Sky Education

Cost Accounting
Multiple choice question’s
1. If actual cost is more than standard cost, Variance is
A) Favourable B) Adverse C) Nil D) All of these
2. Abnormal Loss Units are equal to
A) Output units C) Input units – Normal Loss Units
B) Input units –( Normal loss units &output units) D) Input units – Normal output
3 . Stores ledger contain separate account of
A) Each item of stores C) Issue of stores
B) Receipt of stores D) None of the above
4 . Marginal cost is
A) Method of Costing C) Similar to Absorption Costing
B) A technique of costing D) None of these
5 . Abnormal gain arises if
A) Output quantity is more than input quantity
B) Abnormal loss is avoided
C) There is reduction in normal loss
D) None of the above
6 . Sales is Rs.150,000, Fixed Cost Rs.40,000, Profit Rs.30,000, variable cost is ____
A) 80,000 B) 110,000 C) 25,000 D) 70,000
7 . The product which has lower sale value than main product is
A) Economic product
B) Consumer product
C) By product
D) Joint product
8 . Standard cost is decided for
A) Labor
B) Overheads
C) Materials
D) All the elements
9 . Contribution is equal to
A) Sales - variable cost
B) Fixed cost + profit
C) Sales * P/V ratio
D) All of these
10 . Retention money is equal to
A) Work certified - work uncertified
 B) Work certified - cash received by contractor
C) Contract price - work certified
D) All of the above
11 . Stores Ledge Control Account, accounts for
A) All overhead incurred in process
B) All purchases of materials for the store and all issue of materials
C) All wages incurred in process
D) None of these
12 . The objective of standard Costing is to control cost through
A) Estimated cost
B) Standard cost
C) Variance analysis
D) None of these
13. In Contacting Costing, loss of material by fire is debited to
A) Costing P&L account
B) Financial P&L account
C) Contract account
D) Contractee’s account
14 . At break even point the contribution is equal to
A) Variable cost
B) Administrative cost
C) Sales revenue
D) Fixed cost
15 . If the input is 8400 units normal loss 15% an output 7500 units Then of normal gain is
_________ units
A) 700
B) 300
C) 360
D) 400
16 . Process output is 25,000 units, normal loss 2,000 units, Abnormal gain 3,000 units.
Therefore input is ______ units
A) 20,000 B) 15,000 C) 30,000 D) 24,000
17 . The Standard Cost Card contains quantities and cost for
A) Direct material only
B) Direct labor only
C) Direct material and direct labor only
D) Direct material direct labor and overheads
18 . In contract costing payment of cash to the contractor is made on the basis of
A) Uncertified work
B) Work in progress
 C) Certified work
D) Retention money

19 . Actual output is 25,000 units normal loss is 3,000 units abnormal loss is 2000 units, the
input is
A) 20,000 units
B) 15,000 units
C) 30,000 units
D) 18,000 units
20 . W.I.P. Ledger balance shows
A) Cost of finished work
B) Cost of material
C) Cost of unfinished work
D) None of the above
21 . __________ Is a person for whom contract job is undertaken
A) Contractee
B) Contractor
C) Sub contractor
D) Job worker
22. If contract is 80% certified, profit to be transferred to Profit & Loss a/c. is
A) NIL
B) 1/3 x Notional Profit x Cash recd./work certified
C) 2/3 x Notional Profit x Cash recd./work certified
D) 80% x Notional Profit x Cash recd./work certified
23. A company has a sales of Rs. 400,000, P/V ratio is 20 % and fixed cost is Rs. 30,000 the
profit will be
A) 50,000
B) 40,000
C) 70,000
D) 80,000
24. Cost Ledger contains
A) Factory overhead control account
B) Stores ledger control account
C) Wages control account
D) All the above
25 . When a contract work is completed to the extent of 20% of the contract price profit to be
credited to P&L account is
A) NIL
 B) Full amount
C) 1/3 of profit
D) 2/3 of profit
26 . Break Even Point =
A) Fixed Cost + Profit
B) Sales x P/V ratio
C) Actual Sales – Variable cost
D) Fixed Cost / PV ratio
27. Cost of contract is determined by preparing
A) Cost sheet.
B) Profit and loss account.
C) Balance sheet.
D) Contract account
28 . Total cost incurred is Rs.69,920 Scrap value of normal loss Rs.1,520, input 1900
units, Normal loss is 190 units, abnormal loss is 30 units. Cost of Abnormal loss is
A) 1900
B) 1200
C) 1500
D) 2000
29. The standard hourly rate was Rs.4 the actual rate was Rs.3.50. The labour rate variance
analysis was Rs 24,000 favourable. The actual labour hours were
A) 48000
B) 49000
C) 46000
D) 52000
30 . Abnormal gain is equal to
A) Actual output - Normal output.
B) Actual output - input.
C) Normal output - actual output.
D) Input - actual output.
31 . The difference between standard quantity and actual quantity, multiplied by standard
price is.
A) Labor rate variance.
B) Material usage variance
C) Labor efficiency variance.
D) Material price variance
32 . Profit remaining as reserve in Contract A/c. is
A) Transferred to profit & loss A/C
B) Not taken into account in cost
C) Deducted from W. I. P
D) Debited to cost price of contract
33 . Material issued by Contractee to contractor is
A) Debited to Contract A/c.
B) Credited to Contract A/c.
C) Credited to Contractee A/c.
D) Not considered in Contract at all
34 . Plant transferred by Contract A to Contract B is
A) Debited to Contract A and credited to contract B at cost of plant
B) Debited to contract B and credited to Contract A at cost of plant
C) Debited to Contract A and credited to contract B at WDV of plant.
D) Debited to contract B and credited to Contract A at WDV of plant
35 . Profit is Rs. 400,000. Actual Sales is Rs.30,00,000, margin of safety is 20%. How much
is Break Even Sales?
A) 6,00,000
B) 15,00,000
C) 10,00,000
D) 5,20,000
36 . Normal output is equal to
A) Input - normal loss
B) Input - abnormal loss
C) Input - abnormal gain
D) None of these
37 . Work certified is below 25% of the contract price, the transfer to profit and loss will be
A) 1/3 x Notional profits x cash received /work certified
B) 2/3 of Notional profit x cash received / work certified
C) 100% of Notional profit
D) NIL
38 . Abnormal loss is valued at
A) Cost of output
B) Market value
C) Marginal cost
D) Standard cost
39 . Process costing is applicable to
A) Repair work.
B) Paper industry.
C) Transport company.
D) None of these
40 . The balance of work in process account is equal to
A) The total manufacturing cost Incurred during the period
B) The total cost of the jobs completed and sold
C) The total cost of the incomplete job
 D) The total cost of the job completed
41 . ABC is
A) Method of costing
B) Technique of costing
C) Method of allocation
D) All the above
42 . Subsidiary ledger is
A) Stores ledger
B) Work in progress ledger
C) Finished good ledger
D) All of above
43 . Work done but uncertified is to be value at
A) Contract price
B) Market price
C) Material price
D) Cost price
44 . Notional profit is
A) Difference Between value of work certified and cost of work certified.
B) Profit of contract.
C) Differences between cash received and work certified
D) Difference between retention money and cash received
45 . Normal loss is debited to
A) Process account
B) Abnormal gain A/c.
C) Abnormal loss A/c.
D) None of above
46 . At Break even point the contribution is equal to
A) Variable cost
B) Zero
C) Fixed cost
D) None of above
47 . Amount transferred to profit and loss account out of notional profit when contract is 50%
to 90% complete
A) 2/3 x notional profit x cash received /work certified
B) 2/3 x notional profit x work certified /cash received
C) 2/3 x notional profit x cash received / retention money
D) 2/3 x notional profit x work certified /retention money
48 . When selling price decrease, then break even point
A) Increases
B) Decrease
 C) No effect
D) Can’t say
49 . Sales is Rs. 100,000, fixed cost Rs. 28,000,variable cost is Rs.60,000. BEP sales is
A) 50,000
B) 70,000
C) 100,000
D) 120,000
50 . Margin of safety is
A) Sales - contribution
B) Actual sales - Break even sales
C) Fixed cost + variable cost
D) Sales - variable cost

ANSWER KEYS
1 –B 26 - D
2 –B 27 – D
3 –A 28 - B
4 –B 29 - A
5 –C 30 -A
6 –A 31 - B
7 –C 32 -C
8 –D 33 - D
9 –D 34 - D
10 –B 35 -C
11 –B 36 -A
12 –C 37 -A
13 –A 38 -A
14 –D 39 -B
15 –C 40 -C
16 –D 41 -C
17 –D 42 -D
18 –C 43 -D
19 –C 44 -A
20 –C 45 -D
21 –A 46 -C
22 –C 47-A
23 –A 48 -A
24 –D 49 -B
25 –A 50 -B