separate folio is maintained for
each item
i) Stores Ledger
iii)
Stock Register
ii) Bin Card
iv)
Bill of Materials
In times of rising prices, the pricing of issues will be at a more recent current market
prices in
i) FIFO
iii)
LIFO
ii) Weighted Average
iv)
Simple Average
The inventory is valued at the most recent market prices and it is near to the
valuation based on replacement cost in
i) FIFO
iii)
Weighted Average
ii) LIFO
iv)
Base Stock Method
According to the method of pricing, issues are close to current economic values
i) LIFO
iii)
Highest In First Out Price
ii) FIFO
iv)
Weighted Average Price
In the method of pricing, cost lag behind the current economic values
i) LIFO
iii)
Replacement Price
ii) FIFO
iv)
Weighted Average Price
When prices fluctuate widely, the method that will smooth out the effect of
fluctuations is
i) Simple Average
iii)
FIFO
ii) Weighted Average
iv)
LIFO
In the method, the charge to production is not at actual cost
i) Weighted Average
iii)
Replacement Price
ii) Standard Price
iv)
All of these
Objective Questions
9.
10.
11.
12.
13.
14.
15.
Issue of material during the period is priced at the latest purchase cost under :
i) FIFO
ii)
LIFO
iii) Average
iv)
None of the above
Issue of material under _____ method is from oldest lots.
i) FIFO
ii)
LIFO
iii) Average
iv)
None of the above
During the period of rising prices, pricing of the issue will be at more recent price
under :
i) LIFO
ii)
FIFO
iii) Average
iv)
None of the above
The inventory is valued at more recent price under :
i) LIFO
ii)
FIFO
iii) Average
iv)
None of the above
Trade discount :
i) Increases cost of material
ii)
Decreases cost of material
iii) Does not affect cost of material
iv)
None of the above
FIFO method is :
i) Logical
ii)
Illogical
iii) Recognised by AS2
iv)
both a & c
Under perpetual Inventory system stock is ascertained :
i) Periodically
ii)
Continuously
iii) At the end of the year
iv)
None of the above
Chapter – 5 : Labour Costing
1.
2.
3.
4.
5.
6.
7.
7
Time recording becomes necessary
i) where the overhead recovery rates are based on labour hours.
ii) where the recovery rates are based on machine hours.
iii) where the recovery rates are based on unit of production.
Dial Time Recorder has
i) about 160 holes.
ii) about 200 holes.
iii) about 360 holes.
Clock Card is placed at
i) the entrance of the office.
ii) the entrance of the factory.
iii) the entrance of the stores.
Time Booking is essential for
i) record purpose.
ii) costing purpose.
iii) controlling purpose.
Idle Time Card shows
i) time allowed.
ii) effective use of time.
iii) idle time.
Piece workers are paid wages on
i) piece rate basis.
ii) time rate basis.
iii) time saved basis.
Casual workers are employed when
i) workers are absent.
ii) accident takes place.
iii) there machine breakdown
8
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Cost Accounting (T.Y.B.Com.-Sem.-V)
The objective of Time keeping is of :
i) Preparation of payroll
ii) Compliance with statutory requirments
iii) Fixation of wage rates
iv) All of the above
The objective of Time Booking is to :
i) Ascertain labour cost
ii)
Evaluate labour performance
iii) Control labour
iv)
(i) & (ii)
The methods of Time Booking include :
i) Daily Time sheet
ii)
Attendance Register
iii) Time clock
iv)
none of the above
The card which shows time spent by a worker on every order or job is :
i) Job card
ii)
Job Ticker
iii) Salary slip
iv)
Both (i) & (ii)
The card which records idle time is :
i) Idle Time Card
ii)
Job card
iii) Job sheet
iv)
I card
The workers who are entitled to wages on the basis of their output are called as :
i) Piece workers
ii)
Out workers
iii) Casual workers
iv)
Badli workers
Casual workers work in place of :
i) Absentees
ii)
Retrenched workers
iii) Sincere workers
iv)
None of the above
The workers who work outside the factory premises are called as :
i) Outworkers
ii)
Job workers
iii) Casual workers
iv)
None of the above
Payroll accounting is concerned with :
i) Computation of wages
ii)
Appointment of workers
iii) Termination of workers
iv)
All of the above
Payroll shows :
i) Gross wages
ii)
Deductions
iii) Net wages
iv)
All of the above
Deductions allowed as per payment of wages Act include :
i) House rent
ii)
Income tax
iii) P.F. Deductions
iv)
All of the above
Wages sheet shows :
i) Gross wages
ii)
Deductions
iii) Net wages
iv)
All of the above
Payslip is prepared for :
i) Individual worker
ii)
All the workers
iii) Departmental workers
iv)
Temporary workers
Chapter – 6 : Labour Turnover
1.
2.
Labour turnover is
i) Turnover of goods
iii) Stock Turnover
Labour Turnover is caused by
i) Low wages
iii) Unscientific selection
ii)
iv)
Turnover of labour
Debtor's Turnover
ii)
iv)
Bad working conditions
All of the above
Objective Questions
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
9
Labour Turnover is calculated by
i) Separation method
ii)
Replacement method
iii) Flux method
iv)
All of the above
In a firm, there were 750 employees on 1st April. During the month 120 employees
were left and 250 employees were appointed. No. of the employees on 30th April were
i) 1,000
ii)
880
iii) 550
iv)
630
Labour Turnover leads to :
i) High cost
ii)
Low cost
iii) Low productivity
iv)
(i) & (iii)
Cost of labour turnover may be :
i) Preventive cost
ii)
Replacement cost
iii) Both (i) & (ii)
iv)
none of the above
Medical services cost is :
i) Replacement cost
ii)
Preventive cost
iii) Both (i) & (ii)
iv)
none of the above
Cost of welfare services is a :
i) Preventive cost
ii)
Replacement cost
iii) Both (i) & (ii)
iv)
none of the above
Pension scheme can :
i) Increase labour turnover
ii)
Decrease labour turnover
iii) Maintain labour turnover
iv)
All of the above
Replacement cost is associated with :
i) Replacement of labour
ii)
Appointment of labour
iii) Termination of labour
iv)
All of the above
Cost of accident is :
i) Replacement cost
ii)
Preventive cost
iii) Sunk cost
iv)
All of the above
Labour Turnover may be caused due to :
i) Low wages
ii)
Lack of proper HR Policies
iii) Lack of Training
iv)
All of the above
Unavoidable causes of labour Turnover may be :
i) Death
ii)
Retirement
iii) Marriages
iv)
All of the above
Labour Turnover can be reduced by :
i) Exit interview
ii)
Better facilities
iii) Better pay
iv)
All of the above
Chapter – 7 : Remuneration Systems
1.
2.
3.
4.
The method of remuneration to give stability of labour cost of the employers is
i) straight piece work
ii)
premium bonus
iii) measured day work
The following is the most relevant use of the clock card
i) to measure employee efficiency
ii) to facilitate payment for the time spent on the work premises
iii) to calculate bonus payment
Under Halsey Premium Plan, ____ % of time saved is shared by employer
i) 110
ii) 115
iii)
50
A worker has a time rate of ` 15 per hour. He makes 720 units of a component
(standard time 5 minutes per unit) in a week of 48 hours. His total wages including
Rowan Bonus for the week is
i) ` 792
ii) ` 820
iii)
` 840
iv)
` 864
10
Cost Accounting (T.Y.B.Com.-Sem.-V)
5.
The standard time required per unit of a product is 20 minutes. In a day of
8 working hours, a worker gives an output of 30 units. If he gets a time rate of ` 20
per hour, his total earnings under Halsey Plan was
i) ` 200
ii) ` 192
iii)
` 180
iv)
` 160
Out of the following which wage system is not treated as an Individual incentive wage
system?
i) Bedeaux plan
ii)
Taylor's different piece rate plan
iii) Merrick's multiple rate system
iv)
Co–partnership
Aasharam completes a work in 8 hours instead of 10 hours. Labour rate per hour is
` 5. What he will earn as per Rowan plan?
i) ` 40
ii) ` 48
iii) ` 50
iv)
` 45
"(Actual hours worked ` Rate per hour) + (Time saved ` 50% rate per hour)". Out of
the following in which system the amount of wages is calculated?
i) Halsey plan
ii) Rowan plan
iii) Piece Rate System
iv) Taylor's plan
The difference between hours paid and hours worked is called :
i) Idle time
ii) Standard time
iii) Normal time
iv) Time saved
The flux rate method of labour turnover considers :
i) Employees left
ii) Employees joined
iii) Employees joined & left
iv) Employees replaced
Overtime is paid to workers for extra time worked than _____ working hours
specified.
i) Extra
ii) Additional
iii) Normal
iv) Idle
A worker who does not work in the factory premises but works at his home is called
is :
i) outworker
ii) contract
iii) temporary
iv) casual
The method which does not differentiate between efficient and inefficient worker is :
i) Time rate method
ii) Piece rate method
iii) Halsey Plan
iv) None of the above
The method which differentiate between efficient and inefficient workers is :
i) Time rate
ii) Piece rate
iii) Rowan plan
iv) None of the above
The method acceptable to labour union is :
i) Time rate
ii) Piece rate
iii) Rowan plan
iv) Halsey plan
The method required to improve productivity is :
i) Time rate
ii) Piece rate
iii) Rowan plan
iv) Halsey plan
Under Taylor’s Differential Piece Rate Plan, the different rates fixed are :
i) 2
ii) 3
iii) 4
iv) 5
Under Taylor’s Differential Piece Rate plan efficient workers are paid :
i) 100% of normal rate
ii) 120% of normal rate
iii) 150% of normal rate
iv) None of the above
Taylor’s Differential piece rate plan penalises :
i) Efficient workers
ii) Inefficient workers
iii) Average workers
iv) None of the above
Efficiency of workers is measured on the basis of :
i) Time taken
ii) Standard time
iii) Time allowed
iv) None of the allowed
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Objective Questions
11
Chapter – 8 : Idle Time
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
Idle time is
i) Paid by the employer
ii)
Time wasted by the workers
iii) Not paid by the employer
iv)
All of the above
Idle time may be caused due to
i) Power failure
ii)
Machine breakdown
iii) Waiting for work
iv)
(i) & (ii)
Industrial cause of idle time is
i) Strike
ii)
Lockouts
iii) Population movement
iv)
All of the above
Wages in normal idle time should be charged to
i) Office overheads
ii)
Factory overheads
iii) Selling overheads
iv)
Distribution overheads
Overtime
i) Causes excess labour cost
ii)
Increases productivity
iii) Increases labour turnover
iv)
all of the above
Tea and lunch break is :
i) Normal Idle time
ii)
Abnormal Idle Time
iii) Overtime
iv)
none of the above
Time spent to overcome fatigue is :
i) Normal Idle Time
ii)
Abnormal Idle Time
iii) Overtime
iv)
none of the above
Machine setting time is :
i) Normal Idle Time
ii)
Abnormal Idle Time
iii) Overtime
iv)
none of the above
Travelling time from one job to another job is :
i) Normal Idle Time
ii)
Abnormal Idle Time
iii) Overtime
iv)
none of the above
Machine breakdown is :
i) Normal Idle Time
ii)
Abnormal Idle Time
iii) Overtime
iv)
All of the above
Waiting for tools is :
i) Abnormal Idle time
ii)
Normal Idle time
iii) Overtime
iv)
All of the above
Strikes and lockout is :
i) Normal Idle time
ii)
Abnormal Idle Time
iii) Overtime
iv)
none of the above
Power failure is :
i) Abnormal Idle Time
ii)
Normal Idle Time
iii) Overtime
iv)
None of the above
Overtime premium at Normal Rate is treated as :
i) Direct labour
ii)
Indirect labour
iii) Factory overheads
iv)
none of the above
Overtime premium paid due to negligence of a worker is charged to the concerned :
i) Worker
ii)
Department
iii) Overheads
iv)
All of the above
Overtime premium due to abnormal causes is charged to :
i) Financial P & L A/c
ii)
Costing P & L A/c
iii) Balance sheet
iv)
All of the above
12
Cost Accounting (T.Y.B.Com.-Sem.-V)
17. Overtime increases :
i) Depreciation of P & M
iii) Efficiency of the organisation
ii)
iv)
Productivity
None of the above
Chapter – 9 : Overheads
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Indirect costs cannot be identified with a particular cost centre are shared between
cost centre using
i) a method of apportionment
ii) a method of allocation
iii) a recovery rate
The method of apportionment suitable for allocating rent of building between cost
centres
i) number of employees
ii)
machine hours
iii) KWH
iv)
floor area
The allotment of whole items of cost to cost unit is called
i) cost allocation
ii)
cost apportionment
iii) cost classification
iv)
overhead absorption
Administrative overheads are recovered as a percentage of
i) direct materials
ii) prime cost
iii) works cost
Selling and distribution overheads are absorbed on the basis of
i) rate per unit
ii)
percentage on works cost
iii) percentage on selling price
iv)
any of these
Depreciation on machine is apportioned on the basis of
i) machine cost
ii)
machine hours
iii) labour hours
iv)
labour cost
Power is allocated on the basis of
i) H.P. of machines
ii)
cost of machines
iii) machine hours of machine
iv)
labour hours
Employee welfare expenses are allocated on the basis of
i) number of employees
ii)
labour hours
iii) machine hours
iv)
prime cost
Electricity charges are allocted on the basis of
i) number of light points
ii)
cost of machines
iii) labour hours
iv)
factory cost
Charging overheads to invidual unit is known as :
i) allocation
ii)
apportionment
iii) absorption
iv)
collection
Direct expenses are also known as :
i) Chargeable expenses
ii)
Prime cost
iii) Variable cost
iv)
Period cost
The process of arranging items into groups accoridng to their degree of similarity is
called :
i) Classification
ii)
Analysis
iii) Identification
iv)
Ascertainment
The cost directly attributable to a department is called as :
i) Allotment
ii)
Allocation
iii) Recovery
iv)
Charging
The process of re–distribution of overheads of support department to production
departmnet is called as :
i) Secondary distribution
ii)
primary distribution
iii) Repeat distribution
iv)
none of the above
Objective Questions
13
15. Total of indirect material, indirect labour and indirect expenses is called as :
i) indirect overheads
ii)
Overheads cost
iii) works overheads
iv)
Chargeable cost
16. The process of charging the traceable overheads to cost centres is called as :
i) Overheads allocation
ii)
Overheads charging
iii) Overheads allotment
iv)
None of the above
17. Research cost should be treated as :
i) Production overheads
ii)
Period cost
iii) Variable cost
iv)
None of the above
18. Storekeeping expenses are allocated on the basis :
i) No. of material requisitions
ii)
Area
iii) Direct labour hours
iv)
None of the above
19. Salary of works manager is a :
i) Office overheads
ii)
Factory overheads
iii) Selling overheads
iv)
All of the above
20. Insurance is a :
i) Fixed overheads
ii)
Variable overheads
iii) Semi–variable overheads
iv)
None of the above
21. Assigning code numbers to a group of overheads is called as :
i) Classification
ii)
Codification
iii) Analysis
iv)
None of the above
Chapter – 10 : Computation of Overhead Rates
1.
2.
3.
4.
5.
6.
7.
The process by which cost items are charged direct to a cost unit is called
i) absorption
ii)
apportionment
iii) allocation
iv)
allotment
A common absorption rate used through out the following for all jobs and units of
output irrespective of the department in which they were produced is called
i) machine hour rate
ii)
department absorption rate
iii) overall absorption rate
iv)
blanket absorption rate
When allocating service department costs to production departments, the method
that does not consider different cost behaviour pattern is the
i) step method
ii)
reciprocal method
iii) simple rate method
iv)
dual rate method
Machine hour rate is followed when
i) most of the work is done by machine
ii) most of the work is done by labour
iii) one operator uses several machines
Labour hour rate is followed when most of the work is done by
i) labour
ii) machines
iii) different groups of machines
When overheads recovered in costing are less than actual overheads incurred it is
called :
i) underabsorption
ii)
over absorption
iii) recovery
iv)
none of the above
When overheads recovered in costing are more than actual overheads incurred it is
called :
i) underabsorption
ii)
over absorption
iii) application
iv)
all of the above
14
8.
9.
10.
11.
12.
13.
14.
Cost Accounting (T.Y.B.Com.-Sem.-V)
Factory overheads are recovered as a :
i) % of Direct wages
ii)
% of cost of production
iii) % of sales
iv)
None of the above
Office overheads are recovered as a % of :
i) Direct materials
ii)
Direct wages
iii) Factory cost
iv)
None of the above
Labour hour rate is calculated by the equation :
Labour overheads
Overheads
i)
ii)
Labour hours
Labour hours
Direct Materials
iii)
iv)
None of the above
Direct Labour hours
Machine hour rate is calculated by the equation :
Overheads
Direct Materials
i)
ii)
Machine hours
Machine hours
Direct labour
iii)
iv)
None of the above
Machine hours
Insurance is apportioned on machines on the basis of :
i) Insured value of each machine
ii)
Invoice price of each machine
iii) Area
iv)
Cost of machine
Machine expenses are :
i) Depreciation on machine
ii)
Rent of premises
iii) Salary of supervisors
iv)
All of the above
Machine expenses are :
i) Depreciation of Building
ii)
Repairs & maintenance
iii) Power
iv)
both (ii) & (iii)
Chapter – 11 : Cost Classification
1.
2.
3.
4.
5.
6.
7.
8.
Notional cost is known as :
i) Imputed cost
ii)
Variable cost
iii) Opportunity cost
iv)
Out of pocket cost
Unavoidable cost is called as :
i) Urgent cost
ii)
Inexcable cost
iii) Implicit cost
iv)
Explicit cost
Interest on capital on :
i) Imputed cost
ii)
Sunk cost
iii) overheads cost
iv)
avoidable cost
Cost incurred in closing down a department is called as :
i) Abandonment cost
ii)
Sunk cost
iii) shutdown cost
iv)
urgent cost
The cost involve payment to other parties is called as :
i) out of pocket cost
ii)
book cost
iii) sunk cost
iv)
urgent cost
Cost which must be incurred to continue the operations is called :
i) urgent cost
ii)
opportunity cost
iii) Implicit cost
iv)
Traceable cost
Dock charges is a :
i) Direct cost
ii)
Indirect cost
iii) Urgent cost
iv)
Production cost
Drawing office salaries is a :
i) Factory overheads
ii)
Office overheads
iii) Selling overheads
iv)
Distribution overheads
Objective Questions
Prime cost is equal :
i) Direct cost
ii) Factory cost
10. Cost of rectification is a :
i) Factory overheads
iii) selling overheads
11. Stock of WIP is adjusted to :
i) Office overheads
iii) Selling overheads
12. In costing closing stock is valued at :
i) Cost of production
iii) Market price
15
9.
ii)
iv)
Direct cost + Factory overheads
Cost of production
ii)
iv)
office overheads
direct cost
ii)
iv)
Factory overheads
Direct materials
ii)
iv)
Factory cost
Realisable value
Chapter – 12 : Reconciliation of Cost and Financial Accounts
1.
Premium on issue of shares is
i) Shown in costing profit and loss A/c
iii)
Ignored
ii) Shown in financial profit and loss A/c iv)
None of the above
2. Notional rent is taken in
i) Cost A/c
ii)
Financial A/c
iii) Balance sheet
iv)
Ignored
3. Excess of overheads in costing as compared to profit and loss A/c is
i) Over absorption of overheads
iii)
Both (i) & (ii)
ii) Under absorption of overheads
iv)
None of the above
4. Interest on investment increases
i) Financial profit
ii)
Costing profit
iii) Assets
iv)
None of the above
5. Loss on sale of capital asset is
i) Added to financial profit
ii) Added to costing profit
iii) Ignored from cost A/c
iv) None of the above to get costing profit
6. Over valuation of closing stock in Cost Accounts
i) Increases costing profit
iii)
Decreases costing profit
ii) Increases financial profit
iv)
Decreases financial profit
7. Interest on Bank Deposits is
i) Credited in costing P & L A/c
iii)
Debited in costing P & L A/c
ii) Credited in financial P & L A/c
iv)
Debited in Financial P & L A/c
8. Dividend paid on share capital is
i) Debited to costing P & L A/c
iii)
Credited to costing P & L A/c
ii) Debited to financial P & L A/c
iv)
Credited to financial P & L A/c
9. Over absorption of overheads in costing
i) Decreases costing profit
iii)
Increases costing profit
ii) Increases financial profit
iv)
Both (i) & (ii)
10. Under valuation of opening stock in costing
i) Increases costing profit
iii)
Decreases costing profit
ii) Decreases financial profit
iv)
Both (i) & (ii)
11. Donations paid is
i) Debited to costing P & L A/c
iii)
Ignored in costing
ii) Debited to financial P & L A/c
iv)
(ii) & (iii)
16
Cost Accounting (T.Y.B.Com.-Sem.-V)
II. State with reasons whether following is True of False :
Chapter – 1 : Introduction to Cost Accounting
1. Financial accounts provide information for determination of income.
2. Financial accounting provides information for fixation of prices.
3. Cost information is useless for price fixation.
4. Cost accounting is an essential tool of management.
5. The function of cost accounting is cost control.
6. The objective of cost accounting is to facilitate cost estimation.
7. A cost centre may be a person.
8. ‘Per tonne’ is a cost unit in steel industry.
9. Financial accounting reveals inefficiencies of workers.
10. Direct cost cannot be allocated to the cost unit.
11. Indirect cost can be allocated to the cost unit.
12. Marginal cost is variable cost.
13. Overheads are direct cost.
14. Direct material is an indirect cost.
15. Conversion cost is equal to direct wages and factory overheads.
16. Interest on capital is an imputed cost.
17. Fixed cost changes according to the level of activity.
18. Lubricants are direct materials.
19. Packing charges are distribution cost.
20. Trial run cost is called as pre-production cost.
21. Replacement cost is the cost of replacing an asset.
22. Relevant cost helps the manager in taking a right decision.
23. Depreciation is a book cost.
24. Maintenance of building is a postponable cost.
25. Cost of a product is decided as per cost attach concept.
26. Interest on capital is a non-cost item.
27. Cost sheet shows total cost and cost per unit.
28. Prime cost includes factory overheads.
29. Cost of production includes selling overheads.
30. Carriage on material increases cost of materials.
31. Waste having realisable value is called as scrap.
32. Fixed cost remains constant irrespective of output.
33. Variable cost is also called as product cost.
Chapter – 2 : Material Costing
1.
2.
3.
4.
5.
6.
7.
8.
9.
Purchase order is an order to Stores Department to issue materials.
EOQ is that quantity which is most economical to order.
EOQ is also called as re-order quantity.
Investment in inventory should be optimised by maintaining low stock levels.
Direct materials is the materials which can be directly related to the cost centre.
The stock in hand may exceed the maximum stock level.
Stock levels are fixed up for inventory control.
In no case, material should go below minimum level.
The objective of scientific purchasing is to procure materials of good quality.
Objective Questions
17
10. Purchase requisition requests the supplier to supply materials.
11. Invitation to tender is signed by the Purchase Officer.
12. Purchase Order is a request to the supplier to send information about materials.
13. Delivery challan is an evidence of delivery of materials.
14. Material Inspection Note is forwarded to the Stores Department.
15. Bin Card gives information about position of each item.
16. Stores Ledger shows movement of materials showing quantity and value.
17. Material Abstract is the analysis of material issued against the material
requisitons.
18. Under Perpetual Inventory System, store balance is ascertained after every
receipt and issue of material.
Chapter – 3 : Material Cost – Documentation
1.
2.
3.
4.
5.
6.
7.
8.
9.
Purchase order is prepared by marketing manager.
Purchase order is prepared in 5 copies.
The function of Receiving Department is to open the packages.
Material Requisition is signed by foreman.
Bill of material is signed by Stores Department.
Material Inspection Note is signed by sales manager.
Goods Received Note is prepared by Finance Department.
BIN Card shows receipt, issue and balance record of materials.
Material Transfer Note shows Transfer of material from one Department to
another Department.
10. EOQ is most economical size of order.
11. Carrying cost is incurred to hold inventory in the stores.
12. Ordering cost is incurred to purchase materials.
13. Order should be placed with the supplier when Inventory touches maximum
level.
14. ABC analysis is Activity Based costing.
Chapter – 4 : Inventory Accounting
1.
2.
3.
4.
5.
6.
7.
FIFO Method of pricing of materials results in higher profits.
Valuation of closing stock is the same under FIFO and LIFO Method.
Bin Card is the same as stores ledger.
LIFO and Market Price Method are not same.
If a company wants to maximise net income, it would select FIFO Method.
LIFO Method of pricing issues is useful during the period of inflation.
Weighted Average Method of pricing issues involves adding different prices and
dividing by the number of such prices.
8. Under FIFO Method, materials purchased first are deemed to be issued last.
9. Under LIFO Method, materials purchased last are deemed to be issued first.
Chapter – 5 : Labour Costing
1.
2.
3.
4.
5.
6.
7.
The objective of Time Keeping is fixation of wages.
The objective of Time Booking is ascertainment of labour cost.
Attendance Register is a method of Time Booking.
Salary slip shows time spent by a worker on every job.
Job card records idle time.
Idle time is the time during which workers remain ideal.
Casual workers in place of Retrenched workers.
18
Cost Accounting (T.Y.B.Com.-Sem.-V)
8. The workers who work outside the factory premises are called outworkers.
9. Payroll Accounting is concerned with calculation of wages.
10. Payroll shows Gross wages.
11. Payslip is prepared for a group of workers.
12. Idle facility and idle time are the same.
13. Overtime premium is always treated as factory overheads.
14. Abnormal idle time wages is included in cost of production.
15. Idle time is the difference between time clocked and time booked.
Chapter – 6 : Labour Turnover
1.
2.
3.
4.
5.
6.
7.
Labour Turnover is the movement of people out of the organisation.
Labour Turnover is the accession of people during a certain period.
Lower rate of labour turnover indicates healthy sign of H.R. Department.
Cost of welfare services is a preventive cost of labour turn over.
Pension scheme can increase rate of labour turnover.
Labour Turnover may be caused due to low wages.
Labour Turnover can be reduced by Better Pay.
Chapter – 7 : Remuneration System
1.
2.
3.
4.
5.
6.
7.
Idle time is costly.
A worker who does not work in the factory premises is called as casual worker.
Taylor’s Differential piece rate plan does not punish the inefficient worker.
Time rate method is acceptable to labour union.
Piece Rate Plan improves productivity.
4 different rates are fixed under Taylor’s Differential Piece Rate Plan.
Efficiency of workers is measured on the basis of Time Taken for performance of
a job.
8. Difference between Std. time and time taken shows efficiency of the workers.
9. If actual time taken is less than standard time, it is called Time saved.
10. Piece Rate Plan differentiate between efficient and inefficient workers.
11. Time Rate Plan motivates the efficient workers.
12. Piece Rate Plan motivates the efficient workers.
13. In Halsey Plan Bonus is paid to the workers on the basis of Time saved.
Chapter – 8 : Idle Time
1.
2.
3.
4.
5.
6.
7.
8.
Tea & lunch break is normal idle time.
Machine setting time is abnormal idle time.
Machine Breakdown is Abnormal idle time.
Waiting for tools is normal idle time.
Strike and lock out time is abnormal idle time.
Overtime premium at normal rate is treated as direct labour.
Overtime premium due to abnormal causes is charged to Financial P & L A/c.
Overtime increases depreciation of Plant & Machinery.
Chapter – 9 : Overheads
1.
2.
3.
4.
5.
Cost of packing is production overheads.
Bad Debts is factory overheads.
Interest on capital is included in cost of production.
Depreciation should be excluded from cost accounts.
Scrap can be realised.
Objective Questions
19
6. Waste can be realised.
7. Power cost is allocated over the departments on the basis of H.P. of machines.
8. Overheads include indirect material indirect labour and indirect expenses.
9. Lighting charges are allocated on the basis of No. of light paints.
10. Employee welfare expenses are allocated on the basis of light points.
11. Rent is allocated on the basis of Area.
12. Insurance of Assets is allocated on the basis of Asset values.
13. Supervisor’s salary is allocated on the basis of time spent.
14. Cost of stores is allocated on the basis of Direct Materials.
15. Indirect wages are allocated on the basis of Direct wages.
Chapter – 10 : Computation of Overhead Rates
1. Underabsorption refers to charging less overheads in costing than financial
accounting.
2. Overabsorption refers to charging more overheads in costing than in financial
accounting.
3. Factory overheads are recorded as a % of cost.
4. Factory overheads are recoved as a % of Direct wages.
5. Office overheads are recovered as a % of Direct materials.
6. Machine hour rate is overheads ÷ Machine hours.
7. Machine expenses are repairs of building.
8. Overabsorption of overheads brings down costing profit.
9. Overabsorption of overheads increases costing profit.
10. In labour intensive industries machine hour rate is not suitable.
11. Overabsorption or underabsorption may be due to defective method of
absorption.
12. Rent is a standing charge.
13. Heating & lighting is a machine expense.
14. Power is a machine expense.
15. Obsolescene occurs due to technological advancement.
Chapter – 11 : Cost Classification
1. Interest on Capital is imputed cost.
2. Inexcable cost is avoidable cost.
3. Cost incurred in closing down a department is called as sunk cost.
4. Cost which must be incurred to continue the operations is called as urgent cost.
5. Direct material is included in prime cost.
6. Factory rent is included in administrative overheads.
7. Prime cost is Direct cost.
8. Prime cost is Indirect cost.
9. Factory cost includes Prime cost plus offfice overheads.
10. Cost of production includes factory cost plus office overheads.
11. Total cost includes cost of production plus selling overheads.
12. Inventory valuation is done at cost of production.
13. Inventory valuation is done at market value.
14. Cost of production includes prime cost plus selling overheads.
15. Sale of scrap is added to cost of materials.
16. Sale of scrap of material is deducted from factory overheads.
17. Carriage inward should be added to purchases.
18. Carriage outwards should be considered selling overheads.
20
Cost Accounting (T.Y.B.Com.-Sem.-V)
19. Cost of rectification of defectives is a part of factory overheads.
Chapter – 12 : Reconciliation of Cost and Financial Accounts
1.
2.
3.
4.
5.
6.
Underabsorption of overheads decreases costing profit.
Loss on sale of furniture is shown in financial accounting.
Interest received on Bank Deposit is purely financial in nature.
Transfer to General Reserve is an item of cost accounts.
Underabsorption of overheads increases costing profit.
Under integrated system of accounting both cost accounts and financial accounts
are maintained in the same set of books.
7. Under Non–integrated system of accounting, both cost accounts and financial
accounts are maintained separately.
8. Abnormal loss is considered in costing.
9. Profit on sale of investment is not considered in cost accounts.
10. Retrenchment compensation is considered in costing.
11. Fines and penalties reducing financial profit.
12. Notional cost decreases costing profit.
13. Dividend received increases financial profit.
14. Overvaluation of opening stock in costing decreases costing profit.
15. Overvaluation of opening stock in Financial Accounting reduces Financial profit.
16. Under valuation of closing stock in costing reduces costing profit.
17. Under valuation of closing stock in costing increases costing profit.
18. Difference in Depreciation in costing and financial accounting distinguishes
costing profit from financing profit.
III. Fill in the Blanks :
Chapter – 1 : Introduction to Cost Accounting
1. Cost Accounting system is developed for _________.
2. Cost Accounting is an _________ reporting system.
3. A location for which cost is incurred is a _________.
4. Product cost is _________ cost.
5. Cost which can be identified with the output is called as _________.
6. Interest on capital is _________ cost.
7. Overheads incurred in connection with factory is called _________ overheads.
8. The cost which remains constant irrespective of output is called _________ cost.
9. Direct labour and factory overheads is called _________ cost.
10. Cost of designing is _________ expenses.
11. Variable cost per unit remains _________.
12. Fixed cost per unit _________.
13. Cost relating to capacity is called _________ cost.
14. Cost which is unaffected by change in output is called as _________.
15. Cost _________ is broader in scope and comprises costing, cost accounting cost
control and cost audit.
16. _________ is that portion of cost which is consumed.
17. _________ is that part of cost which is consumed but did not result in Revenue.
18. Asset is an _________ _________.
19. Cost _________ is verification of cost accounts.
20. _________ have no access to cost records.
21. A tonne of coal is a cost _________.
Objective Questions
21
22. In case of paper the cost unit is _________.
23. In case of power the cost unit is _________.
24. In case of gas the cost unit is _________.
25. In case of interior decoration the cost unit is _________ _________.
26. The objective of _________ _________ is to maximise ROI.
27. Anything for which a separate measurement of cost is required is _________
_________.
28. The example of cost object as product is _________.
29. placement of an order is a cost object when it is _________.
30. Timber in furniture is a _________ raw material.
31. Milk and cream is a _________ raw material in ice cream.
32. Tin packing of ghee is a _________ packing material.
33. Carpenter in a furniture unit is a _________ labour.
34. Halwai in confectionary unit is a _________ labour.
35. Labour in pay roll depp. is an _________ labour.
36. Exciseduty based on output is _________ expenses.
37. Lubricating oil is a _________ overhead.
38. Cost of cloth in a shirt is _________ material.
39. Normal cost is treated as a _________.
40. _________ cost indicates what the cost should have been.
41. Relevant cost is _________ for decision making.
42. The cost incurred by past decision is _________ cost.
43. Fixed cost which continues to be incurred even when plant is temporarily
shutdown is called as _________ cost.
44. The cost which involves cash outlay is _________ _________ _________ cost.
45. The cost of next best alternative is _________ _________.
46. The cost which does not involve any cash outlay is _________ cost.
47. Increase or decrease in total cost due to charge in activity level is _________
_________.
48. Current purchase price of an identical asset is called as _________ _________.
49. The cost which cannot be avoided is called as _________ cost.
50. The cost which can be avoided by managerical decisions is called as _________
cost.
51. Loss on sale of fixed asset is _________ _________ item.
Chapter – 2 : Material Cost
1. The most important element of cost is _________.
2. Request to the supplier to supply material is an _________.
3. _________ _________ are fixed to control inventory.
4. _________ _________ indicates maximum stock to be maintained.
5. Economical size of order is called as _________.
6. _________ _________ _________ shows minimum stock to be maintained.
7. Scientific purchasing begins with _________.
8. Goods received note is prepared by _________ _________.
9. _________ _________ shows stock position at the bin.
10. _________ _________ _________ is decided on the basis of ordering cost and
carrying cost.
11. _________ _________ _________ locks of maximum working capital.
12. _________ analysis shows classification of inventory into three categories.
22
Cost Accounting (T.Y.B.Com.-Sem.-V)
13. _________ class items requires loose control.
14. _________ class items are costliest.
15. _________ class items requires more attention.
16. _________ class items require moderate control.
Chapter – 3 : Material Cost : Documentatiom
1. Purchase Requisition is a _________ of material.
2. _________ _________ shows stock position of Bin.
3. _________ _________ _________ shows movement of each item of material.
4. Material control includes control over _________.
5. Under _________ _________ _________ stock is verified at the end of a certain
period.
6. Under _________ _________ _________ stock is verified continuously.
7. _________ _________ _________ is a technique of selective control.
8. _________ _________ _________helpful for calculation of cost of material of a job.
Chapter – 4 : Inventory Accounting
1. Issue of material priced at latest purchase price under _________ method.
2. Under rising prices pricing of material issued at latest price under _________
method.
3. Fluctuation in prices are averaged out under _________ _________ method.
4. Inventory valuation is done at latest price under _________ method.
5. _________ method is recognised under AS 2.
6. _________ method is followed when lots of materials are not identifiable.
7. _________ _________ methods are followed when lots of materials are identifiable.
8. Inventary is valued at more recent prices under _________ method.
9. _________ _________ decrease cost of materials.
10. Taxes and duties _________ cost of material.
11. _________ method is logical.
12. Under _________ method cost of goods sold represents cost of earlier purchases.
13. Under _________ method cost of goods sold represents cost of recent purchases.
14. Under rising prices higher income is reported under _________ method.
15. Under rising prices lower income is reported under _________ method.
16. _________ method is advantageously used in process industries.
Chapter – 5 : Labour Costing
1.
2.
3.
4.
Dial Time recorder has _________ holes.
_________ card is placed at the entrance of the factory.
Time _________ is essential for costing purpose.
_________ _________ _________ shows effective use of time.
5. Piece workers are paid wages on _________ _________ basis.
6. Casual workers are appointed in place of _________.
7. Time _________ is necessary for pay roll.
8. Time _________ is done to ascertain labour cost.
9. _________ _________ sheet is the method of time booking.
10. The card which shows time spent by a worker is called _________ card.
11. Workers who work outside the factory premises are called as _________ works.
Objective Questions
23
12. _________ _________ accounting is conncerned with computation of wages.
13. _________ roll shows details of wages paid.
14. _________ sheet shows gross wages.
15. _________ _________ is prepared for individual worker.
16. _________ labour cannot be readily identified.
17. _________ _________ is a system of recording arrival and departure time of each
worker.
18. Muster roll is kept at the _________ of the factory.
19. _________ _________ facilitates the reconciliation of gate time with work time.
20. Usually _________ workers are paid daily basis.
21. _________ _________ is a periodic statement of wages.
22. Net wages are gross wages less _________.
23. Analysis of wages paid to each worker is called _________ abstract.
Chapter – 6 : Labour Turnover
1. _________ _________ is turnover of workers.
2. Law wages cause _________ _________.
3. Flux method is used to calculate _________.
4. Labour turnover leads to high _________.
5. Cost of labour turnover may be _________ or replacement.
6. Medical services cost is _________ cost.
7. Cost of welfare services is _________ cost.
8. pension scheme can _________ labour turnover.
9. Replacement cost is associated with _________ of labour.
10. Cost of accident is _________ cost.
11. Unavoidable cause of labour turnover may be _________ _________ _________ of
employee.
12. Exit interview can _________ labour turnover.
Chapter – 7 : Remuneration Systems
1. Under _________ _________ system wages are paid at a fixed rate.
2. Under _________ _________ system output of worker is not relevant.
3. Under _________ _________ system wages are guaranteed for time taken.
4. _________ _________ system reduces rough handling of machines.
5. _________ _________ system does not provide incentive to efficient workers.
6. _________ _________ system brings down output.
7. _________ _________ system is suitable when quality of work is more important.
8. Under piecerate system wages are paid at a _________ _________ per _________.
9. Under _________ _________ system time spent on job is not considered.
10. _________ _________ _________ system provides incentives to efficient workers.
11. _________ _________ system reduces tendency of workers to go slow.
12. _________ _________ system is suitable where task can be readily measured.
13. _________ _________ system is suitable when quality of work is important.
14. Under _________ _________ bonus is paid to the workers on the basis of time
saved.
15. Under _________ _________ bonus is paid to the workers in proportion to time
saved and time allowed.
16. Under _________ _________ _________ _________ plan two rates are fixed.
17. Under _________ _________ _________ _________ plan three piece rates are fixed.
24
Cost Accounting (T.Y.B.Com.-Sem.-V)
18. _________ _________ _________ _________ plan does not penalise the workers who
produces below standard output.
Chapter – 8 : Idle Time
1. _________ time is paid by the employer.
2. Idle time is caused by _________ _________.
3. Normal Idle Time wages are charged to _________ overheads.
4. _________ time causes excess labour cost.
5. Tea & Lunch break is _________ idle time.
6. Time spent to overcome fatigue is _________.
7. Machine setting time is _________ idle time.
8. Traveling time from one job to another job is _________ idle time.
9. Machine breakdown is _________ idle rate.
10. Working for tools is _________ idle time.
11. Power failure is _________ idle time.
12. Overtime premium increases _________ of plant & machinery.
Chapter – 9 : Overheads
1. Indirect cost is known as _________.
2. Cost incurred to secure orders is _________.
3. Material which cannot be charged directly _________.
4. Rent of building is _________ overheads.
5. Cost which can be controlled is _________ cost.
6. Cost of abnormal idle time is _________ overheads.
7. Depreciation on machinery is charged under _________ overheads.
8. Royalty on production is a _________charge.
9. Costing department expenses are considered as _________ overheads.
10. Stationery in production dept is _________ material.
11. Salary of office clerk is _________ labour.
12. Rent is _________ expense.
13. Overheads are classified on the basis of behaviour as _________ _________
_________.
14. Overheads are classified on the basis of function as _________ _________ _________.
15. Cost of catelogues is _________ _________.
16. Rent of premises is _________ overheads.
17. Telephone charges is _________ _________ overheads.
18. Actual benefit received by the department is _________ of apportionment of
overheads.
19. Compensation to workers is apportioned on the basis of _________.
20. Store keeping expenses are apportioned on the basis of _________ material.
Chapter – 10 : Computation of Overhead Rates
1.
2.
3.
4.
5.
6.
7.
8.
9.
The process of charging cost to a cost unit is _________.
Labour hour rate is followed in _________ intensive industry.
Machine hour rate is followed in _________ intensive industry.
Recovery of overheads in costing less than actual is _________ of overheads.
Recovery of overheads in costing more than actual is _________ of overheads.
Factory overheads are recovered as a % of _________ wages.
Office overheads are recovered as a % of _________ _________ cost.
Labour hour rate = _________.
Machine hour rate = _________.
Objective Questions
25
10. Depreciation of machine is _________ expense.
11. Repairs and maintenance is _________ expense.
12. Production overhead rate is suitable when output is _________.
13. % of direct material cost is suitable when material prices do not _________ much.
14. % of Direct wages is suitable when direct _________ is major factor of production.
15. Direct labour hour rate is suitable when labour is _________ factor of produciton.
16. Machine hour rate is suitable when machine is a _________ factor of production.
17. Rent is a _________ charge.
18. Insurance is a _________ charge.
19. Power is a _________ expense.
20. Lubricating oil is a _________ expense.
21. Machine hour rate takes into account _________ _________.
Chapter – 11 : Cost Classification
1. _________ cost is imputed cost.
2. Interest on capital is _________.
3. Drawing office salaries _________ overheads.
4. Prime cost is _________ cost.
5. Overheads are _________ cost.
6. Factory Cost is = Prime Cost + _________.
7. Cost of Production is = Factory Cost + _________.
8. Cost of Sales = Cost of Production + _________.
9. Sales = Total _________ + Profit.
10. In costing stock valuation is done at _________ of _________.
11. Cost of rectification is _________ overheads.
12. Stock of WIP is adjusted to _________ overheads.
13. Sale of scrap of material is deducted from cost of _________.
14. Sale of factory scrap is deducted from _________ overheads.
15. Profit on sale of asset is a _________ _________ item.
16. Prelim-Expenses written off is a _________ _________ item.
Chapter – 12 : Reconciliation of Cost and Financial Accounts
1. _________ facilitates internal control.
2. Dividend received is shown in _________ accounts only.
3. Overheads recovered in costing is more than actual it is called _________.
4. Less overheads recovered in costing is called _________.
5. Donations paid reduces _________ profit.
6. Interest on capital reduces _________ profit.
7. Underabsorption of overheads in costing increases _________ profit.
8. Premium on issue of shares is shown in _________ P & L A/c.
9. Notional Rent is taken in _________ P & L A/c.
10. Interest on investment increases _________ profit.
11. Over valuation of closing stock in costing increases _________ profit.
12. Under valuation of closing stock in costing decreases _________ profit.
13. Over absorption of overheads in costing decreases _________ profit.
14. Under absorption of overheads in costing increases _________ profit.
15. Dividend paid on shares is debited to _________ P & L A/c.
16. Donation paid is debited to _________ P & L A/c.
17. Under valuation of opening stock in finance increases _________ profit.
18. Overvaluation of opening stock in finance _________ costing profit.
26
Cost Accounting (T.Y.B.Com.-Sem.-V)
IV. Match the Followings :
Chapter – 1 : Introduction to Cost Accounting
1.
Column ‘A’
a)
Cost Accounting Includes
Column ‘B’
i)
Useful for Inside
b) Costing Information
ii) Cost Object
c)
iii) Per 100 bricks
T.V.
d) Bricks
iv) Per Hour
e)
v)
Computer Service
Costing, Cost Accounting
vi) Direct Labour
2.
Column ‘A’
a)
Wages of Carpenter
Column ‘B’
i)
Direct Labour
b) Wages of Tailor in Tailoring
ii) Indirect Labour
c)
iii) Indirect Labour
Wages of Workers in Time Keeping
d) Wages of Workers in Packing Dept.
iv) Primary Packing
e)
v)
Tin for Ghee
Direct Wages
vi) Secondary Packing
3.
Column ‘A’
a)
Cloth in Garments
Column ‘B’
i)
Basic Material
b) Paper in Books
ii) Primary Packing Material
c)
iii) Primary Packing Material
Bag for Cement
d) Plastic Packing for Milk
iv) Primary Packing Material
e)
v)
Bottle for Waste
Direct Labour
vi) Basic Material
4.
Column ‘A’
a)
Wages to stich a shirt
Column ‘B’
i)
Normal Cost
b) Cost which is normally incurred
ii) Charged to costing P & L
c)
iii) Pre-determined Cost
Abnormal Cost
d) Estimated Cost
iv) Past Cost
e)
v)
Sunk Cost
Imputed Cost
vi) Production Cost
Chapter – 2 : Material Cost
Column ‘A’
a)
Bin Card
Column ‘B’
i)
Request to Supply Material
b) Purchase Order
ii) Cheapest
c)
iii) Shows Maximum Stock
A Class Items
d) C Class Items
iv) Minimum Stock
Objective Questions
27
e)
Maximum Level
v)
f)
Minimum Level
vi) Stock Position at Bin
G) Average Level
h) Most Economical Order Size
vii)
Costliest
Opening Stock + Closing Stock
2
viii) EOQ
Chapter – 3 : Material Cost : Documentatiom
Column ‘A’
a)
Purchase Requisition
Column ‘B’
i)
Movement of Stock
b) Bin Card
ii) Stock Verification Periodically
c)
iii) Stock
Verification
Continously
Stores Ledger
d) Periodic Inventory
iv) Stock Taking
e)
v)
Perpetual Inventory
Done
Stock Position at Bin
vi) Requirement
Chapter – 4 : Inventory Accounting
Column ‘A’
a)
Issue of Material at Latest Price
Column ‘B’
i)
FIFO
b) Inventory at Latest Price
ii) FIFO /WA
c)
iii) Average Price Finding
Recognised by AS 2
d) W. A.
iv) Most Logical
e)
FIFO
v)
f)
LIFO
vi) LIFO
g)
WA
vii) When lots are not identifiable
h) FIFO
When lots are identifiable
viii) Higher income reported under
rising prices
ix) Perpetual Inventory
x)
Base Stock Method
Chapter – 5 : Labour Costing
Column ‘A’
a)
Dial Time, Recorder
Column ‘B’
i)
Effective Use of Time
b) Clock Card
ii) In Place of Absentees
c)
iii) For Pay Roll
Idle Time Card
d) Casual Workers
iv) Computation of Wages
e)
Time Keeping
v)
f)
Daily Time Sheet
vi) Reconciliation of Time
g)
Pay Roll Accounting
vii) Gross Wages Less Deduction
Individual Workers
h) Pay Slip
viii) Analysis of Wages Paid
i)
Muster Roll
ix) At the Gate of Factory
j)
Job Card
x)
k) Net Wages
Workers Working Outside
xi) Method of Time Book
28
Cost Accounting (T.Y.B.Com.-Sem.-V)
l)
Wage Abstract
xii) Paid at Piece Rate
m) Out Workers
xiii) At the entrance of factory
n) Piece Workers
xiv) 160 Holes
xv) Time Rate
xvi) Idle Time
Chapter – 6 : Labour Turnover
Column ‘A’
a)
Labour Turnover
Column ‘B’
i)
Cause Labour Turnover
b) Low Wages
ii) Preventive Cost / Replacement
Cost
c)
iii) Preventive Cost
Cost of Labour Turnover
d) Medical Services
iv) Replacement Cost
e)
Accident
v)
f)
Welfare Services
vi) Increase Labour Turnover
g)
Death
vii) Unavoidable Cause of Labour
Turnover
Reduce Labour Turnover
viii) Turnover of Workers
ix) Pension Scheme
Chapter – 7 : Remuneration Systems
Column ‘A’
a)
Time Rate Plan
Column ‘B’
i)
No Incentive to Efficiency
b) Time Rate Plan
ii) Develops Go Slow tendency
c)
iii) Provides Incentives to Efficiency
Time Rate Plan
d) Piece Rate Plan
iv) No guarantee of Wages
e)
Piece Rate Plan
v)
f)
Taylor’s Differential Piece Rate Plan
vi) Guaranteed Timer
g)
Halsey Plan
vii) Bonus for Time Saved
h) Rowan Plan
viii) Bonus Proportionated
i)
Merick Differencial Plan
ix) Three Rates Fixed
j)
120% of Ordinary Piece Rate
x)
k) 83% of Normal Piece Rate
Two Piece Rates
Merick’s Piece Rate
xi) Taylor’s Piece Rate Plan
xii) Emerson’s Plan
xiii) Equal Treatment
Chapter – 8 : Idle Time
Column ‘A’
a)
Idle Time
Column ‘B’
i)
Charged to Factory Over heads
b) Normal Idle Time Wages
ii) Causes Excess Labour Cost
c)
iii) Normal
Overtime
d) Tea & Lunch Break
iv) Normal
e)
v)
Machine Setting Time
Abnormal
Objective Questions
29
f)
Machine Break Down
vi) Abnormal
g)
Power Failure
vii) Depreciation
h) Overtime Premium
viii) Accident
ix) Overtime
x)
Lower Cost
xi) Paid by the Employer
Chapter – 9 : Overheads
1.
Column ‘A’
a)
Rent
Column ‘B’
i)
H.P. of Machines
b) Lighting
ii) Capital Value
c)
iii) Light Points
Power
d) Depreciation
iv) Floor Area
e)
v)
Advertising
Percentage of Sales
vi) Employees
2.
Column ‘A’
a)
Rent
Column ‘B’
i)
No. of light points
b) Lighting and Heating
ii) Time spent on machine
c)
iii) Cost of each machine
Supervision
d) Insurance
iv) Actual depreciation
e)
v)
Depreciation
Requisition Slip
vi) Floor area occupied by each
machine
3.
Column ‘A’
a)
Stationary
Column ‘B’
i)
Indirect Material
b) Office Salary
ii) Indirect Labour
c)
iii) Indirect Material
Rent
d) Cost of Catelogues
iv) Semi-Variable Overheads
e)
v)
Telephone Charges
On the Basis of Wages
F) Compensation to Workers
vi) Factory Cost
g)
vii) Fixed Cost
Repeated Distribution Method
viii) Method of Reapportionment of
Same Dept. cost
Chapter – 10 : Computation of Overhead Rates
Column ‘A’
a)
Absorption
Column ‘B’
i)
Labour Intensive Industry
b) Labour Hour Rate
ii) Machine Intensive Industry
c)
iii) Recovery of Less Overhead
Machine Hour Rate
d) Under Absorption of Overheads
iv) Recovery of More Overheads in
30
Cost Accounting (T.Y.B.Com.-Sem.-V)
Costing
e)
Overabsorption of Overheads
v)
Machine Expense Process of
f)
Depreciation of Machine
vi) Charging Overheads to Cost Unit
g)
Rent
vii) Standing Charge
viii) Machine Expenditure
ix) Insurance
Chapter – 11 : Cost Classification
1.
Column ‘A’
Column ‘B’
1. Interest on Loan
i)
Direct Cost
2. Prime Cost
ii)
Factory
Cost
Overheads
3. Cost of Production
iii) Prime
Cost
Overheads
4. Factory Cost
iv) Sales less Total Cost
5. Profit
v)
plus
plus
Office
Factory
Cost plus Profit
vi) Non-Cost Item
2.
Column ‘A’
a)
Overheads are
Column ‘B’
i)
Factory Overheads
b) Drawing Office Salaries
ii) At Cost of Production
c)
iii) Factory Overheads
Stock Valuation
d) Cost of Rectification
iv) Adjusted to Factory Overheads
e)
Stock of WIP
v)
f)
Sale of Scrap of Materials
vi) Non Cost Item
g)
Prelim. Exp. w/off
vii) Cash Cost
Deducted from Cost of Materials
h) Sales
viii) Indirect Cost
i)
ix) Total Cost + Profit
Direct Cost
x)
Direct material + Direct labour +
Direct Expenses
Chapter – 12 : Reconciliation of Cost and Financial Accounts
Column ‘A’
Column ‘B’
1. Reconciliation
i)
included in cost A/cs
2. Profit on sale of asset
ii)
credited to financial Profit and
Loss A/c
3. Interest on capital
iii) Debited to cost A/c
4. Notional expenses
iv) Debited to financial Profit and
Loss A/c
5. Dividend on share capital
v)
Credited to cost A/c
vi) Shown in financial A/cs
vii) under non-integral
accounting
system
of
Objective Questions
V. Short Answer Questions :
Chapter – 1 : Introduction to Cost Accounting
1. What is Cost?
2. What is a Unit of Cost?
3. What is Cost Centre?
4. What is Profit Centre?
5. What is Investment Centre?
6. What is Revenue Centre?
7. What is apportunity Cost?
8. What is out of Pocket Cost?
9. What is Committed Cost?
10. What is a Notional Cost?
11. What is Shutdown Cost?
Chapter – 2 : Material Cost
1. What is EOQ?
2. What is Ordering Cost?
3. What is holding Cost?
4. What is ABC Analysis?
5. What is Bin Card?
6. What is Material Requision?
7. What is Average Stock?
8. What is Maximum Level?
9. What is Re-order level?
Chapter – 3 : Material Cost : Documentatiom
1. What is Stores Ledger?
2. What is Bin Card?
3. What is Material Control?
4. What is Periodic Inventory Control?
5. What is perpetual Inventory Control?
6. What is ABC Analysis?
Chapter – 4 : Inventory Accounting
1. What is Stores Ledger?
2. What is FIFO Method?
3. What is LIFO Method?
4. Which Method reported is most logical for inventory valuation?
5. Why higher income is reported under rising prices in FIFO method?
6. Why lower income is reported under rising prices in LIFO method?
7. Which methods are recognised by AS 2 for inventory valuation?
8. Which method is suitable for inventory valuation?
9. Under which circumstance WA method is applicable.
31
32
Cost Accounting (T.Y.B.Com.-Sem.-V)
Chapter – 5 : Labour Costing
1. What is Dial Time Recorder?
2. What is Clock Card?
3. Why is Time Keeping necessary?
4. Why is Time Booking done?
5. Who is a casual worker?
6. Who is an Outworker?
7. Who is Piece Worker?
8. Why is Muster Roll Required?
9. Why job card required?
10. What is Pay Roll Accounting?
11. What is a Pay Slip?
12. What are the Contents of Pay Slip?
13. What is Wage Abstract?
14. What is Idle Time Card?
Chapter – 6 : Labour Turnover
1.
2.
3.
4.
5.
6.
7.
What
What
What
What
What
What
What
is
is
is
is
is
is
is
Labour Turnover?
flux method of labour turnover?
preventive cost of labour turnover?
replacement cost of labour turnover?
the cause of labour Turnover?
unavoidable cause of labour Turnover?
the effect of Labour Turnover?
Chapter – 7 : Remuneration Systems
1.
2.
3.
4.
5.
6.
7.
8.
9.
What is Time Rate Plan?
What is Piece Rate Plan?
What is Halsey’s Plan?
What is Rowan’s Plan?
What is Taylor’s Differential Piece Rate Plan?
What is Merickk’s Piece Rate Plan?
In what respect there is a difference between Halsey Plan and Rawan’s Plan?
What is the difference between Taylor’s plan and merickk’s piece rate plan?
Which plan of remuneration is favoured by trade union?
Chapter – 8 : Idle Time
1.
2.
3.
4.
5.
6.
What
What
What
What
What
What
is
is
is
is
is
is
Idle Time?
Normal Idle Time?
Abnormal Idle Time?
Overtime Premium?
the treatment for overtime premium?
the treatment for idle time?
Chapter – 9 : Overheads
1. What is Overheads?
2. What is Factory Overheads?
3. What is Factory Cost?
Objective Questions
4. What is Office Overheads?
5. What is Selling Overheads?
6. What is Fringe Benefits?
Chapter – 10 : Computation of Overhead Rates
1.
2.
3.
4.
5.
6.
7.
What
What
What
What
What
What
What
is
is
is
is
is
is
is
Recovery of Overheads?
Under Absorption of Overheads?
Over Absorption of Overheads?
Labour Hour Rate?
Machine Hour Rate?
Standing Charge?
Machine Expense?
Chapter – 11 : Cost Classification
1.
2.
3.
4.
5.
6.
7.
What
What
What
What
What
What
What
is
is
is
is
is
is
is
Direct Cost?
Direct Labour?
chargeable Expenses?
Prime Cost?
Factory Cost?
cost of production?
cost of sales?
Chapter – 12 : Reconciliation
1.
2.
3.
4.
5.
What is Non-inteprated system?
What is Cost Reconciliation?
Why costing profit differ from financial profit?
What is over absorption of overheads?
What is under absorption of overheads?
VI. Short Notes :
Chapter – 1 : Introduction to Cost Accounting
1.
2.
3.
4.
5.
6.
7.
8.
9.
Opportunity Cost
Relevant Cost
Direct Cost
Indirect Cost
Committed Cost
Shutdown Cost
Marginal Cost
Out of Pocket Cost
Cash Cost
Chapter – 2 : Material Cost
1.
2.
3.
4.
5.
Bin Card
Scientific Purchasing
Re-order Level
ABC Analysis
EOQ
33
34
Cost Accounting (T.Y.B.Com.-Sem.-V)
6.
7.
8.
9.
Minimum Stock Level
Maximum Stock Level
Goods Received Note
Material Inspection Note
Chapter – 3 : Material Cost : Documentatiom
1.
2.
3.
4.
5.
6.
Bin Card
Stores Ledger
Material Control
Periodic Inventory System
Perpetual Inventory System
Material Requisition
Chapter – 4 : Inventory Accounting
1.
2.
3.
4.
LIFO Method
FIFO Method
Weighted Average Method
Suitability of Stock Valuation Method
Chapter – 5 : Labour Costing
1.
2.
3.
4.
5.
6.
7.
8.
9.
Clock Card
Muster Roll Accounting
Pay Slip
Idle Time Sheet
Daily Time Sheet
Job Card
Casual Workers
Out Workers
Wage Abstract
Chapter – 6 : Labour Turnover
1.
2.
3.
4.
5.
Labour Turnover
Causes of Labour Turnover
Effect of Labour Turnover
Preventive Cost of Labour Turnover
Replacement Cost of Labour Turnover
Chapter – 7 : Remuneration Systems
1.
2.
3.
4.
5.
6.
Time rate Plan
Piece Rate Plan
Halsey Plan
Rowan Plan
Taylor’s Plan
Merickk’s Piece Rate Plan
Chapter – 8 : Idle Time
1. Idle Time
2. Normal Idle Time
Objective Questions
3.
4.
5.
6.
7.
8.
Abnormal Idle Time
Causes of Normal Idle Time
Causes of Abnormal Idle Time
Treatment of Cost of Normal Idle Time
Treatment of Cost of Abnormal Idle Time
Treatment of Overtime Premium
Chapter – 9 : Overheads
1.
2.
3.
4.
5.
Manufacturing Overheads
Selling Overheads
Office Overheads
Fixed Overheads
Fringe Benefits
Chapter – 10 : Computation of Overhead Rates
1. Overheads
2. Classification of Overheads
3. Factory Overheads
4. Office Overheads
5. Selling & Distribution Overheads
6. Machine hour Rate
7. Labour Hour Rate
8. Absorption of Overheads
9. Under absoption of Overheads
10. Over absorption of Overheads
Chapter – 11 : Cost Classification
1.
2.
3.
4.
5.
6.
Prime Cost
Direct Labour
Factory Cost
Cost of Production
Cost of Sales
Valuation of Stock
Chapter – 12 : Reconciliation of Cost and Financial Accounts
1.
2.
3.
4.
5.
6.
Cost Reconciliation
Overabsorption of Overheads
Under absorption of Overheads
Notional Cost
Impact of Overvaluation of closing stock on costing profit
Impact of under valuation of closing stock on costing profit.
35