Cost Accounting Objective (MCQ)

23 EP–CMA–December 2019
COST AND MANAGEMENT ACCOUNTING - SELECT SERIES

Time allowed : 3 hours Maximum marks : 100
Total number of Questions : 100
1. Fixed cost is a cost ................... .
(A) Which changes in total in proportion to changes in output
(B) Which varies directly with the output
(C) Which does not change in total during a given period despite changes in the
quantity of output
(D) Which remains same for each unit of output
2. Which of the following is not directly considered as a function of management

accounting ?
(A) Financial planning
(B) Decision making
(C) Reporting
(D) Cost computation
3. Imputed cost is a ..................... .
(A) notional cost
(B) real cost
(C) normal cost
(D) variable cost
4. ........................... represent the resources that have been sacrificed to attain

a particular objective.
(A) Expenses
(B) Costs
(C) Assets
(D) Liabilities
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EP–CMA–December 2019 24
5. ........................ are difficult to trace to a single product or it is uneconomical to
do so. They are common to several product.
(A) Period costs
(B) Indirect costs
(C) Sunk costs
(D) Step costs
6. Management accounting is :
(a) Subjective
(b) Objective
(A) Only (a)
(B) Only (b)
(C) Both (a) and (b)
(D) None of the above
7. Material consumed is `5,00,000, Opening stock of raw material is `50,000 and
Closing stock of raw material is `25,000. What is the cost of raw material
purchased ?
(A) `4,50,000
(B) `4,75,000
(C) `5,25,000
(D) `5,50,000
8. Scrap is .................... .
(A) residue of material
(B) abnormal gain of material
(C) surplus material
(D) abnormal loss of material
9. Stores ledger is a ................. .
(A) Quantitative as well as value wise record of material received, issued and
its balance
(B) Quantitative wise record of material received, issued and balance
(C) Value wise record of material received, issued and balance
(D) Record of qualitative and quantitative information about materials purchased,
issued and balance available
10. Which of the following items can be classified as “C” category as per ABC
analysis of inventory control ?
Items Unit usage Value per unit (`)
1 20,000 60.75
2 10,000 80.95
3 32,000 19.20
4 38,000 17.10
5 60,000 03.40
(A) Item number 5 only
(B) Items numbers 2 and 4
(C) Items numbers 2 and 3
(D) Items numbers 1 and 2
11. Costs associated with the labour turnover can be categorized into :
(A) Preventive costs only
(B) Replacement costs only
(C) Both of the above
(D) Recruitment costs
12. Calculate the labour turnover rate according to Separation method from the
following :
No. of workers on the payroll :
— At the beginning of month : 500
— At the end of the month : 600
During the month, 5 workers left, 20 workers were discharged and 75 workers
were recruited. Of these, 10 workers were recruited in the vacancies of those
leaving and while the rest were engaged for an expansion scheme.
(A) 4.55%
(B) 1.82%
(C) 6%
(D) 3%
13. In relation to labour cost, “Free or Subsidized Food” will be classified as :
(A) Monetary Benefits
(B) Deferred Monetary Benefits
(C) Fringe Benefits
14. Normal rate per hour = `5.40;
Standard time per unit = 1 Minute;
Output per day = 450 units;
Working hours per day are 8;
Calculate the earning as per Merrick’s Multiple Piece Rate System.
(A) `40.50
(B) `44.55
(C) `55.44
(D) `35.10
15. Normal rate per hour `4.00;
Piece rate `3.00 per unit;
Standard 2 units per hour;
In 40 hours, total production of the worker is 120 units.
Calculate the earnings of the worker under Gantt’s Task and Bonus Plan.
(A) `630
(B) `432
(C) `288
(D) `192
16. Which of the following provides guaranteed time wage to workers ?
(A) Emerson’s Plan
(B) Time Rate System
(C) Halsey Plan
(D) All of the above
17. Labour turnover rate for the month was 20% under replacement method; Number
of workers replaced during month was 80 and left was 20. Find out the average
number of workers on roll in the month :
(A) 800
(B) 400
(C) 200
(D) 1000
18. In which of the following methods “Line of best fit” is drawn to find out “variable
overheads” and “fixed overheads” out of “Semi-Variable Overheads” ?
(A) Comparison by period or level of activity method
(B) Analytical Method
(C) High & Low Point Method
(D) Least Square Method
19. Under or Over absorption of overheads due to abnormal factors is :
(A) Charged off to costing P&L A/c
(B) Charged to production using supplementary overhead rate
(C) Charged to product cost
(D) Separately shown in the cost sheet
20. Percentage of direct material cost method of factory overhead absorption is
suitable :
(A) If sub-standard material is used in production process.
(B) If material having low grades is used in production process.
(C) If material is a smaller part of the cost of units made in the cost centre.
(D) If the output is uniform.
21. Assertion (A) :
Overheads are recovered in Cost Accounting based on predetermined rates.
Reason (R) :
This solves the problem of treatment of under-recovery or over-recovery of

overheads. Select the correct answer from the options given below :
(A) Both A and R are true
(B) Both A and R are false
(C) A is true, but R is false
(D) R is true, but A is false
22. Most suitable basis for apportioning insurance cost of machines would be :
(A) Weight of Machines
(B) Value of Machines
(C) Size of Machines
(D) No. of Machines
23. ........................ is an item like product, job or customer for which cost
measurement is required in Activity Based Costing.
(A) Cost pool
(B) Cost driver
(C) Cost centre
(D) Cost object
24. Which of the following is likely to be classified as a batch level activity in an
activity based costing system ?
(A) Quality assurance
(B) Assembling
(C) Purchasing
(D) Producing parts upto a certain limit
25. One of company A’s cost pool is parts administration. The expected overhead
cost for that cost pool was `3,80,000 and the expected activity was 5,000 part
types. The actual overhead cost for the cost pool was `4,20,000 at an actual
activity of 6,000 part types. The activity rate used to assign costs for that cost
pool was :
(A) `63 per part type
(B) `76 per part type
(C) `70 per part type
(D) `84 per part type
26. The division of activities into unit level, batch level, product sustaining level and
facility level categories is commonly known as a :
(A) Cost object
(B) Cost application
(C) Cost hierarchy
(D) Cost estimation
27. On 31st March, 2019, profit as per financial accounts was `50,000. A comparison
of cost and financial accounts revealed the following :
Works overheads over-absorbed in cost accounting : `8,500
Excess depreciation charged in cost accounts : `3,000
Interest on investments included in financial accounts only : `2,500
The profit as per cost accounts will be :
(A) `47,000
(B) `36,000
(C) `41,000
(D) `53,000
28. What journal entry will be necessary to be made for sales at total sales value
during a year, if the books are kept under Non integrated Accounting System ?
(A) Cash/Sundry Debtor A/c Dr.
To Sales A/c
(B) Cash/Sundry Debtor A/c Dr.
To Profit & Loss A/c
(C) Costing P&L A/c Dr.
To Nominal Ledger Control A/c
(D) General Ledger Adjustment A/c Dr.
To Costing P&L A/c
29. In non-integrated accounting system, the standing order ledger is used to record:
(A) Overheads incurred
(B) All trade debtors
(C) All trade creditors
(D) Receipt of finished goods
30. Assertion (A) :
In an integrated accounting system, there is no need of reconciliation of cost
accounting profit and financial accounting profit.
Reason (R) :
Only one set of books provides information for the ascertainment of cost as well
as preparation of balance sheet as per legal requirements.
Select the correct answer from the options given below :
(A) A is true, but R is false
(B) A is false, but R is true
(C) Both A and R are true and R is the correct explanation of A
(D) Both A and R are true but R is not the correct explanation of A
31. In a reconciliation statement prepared by taking profit as per cost account as
the base, overheads over-recovered in cost accounts are to be :
(A) Deducted from costing profit
(B) Added to costing profit
(C) Added to financial accounting profit
(D) Deducted from financial accounting profit
32. Which of the following statements is true ?
(A) Job costing is not a specific order costing
(B) Job costing cannot be used in conjunction with marginal costing
(C) In cost plus contracts, the contractor runs a risk of incurring a loss
(D) Batch costing is a variant of job costing
33. If the sales value of a product is `94,080 and the profit margin on cost is 12%,
the amount of profit will be :
(A) `7,800
(B) `11,290
(C) `8,580
(D) `10,080
34. In contract costing, cash received = ?
(A) Value of Work Certified – Retention Money
(B) Value of Work Certified + Retention Money
(C) Value of Work Certified + Work Uncertified – Retention Money
(D) Value of Work Certified + Work Uncertified + Material in Hand – Retention
Money
35. Profit on incompleted contracts should not be transferred to profit and loss
account, if the value of work certified is less than ...................... of contract
price.
(A) 40%
(B) 50%
(C) 25%
(D) 30%
36. The total profit is `60,000, on a contract price of `3,00,000 and the contract is
60% completed and has been certified. If the retention money is 20% of the
certified value, the amount of profit (on cash basis) that can be prudently credited
to profit and loss account is :
(A) `28,000
(B) `32,000
(C) `40,000
(D) `60,000
37. Which of the following is not a feature of a process production system ?
(A) Repetitive production
(B) High production volume
(C) Low production flexibility
(D) Heterogeneous products
38. Where the scrap possesses a saleable value as a waste product or as a raw
material for another product, the value there is :
(A) Credited to the Process A/c
(B) Debited to the Process A/c
(C) Credited to Costing P&L A/c
(D) Credited to Cash or Bank A/c
39. A product is completed in three consecutive processes. Details of normal and
abnormal losses are as follows :
Process I II III
Normal loss unit 250 470 215
Abnormal loss unit 50 — 35
Abnormal loss value (`) 300 — 770
Abnormal gain unit — 70 —
Abnormal gain value (`) — 840 —
Realisable scrap value per unit of process I, II and III are `1, `5 and `6
respectively. Indicate from out of the following, what will be the Abnormal Gain
to be transferred to Costing P&L Account ?
(A) `490
(B) `810
(C) `3,890
(D) `840
40. Costs that are incurred after the split-off point of joint products in a production
process are referred to as :
(A) Common costs
(B) Separable costs
(C) By-product costs
(D) Manufacturing costs
41. Joint costs are allocated to which of the following products :
By-Products Scrap
(A) Yes Yes
(B) Yes No
(C) No No
(D) No Yes
42. In service costing, costs are classified as :
(A) Standing charges, running charges and maintenance cost
(B) Fixed cost, normal cost and standard cost
(C) Variable cost, fixed cost and marginal cost
(D) Standard cost, marginal cost and fixed cost
43. Total passenger km run by ABC Ltd. was 21,60,000 for the year between town
Z and town A. The bus made 3 round trips per day. Seating capacity of the bus
was 50 passengers and average daily occupancy was 80% and the bus runs on
an average 25 days in a month. Calculate the distance between towns Z and A.
(A) 30 km
(B) 25 km
(C) 45 km
(D) 40 km
44. A transport company is running 5 buses between two towns, which are 50 km
apart. Seating capacity of each bus is 50 passengers. Actually passengers
carried by each bus were 75% of its seating capacity. All the buses ran on 30
days of the month. Each bus made one round trip per day. Passenger km
is................... per month.
(A) 2,81,250
(B) 1,87,500
(C) 5,62,500
45. If fixed costs decrease while variable cost per unit and selling price per unit
remain constant, the new BEP in relation to the old BEP will be :
(A) Lower
(B) Higher
(C) Unchanged
(D) Indeterminate
46. Sales `25,000; variable cost `20,000; fixed cost `4,000; P/V ratio is :
(A) 20%
(B) 80%
(C) 15%
(D) 30%
47. If the P/V ratio is 25% and selling price is `25 per unit, the marginal cost of the
product would be :
(A) `18.75
(B) `16.00
(C) `15.50
(D) `20.00
48. ABC Ltd. shows a break-even sales of `42,500 and a budgeted sales of `50,000.
Identify the margin of safety ratio :
(A) 15%
(B) 81%
(C) 1.81%
(D) Require more information to calculate
49. A company makes a single product and incurs fixed costs of `20,000 per annum.
Variable cost per unit is `5 and each unit sells for `15. Annual sales demand is
7,000 units. The break-even point is :
(A) 2,000 units
(B) 3,000 units
(C) 4,000 units
(D) 6,000 units
50. Contribution margin is equal to :
(A) Fixed cost – loss
(B) Profit + variable cost
(C) Sales – fixed cost – profit
(D) Sales – profit
51. P/V Ratio is an indicator of ............... .
(A) the rate at which goods are manufactured
(B) the volume of sales
(C) the value of sales
(D) the rate of profit
52. In marginal costing, Angle of Incidence is .................. .
(A) the angle between the sales line and the total cost line.
(B) the angle between the sales line and the Y-axis.
(C) the angle between the sales line and the X-axis.
(D) the angle between the sales line and the total profit line.
53. A company’s break-even point is 55,000 units per annum. The selling price is
`92 per unit and the variable cost is `42 per unit. What are the company’s
annual fixed costs ?
(A) `27,50,000
(B) `24,00,000
(C) `30,00,000
54. If P/V Ratio is 20% and Margin of Safety sales is `4,00,000, the amount of
profit is :
(A) `1,00,000
(B) `80,000
(C) `75,000
(D) `60,000
55. Standard cost per unit of X :
Material 50 kg @ `40/kg
Actual production 100 units
Actual material cost `42/kg
Material price variance 9800 A
Material usage variance 4000 F
Ascertain the actual quantity of material used :
(A) 5,000 kg
(B) 4,900 kg
(C) 4,750 kg
(D) 4,887 kg
56. When calculating cost variance under a standard costing system we must :
(A) Compare actual costs with those that were budgeted
(B) Compare standard costs with actual costs at the standard level of activity
(C) Compare actual costs with standard costs at the actual level of activity
(D) Compare actual outputs against budgeted outputs
57. Gang variance is a sub-variance of :
(A) Labour efficiency variance
(B) Labour mix variance
(C) Labour yield variance
(D) Labour rate variance
58. Match the following :
List-I List-II
(P) Cost control purposes (1) ........... is a pre-determined cost
(Q) Standard cost (2) Responsibility accounting fixes responsibility
for ...........
(R) Integrates (3) Cost accounting guides for fixing future ...........
(S) Production policies (4) Budgeting system ................................. key
managerial functions
(P) (Q) (R) (S)
(A) (4) (3) (2) (1)
(B) (2) (1) (4) (3)
(C) (2) (3) (4) (1)
(D) (3) (2) (4) (1)
59. Examine the following relating to Job No. 100 :
Standard hours planned 64.50
Actual hours worked 61.25
Standard wage rate `4.15
Actual wage rate `4.25
Standard units budgeted 20
The total labour variance for Job No. 100 is .................... .
(A) `7.36 (F)
(B) `6.13 (F)
(C) `13.49 (F)
(D) `6.13 (A)
60. Examine the following relating to Job No. 999 :
Standard hours planned 28.0
Actual hours worked 26.5
Standard wage rate `5.60
Actual wage rate `6.05
Assume that there is no idle time
The labour efficiency variance for Job No. 999 is .................... .
(A) `9.08 (F)
(B) `8.40 (F)
(C) `11.93 (A)
(D) `3.53 (A)
61. Standard for various overheads is based on :
(A) The past performance
(B) Budgeted output
(C) Forecast
62. The standards that require peak efficiency and do not allow any work interruptions
are known as :
(A) normal standards
(B) practical standards
(C) ideal standards
(D) current standards
63. The following information belongs to ABC Manufacturing Company that uses a
standard costing system :
• Basic wage rate : `12 per hour
• Fringe benefits : `2 per hour
• Basic time : 2 hours per unit
• Allowance for down time : 0.3 hours per unit
• Allowance for breaks : 0.2 hours per unit
Based on the above information, what is the standard direct labour cost per
unit?
(A) `35.00
(B) `28.00
(C) `30.00
(D) `32.20
64. A flexible budget is :
(A) A budget that is adjusted to reflect different costs at different activity levels
(B) A budget that will be changed at the end of the month in order to reflect the
actual costs of a department in the month
(C) A budget that comprises variable costs only
(D) A budget that is constantly being changed
65. If a company plans to sell 16,000 units of a product and desires to sells 17,000
units, the most appropriate comparison of the cost data associated with the
sales will be possible by a budget based on :
(A) The original planned level of activity
(B) 18,000 units of activity
(C) 17,000 units of activity
(D) 16,000 units of activity
66. Consider the following data for the month of May :
Closing stock 80 units
Production 280 units
Sales 330 units
Based on the data, the closing inventory for April month was :
(A) 70 units
(B) 130 units
(C) 50 units
(D) 410 units
67. ABC Ltd. has forecast its sales for the next three months as follows :
May : 12,000 units
June : 20,000 units
July : 25,000 units
Opening stock as on 1st April is expected to be 5,000 units. Closing stock
should equal to 20% of the coming month’s sales needs.
How many units should be produced in June month ?
(A) 20,000 units
(B) 11,000 units
(C) 21,000 units
(D) 25,000 units
68. Budgeted sales of X for March are 18,000 units. At the end of the production
process for X, 10% of production units are scrapped as defective. Opening
inventories of X for March are budgeted to be 15,000 units and closing inventories
will be 11,400 units. All inventories of finished goods must have successfully
passed the quality control check. The production budget for X for March, in
units is :
(A) 12,960
(B) 14,400
(C) 15,840
(D) 16,000
69. ABC Limited is a manufacturing company that has no production resource
limitations for the foreseeable future. The Managing Director has asked the
company managers to coordinate the preparation of their budgets for the next
financial year. In what order should the following budgets be prepared ?
(1) Sales budget
(2) Cash budget
(3) Production budget
(4) Purchase budget
(5) Finished goods inventory budget
(A) (2), (3), (4), (5), (1)
(B) (1), (5), (3), (4), (2)
(C) (1), (4), (5), (3), (2)
(D) (4), (5), (3), (1), (2)
70. ABC Ltd. is currently reviewing its cash budget for the year ended 31st March,
2020. An extract from its sales budget for the same year shows the following
sales values :
Month `
March 60,000
April 70,000
May 55,000
June 65,000
40% of its sales are expected to be for cash. Out of its credit sales, 70% are
expected to pay in the 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 to be shown in the cash budget for
May 2019 is :
(A) `66,532
(B) `61,120
(C) `60,532
(D) `86,620
71. Which of the following will not appear in cash budget ?
(A) Machinery bought without down payment on hire purchase
(B) Depreciation of Plant & Machinery
(C) Sales revenue from business
(D) Wages paid to workers
72. Budgetary control involves all but not one of the following. Find that one :
(A) Modifying future plans
(B) Analyzing differences
(C) Using static budgets
(D) Determining differences between actual and planned results
73. A job requires 2,400 actual labour hours for completion and it is anticipated that
there will be 20% idle time. If the wage rate is `10 per hour, what is the budgeted
labour cost for the job ?
(A) `19,200
(B) `24,000
(C) `28,800
(D) `30,000
74. Estimated wages for January 2020, are `4,000 and Estimated wages for February
2020, are `4,400.
If the company’s practics is to delay a payment of wages is half a month, the
amount of wages to be considered in the actual cash budget for the month of
February, 2020 is :
(A) `4,000
(B) `4,400
(C) `4,600
(D) `4,200
75. Which section of the Companies Act, 2013 deals with audit of cost accounting
records ?
(A) Section 158
(B) Section 128
(C) Section 168
(D) Section 148
76. The ratio that explains how efficiently companies use their assets to generate
revenue is :
(A) Revenue asset ratio
(B) Receivable turnover ratio
(C) Income ratio
(D) Asset turnover ratio
77. While calculating dividend cover for preference shares the numerator should be
taken as :
(A) Earnings Before Interest and Tax
(B) Profit available for equity shareholders
(C) Profit After Tax
(D) Profit After Tax + Depreciation
78. A Ltd. financial statement shows the following data :
Equity share capital `5,67,500
Reserve & surplus `3,87,850
Total debt `5,88,778 out of which `2,88,778 are long term debts
Fixed assets are `11,44,128
Calculate the current ratio :
(A) 2.48
(B) 1.92
(C) 3.68
(D) 1.33
79. Profit after tax of AB Ltd. was `3,44,460. Total assets are `5,97,70,000 out of
which `3,57,70,000 was financed from loan funds.
Calculate the return on equity :
(A) 0.962%
(B) 0.576%
(C) 1.435%
(D) 1.576%
80. ABC Ltd. gives the following information :
Fixed assets = `10,50,000
Fixed assets turnover ratio (on cost of sales) = 2
Gross Profit (GP) rate on sales = 25%
Calculate the Sales value :
(A) `21,00,000
(B) `25,00,000
(C) `26,00,000
(D) `28,00,000
81. Debtor velocity = 3 months
Annual Sales `25,00,000
Bills receivable & bills payable at the end of the year were `60,000 and `36,667
respectively. Calculate Sundry debtors :
(A) `6,25,000
(B) `5,25,000
(C) `5,65,000
(D) `6,65,000
82. In case of Financial Institutions, cash flows arising from ...................... are
classified as cash flows from operating activities.
(A) Interest Received
(B) Dividend Received
(C) Interest Paid
83. Amortization of preliminary expenses is :
(A) A source of funds
(B) An application of funds
(C) A reduction in funds from operations
(D) Neither a source nor an application of funds
84. The assets of another company were purchased for `60,000 payable in fully
paid shares of a company. These assets consisted of stock `22,000, machinery
`18,000 and goodwill `20,000. In addition, sundry purchases of plant were made
for `5,650. How much amount should be shown in fund flow statement under
plant and machinery purchase application ?
(A) `18,000
(B) `23,650
(C) `5,650
(D) `43,650
85. Cash payment to and on behalf of employees is an example of cash flow from:
(A) Operating activity
(B) Investing activity
(C) Financing activity
86. In cash flow statement cash flow on account of the income tax paid is shown :
(A) Under the heading “Cash flow from investing activities”
(B) Under the heading “Cash flow from financial activities”
(C) Under the heading “Cash flow from operating activities” before the heading
cash generated from operations
(D) Under the heading “Cash flow from operating activities” after the heading
cash generated from operations
87. Which of the following involves a movement of cash in business ?
(A) Bonus shares issued to existing shareholders
(B) Right shares issued to existing shareholders
(C) More depreciation charged on fixed assets
(D) Provision for repair and renewals
88. In the books of ABC Ltd. the balance of 5% Debentures of the face value `100
each at the beginning of the year was `1,00,000 and at the end it was `70,000.
At the end of the year `20,000, 5% Debentures were redeemed by purchase
from open market @ `96 each. Ignoring other transactions, calculate net fund
flow from transaction relating to 5% Debentures :
(A) Net outflow `10,000
(B) Net outflow `29,200
(C) Net outflow `19,200
(D) Net outflow `30,000
89. Net profit before working capital adjustments of ABC Ltd. is `3,52,000. The
changes in working capital during the year are as follows :
`
Decrease in debtors 2,68,800
Decrease in outstanding expenses 9,600
Increase in stock 28,800
Increase in advances 1,920
Increase in creditors 38,400
What is the cash generated from operations ?
(A) `5,61,280
(B) `6,18,880
(C) `1,47,720
(D) `5,61,280
90. From the following details calculate the cash generated from operations :
Net profit before working capital changes is `3,051 lakh
Net increase in current assets is `3,205 lakh, while there is net increase in
current liabilities by `9 lakh.
(A) + `6,247 lakh
(B) – `145 lakh
(C) + `6,256 lakh
(D) – `6,256 lakh
91. Statement-I :
In funds flow analysis, current assets and current liabilities are shown separately
in a statement of changes in working capital.
Statement-II :
In cash flow analysis, increases and decreases of all current assets and current
liabilities are adjusted in the calculation of cash flow from operating activities.
Select the correct answer from the following :
(A) Both statements are correct
(B) Both statements are incorrect
(C) Statement-I is correct, but Statement-II is incorrect
(D) Statement-I is incorrect, but Statement-II is correct
92. Calculate cost of sales from the following information :
Net Works Cost : `2,00,000
Office & Administration Overheads :
`1,00,000; Selling Overheads : `10,000
Opening stock of WIP : `10,000; Closing stock of WIP : `20,000
Closing stock of finished goods : `30,000;
There was no opening stock of finished goods.
(A) `2,70,000
(B) `3,20,000
(C) `3,00,000
(D) `2,80,000
93. Calculate cost per tonne mile for a distribution division of a multinational company
using the following information :
Tonnes carried 2,479
Number of drivers 20
Hours worked by drivers 35,520
Tonnes miles carried 3,75,200
Cost incurred (`) 5,62,800
(A) `0.88
(B) `1.50
(C) `15.84
(D) `28,140
94. The main focus of ........................ is upon the work to be done, services to be
rendered rather than things to be spent for or acquired.
(A) Programme Budget
(B) Basic Budget
(C) Current Budget
(D) Performance Budget
95. When margin of safety is 40% of sales, find fixed cost when profit is `25,000.
(A) `30,000
(B) `35,000
(C) `37,500
(D) `40,000
96. ........................... cost measures the addition in unit cost for an addition in
output.
(A) Marginal
(B) Differential
(C) Incremental
(D) Imputed
97. The Cost Accounting Standard related with pollution control cost is :
(A) CAS 7
(B) CAS 10
(C) CAS 14
(D) CAS 19
98. ....................... plan is a most suitable incentive plan for beginners and trainees.
(A) Halsey
(B) Barth’s
(C) Hayne’s
(D) Diemer
99. Primary packing is an item of :
(A) Selling overhead
(B) Prime cost
(C) Distribution overhead
(D) Factory overhead
100. ............................ helps in predicting the future market value of the shares of
a company.
(A) Price Earning Ratio
(B) Earning Per Share Ratio
(C) Dividend Yield Ratio
(D) Pay-out Ratio
ANSWER KEY
Q.no. Ans Q.no. Ans Q.no. Ans

1 C 34 A 67 C
2 D 35 C 68 D
3 A 36 B 69 B
4 B 37 D 70 C
5 B 38 A 71 B
6 A 39 A 72 C
7 B 40 B 73 D
8 A 41 C 74 D
9 A 42 A 75 D
10 A 43 A 76 D
11 C 44 C 77 C
12 A 45 A 78 D
13 C 79 C
46 A
80 D
14 B 47 A
81 C
15 C 48 A 82 D
16 D 49 A 83 D
17 B 50 A 84 B
18 D 51 D 85 A
19 A 52 A 86 D
20 D 53 A 87 B
21 C 54 B 88 B
22 B 55 B 89 B
23 D 56 C 90 B
24 C 57 B 91 A
25 B 58 B 92 D
26 C 59 A 93 B
27 B 60 B 94 D
28 D 61 D 95 C
29 A 62 C 96 C
30 C 63 A 97 C
31 B 64 A 98 B
32 D 65 C 99 B
33 D 66 B 100 A
21 EP–CMA–June 2019

1. Which of the following is included in both the prime cost and conversion cost ?
(A) Direct Material
(B) Direct Labour
(C) Indirect Material
(D) Indirect Labour
2. The cost which has already been incurred and cannot be avoided by decisions
taken in the future is :
(A) Fixed cost
(B) Sunk cost
(C) Opportunity cost
(D) Imputed cost
3. Which of the following institute defined cost as "the amount of expenditure
(actual or notional) incurred on, or attributable to a specified thing or activity" ?
(A) The Institute of Cost and Management Accountants, London
(B) The Institute of Management Accountants, London
(C) The Chartered Institute of Management Accountants, London
(D) The Chartered Institute of Cost Accountants, London
4. This method of costing is useful for the assembly department in a factory
producing a mechanical article :
(A) Terminal Costing
(B) Composite Costing
(C) Departmental Costing
(D) Single-output Costing
5. Which one of the following is not a practical difficulty in the installation of a cost
accounting system ?
(A) Lack of support from departmental heads
(B) Resistance from the existing financial accounting staff
(C) Huge expenditure
(D) Availability of qualified staff
21
EP–CMA–June 2019 22
6. Principles to determine production overheads relates to :
(A) CAS 5
(B) CAS 7
(C) CAS 3
(D) CAS 2
7. Based on cost accounting information, which is the tool of Management
Accounting for decision-making ?
(A) Marginal Costing
(B) Standard Costing
(C) Differential Costing
8. __________ is concerned with historical records, while ______ is concerned
with historical cost with pre-determined cost.
(A) Cost Accounting, Financial Accounting
(B) Financial Accounting, Cost Accounting
(C) Financial Accounting, Management Accounting
(D) Management Accounting, Cost Accounting
9. A centre where raw materials are handled and converted into saleable product is
known as :
(A) Unproductive cost centre
(B) Operation cost centre
(C) Productive cost centre
(D) Process cost centre
10. If costs are classified 'by changes in activity or volume' then which of the following
is the correct classification ?
(A) Fixed Cost, Variable Cost and Semi-variable Cost
(B) Historical Cost, Pre-determined Cost, Standard Cost, Estimated Cost
(C) Production Cost, Administration Cost, Selling Cost, Distribution Cost,
Research and Development Cost
(D) Material, Labour and Expenses
11. The following informations are given :
10,000 units of material are consumed per year; per unit cost is `20; cost of
processing an order is `50; Annual interest rate is 5%; Annual carrying cost of
material per unit is 15% (other than interest). What would be the Economic
Order Quantity (EOQ) ?
(A) 200 units
(B) 500 units
(C) 400 units
(D) 100 units
12. Which of the following is the objective of inventory management ?
(A) To ensure timely delivery of inventory for production
(B) To avoid under or over production
(C) To maintain investment in inventories at lowest level
13. V Ltd. is the manufacturer of picture tubes for TV. The following are details of
their operation. Minimum usages 50 tubes per week, Maximum usages 200
tubes per week; Normal usages 100 tubes per week; lead time to supply 4-6
weeks; and Re-order quantity 400 tubes. What would be the maximum and
minimum level of stock ?
(A) 1400 units and 700 units
(B) 1200 units and 700 units
(C) 1300 units and 600 units
(D) 1100 units and 600 units
14. Smoke, dust, gases and loss of weight due to seasoning are examples of
__________
(A) Scrap
(B) Spoilage
(C) Defectives
(D) Waste
15. Statement I :
Losses or gains arising out of atmospheric conditions are the losses or gains
due to unavoidable causes.
Statement II :
Differences due to unavoidable causes should be valued and adjusted through
the stores consumption account and recovered in cost as an item of stores
overhead expenses.
Select the correct answer from the options given below:
(C) Statement I is incorrect, but statement II is correct
(D) Statement I is correct, but statement II is incorrect
16. Which one is not a correct accounting treatment of normal defectives ?
(A) Charged to good units
(B) Charged to costing profit and loss account
(C) Charged to factory overheads
(D) Charged to specific job/department
17. The following information is given for receipts and issues of a material in the
month of March, 2019.
Date Description Quantity Rate
(kg) (`)
1 March Receipt 400 5.00
8 March Issue 700 —
30 March Issue 600 —
What is the value of closing stock under FIFO and LIFO method ?
(A) `800 and `900
(B) `900 and `800
(C) `1,000 and `900
(D) `900 and `1,000
18. Weekly time sheets are used as a method for:
(A) Time Keeping
(B) Time Booking
(C) Preparation of Payrolls
(D) Measuring Idle Time
19. Idle time arises due to administrative causes are charged to ________ and over
time arises due to the negligence of workers of a particular department is charged
to _______ .
(A) Department overheads, Costing P&L account
(B) General works overheads, Concerned department
(C) Department overheads, Concerned department
(D) Costing P&L account, Costing P&L account
20. Under inflated price method of pricing of material issues, ____________ are
included with actual price of materials.
(A) Ordering Costs
(B) Carrying Costs
(C) Transporting Costs
21. Cost of labour welfare activities is an example of:
(A) Preventive Cost
(B) Replacement Cost
(C) Material Cost
22. Labour turnover rate for the quarter ended 31st Dec. 2018 as 16%, 8% and 6%
under flux, replacement and separation methods respectively. If the number of
workers replaced during the quarter is 60. What number of workers left and
discharged and what number of workers recruited and joined ?
(A) 48 and 112
(B) 45 and 75
(C) 45 and 15
(D) 40 and 100
23. Which one is not a merit of piece rate system ?
(A) The quality of work is improved
(B) Idle time is automatically controlled
(C) It increases efficiency
(D) The reward is related to effort
24. X executes a piece of work in 128 hours as against 160 hours allowed to him.
Hourly rate is `40 and gets dearness allowance of `100 per day of 8 hours, in
addition to his wages. Bonus is given on basic wages.
What would be the amount of bonus under Emerson's Efficiency Plan ?
(A) `2304
(B) `1280
(C) `2560
(D) `2506
25. The meaning of apportionment of overheads is :
(A) A charging of discrete identifiable items of cost to cost centres or cost units
(B) The collection of cost attributable to cost centres and cost units using
costing methods and principles.
(C) The division of costs amongst two or more cost centres in proportion to the
estimated benefit received.
(D) The process of establishing the overheads of cost centres and cost units.
26. Legal charges is an example of :
(A) Prime Cost
(B) Production Overheads
(C) Selling and Distribution Overheads
(D) Office and Administration Overheads
27. Pay roll or time department cost will be apportioned on the basis of :
(A) Direct material cost
(B) Direct labour hours
(C) Floor area
(D) Number of requisitions
28. The following data has been extracted from the records of a manufacturing
company :
Machine Hours 9,00,000 4,00,000
Manufacturing Overhead ` 57,00,000 42,00,000
Total manufacturing overhead for an activity level of 5,50,000 machine hours = ?
(A) `42,00,000
(B) `46,50,000
(C) `57,00,000
(D) `49,50,000
29. Work out machine hour rate from the following:
Cost of machine : `90,00,000
Scrap value : NIL
Freight & Installation charges : `10,00,000
Working Life : 10 years
Working hours : 2,000 per year
Repairing charges : 50% of depreciation
Power : 10 units of per hour @ `10 per unit
Lubricating oil : `200 per day of 8 hours
Consumable stores : `1,000 per day of 8 hours
Wages of operator : `400 per day
(A) `1075 per hour
(B) `875 per hour
(C) `950 per hour
(D) `1050 per hour
30. Which method of re-distribution of service department costs to production

departments is not a part of reciprocal service method ?
(A) Simultaneous equation method
(B) Step method
(C) Repeated distribution method
(D) Trial and error method
31. The following data are related to overheads of a particular period :
Budgeted Actual
Fixed overheads
(`) 30,000 28,000
Direct labour hours 40,000 39,000
Overheads are absorbed on the basis of labour hours. What will be the under or
over absorbed overheads ?
(A) Over absorbed `1,250
(B) Under absorbed `1,250
(C) Over absorbed `1,000
(D) Under absorbed `1,000
32. Which of the following methods is not applied for segregation of semi-variable
expenses into fixed and variable ?
(A) Graphical Presentation Method
(B) Maximum Absorption Point
(C) High and Low Point Method

33. In ABC system, the allocation basis that are used for applying costs to services
or procedures are called :
(A) Cost Pool
(B) Cost Absorption
(C) Cost Object
(D) Cost Driver
34. A company is switching from traditional overhead allocation system based on
machine hours to activity based costing system using machine hours and
production setups as measure of activity. The following information is given :
Machine hours 40,000 and per hour overhead rate `5.
Number of production setups 2000 and per setup overhead rate `20.
A job for current year required 28 machine hours and 2 production setups. Would
this job have been over costed or under costed, under the traditional system
and how much ?
(A) Over costed by `12
(B) Under costed by `12
(C) Under costed by `20
(D) Over costed by `40
35. Statement I :
Cost ledger control account is opened in non- integrated system to record all
transactions of income and expenditure which originate in the financial accounts.
Statement II :
The total of cost ledger control account should be tallied with total of balances
of all impersonal accounts.
36. When indirect material is issued from store to production department then _______
account is debited and __________ account is credited in non-integrated system.
(A) WIP control and Stores ledger control
(B) Costing P&L and Stores ledger control
(C) Costing P&L and Cost ledger control
(D) Overhead control and Stores ledger control
37. Under integrated system of accounting, purchase of raw materials is debited to
which account ?
(A) WIP Control Account
(B) Stores Ledger Control Account
(C) Purchase Account
38. When actual expenses are more than recovered in cost accounts, it is known
as :
(A) Over absorption
(B) Over valued
(C) Under absorption
(D) Over applied
39. In non-integrated system unproductive wages will be debited to :
(A) WIP Ledger Control A/c
(B) Finished Stock Ledger Control A/c
(C) General Ledger Adjustment A/c
(D) Factory Overheads Control A/c
40. The following details are given to you :
Raw materials consumed `1,60,000
Direct wages ?
Factory overheads 60% of direct wages
Office overheads 10% of factory cost
Cost of production `3,52,000
The amount of direct wages will be :
(A) `1,36,000
(B) `1,20,000
(C) `1,00,000
(D) `1,76,000
41. ABC Ltd. calculates the price of product by adding overheads to the prime cost
as 20% of total cost and adding 25% to total costs as a profit margin. The
product was sold for `2,450. Prime cost of the product will be ________ .
(A) `1,470
(B) `1,306.67
(C) `1,568
(D) `2,352
42. Which of the following is not a characteristic of the Production Account ?
(A) Expenses are not classified to ascertain Prime Cost, Factory Cost etc.
(B) It is based on estimated figures of expenses.
(C) It is prepared for each manufacturing department.
(D) No figures of previous period provided.
43. Q company manufactures ring binders which are embossed with the customer's
own logo. A customer has ordered a batch of 700 binders. The following illustrates
the cost of a typical batch of 100 binders :
`
Direct Material 70
Direct Labour 25
Machine set up 10
Design and Art work 35
Prime Cost 140
Direct employees are paid on a piecework basis.
Q company absorbs production overheads at a rate of 24% of direct wages
cost. 6% is added to the total production cost of each batch to allow for selling,
distribution and administration overheads.
Q company requires a profit margin of 20% on sales value.
The selling price for 700 units (to the nearest `) will be :
(A) `1,354
(B) `1,300
(C) `1,083
(D) `1,325
44. The following information relates to manufacturing of a component "ZIP" in a
cost centre. Cost of material `6 per component, Operator's wages `7.20 per
hour, Machine hour rate `1.50 per hour, setting up time of machine (productive)
5 hours, manufacturing time 10 minutes per component. Company producing 50
batches consist of 100 components in each batch. What will be the cost per
batch and total setting up cost ?
(A) `740.87 and 43.50
(B) `745.87 and 43.50
(C) `745.72 and 36
(D) `74.57 and 36
45. Contract price `18,00,000, 70% of the contract was completed. Architect gave
certificate for 60% of the contract price on which 80% was paid. Cost incurred
till date `10,50,000. Cost of work uncertified will be :
(A) `1,50,000
(B) `1,80,000
(C) `2,10,000
(D) `3,90,000
46. Assertion (A) :
When work certified is less than 1/4 of the contract price, a zero value of
attributable profit taken into account.
Reason (R) :
The profit outcome of the contract cannot be estimated with reasonable accuracy
and amount of carried forward as provision against future losses, increase in
prices and other contingencies.
(A) Both (A) and (R) are true and (R) is the correct explanation of (A)
(B) Both (A) and (R) are true and (R) is not the correct explanation of (A)
(C) (A) is true, but (R) is false
(D) (A) is false, but (R) is true
47. When value of contract is ascertained by adding a certain percentage of profit
over the total cost of work. It is known as :
(A) Subcontract
(B) Cost plus contract
(C) Escalation clause
(D) Work certified
48. When an abnormal gain in a process occurs, the accounting entry is to be
made:
(A) Process account debit and Abnormal gain account credit
(B) Abnormal gain account debit and P&L account credit
(C) Abnormal gain account debit and Normal wastage account credit
(D) Normal wastage account debit and abnormal gain account credit
49. In process A, 20,000 units are introduced during a particular month. The normal
loss is estimated to be 4% of the input. At the end of the month 2,400 units were
lying as incomplete. The stagewise completion of the inventory was given as
under :
Materials : 80% complete
Labour : 60% complete
Overheads : 50% complete
16,600 units were transferred to finished stores. Equivalent units in respect of
material = ?
(A) 20,000 units
(B) 18,000 units
(C) 18,240 units
(D) 18,720 units
50. P Ltd. operates a process costing system. The process is expected to lose
20% of input and this can be sold for `10 per kg. Inputs for the month of April,
2019 are : Direct material 4,000 kg at a total cost of `66,000, Direct labour
`11,120 for the month. There is no opening and closing WIP. Actual output was
3,600 kg. What is the valuation of the output ?
(A) `62,208
(B) `77,760
(C) `69,120
(D) `85,120
51. Cars, jeeps, buses etc. produced by an automobile industry are classified as :
(A) Joint products
(B) By-products
(C) Co-products
52. In a manufacturing concern, the joint expenses of products X, Y and Z are
`25,000. Subsequent expenses of products X, Y and Z are ` 5,900, 4,000 and
4,450 respectively. Sales values are : X ` 30,000, Y ` 20,000 and Z `15,000.
Estimated profit on sales are : X 40%, Y 30% and Z 25%. What is the amount
of share in the joint expenses of product X, Y and Z respectively if the selling
expenses are 6% on sales value ?
(A) `12,100, `10,000 and `6,800
(B) `10,300, `8,800 and `5,900
(C) `11,538, `7,692 and `5,769
(D) `10,405, `8,092 and `6,503
53. The following information is given :
Input of raw material
@ ` 50 per unit : 1,000 units
Direct Material `15,000
Direct Wages `9,000
Production overheads `12,000
Actual output transferred to next process : 900 units
Normal Loss 5%
Value of Scrap `20 per unit
The amount of abnormal loss would be transferred to costing profit and loss
account (calculation to the nearest rupee) :
(A) `3,474
(B) `4,474
(C) `4,300
(D) `4,250
(A) Fixed cost, Normal cost and Standard cost
(B) Standard cost, Marginal cost and Variable cost
(C) Variable cost. Fixed cost and Marginal cost
(D) Standard charges, Running charges and Maintenance charges
55. Which of the following 'Cost Unit' is not used by the organisation engaged in
providing services ?
(A) Per Metre
(B) Tonne Km
(C) Passenger Km
(D) Kilowatt Hour
56. A hotel has a capacity of 100 single bed-rooms and 40 double bed-rooms. The
average occupancy for single bed-room is 80% and for double bed-rooms is
60% throughout the year of 365 days. The rent for double bed-room has been
fixed 1.50 times of rent of single bed-room. Total operational cost of the year is
`1,96,45,760 and hotel earns margin of safety of 20% on chargeable price.
Chargeable room rent per day for single and double bed-room will be :
(A) `556.80 and `835.20
(B) `580 and `870
(C) `646.90 and `970.40
(D) `517.50 and `776.30
57. The effect of sale price reduction is always reduce the P/V ratio to raise ________
and to shorten the ______ .
(A) BEP and Margin of Safety
(B) Fixed Cost and BEP
(C) Margin of Safety and BEP
(D) Profit and BEP
58. ABC Ltd. had a marginal costing profit of `1,25,500 in April, 2018. Opening
stock were 1,800 units and closing stock were 1,260 units. The company is
considering changing to absorption costing system. Fixed overhead absorption
rate is `6 per unit. Profit under absorption costing will be _________ .
(A) `1,28,740
(B) `1,22,260
(C) `1,14,700
(D) `1,33,060
Sales (`) Profit (`)
Period 1 20,000 4,000
Period 2 30,000 8,000
Sales to earn a profit of? 16,000 will be :
(A) `40,000
(B) `60,000
(C) `50,000
(D) `75,000
60. P/V Ratio is 25% and margin of safety is `6,00,000, the amount of profit is :
(A) `2,00,000
(B) `1,60,000
(C) `1,50,000
(D) `1,20,000
Selling price `20 per unit, Variable cost `15 per unit and Fixed cost `48,000.
What will be BEP sales (in `) and Profit if actual sales is 40% more than BEP
sales ?
(A) `1,92,000 and `20,800
(B) `1,80,000 and `18,000
(C) `96,000 and `9,600
(D) `1,92,000 and `19,200
62. Statement I :
When a factory operates at full capacity, Fixed cost also becomes relevant for
make or buy decision.
Statement II :
Margin of safety is the difference of actual sales and standard sales.
63. The total cost and profit during two periods are as follows :
Period I Period II
Total cost (`) 4,50,000 6,50,000
Profit (`) 50,000 1,00,000
Profit volume ratio will be :
(A) 15%
(B) 25%
(C) 20%
(D) 33 1/3%
64. If profit, fixed cost and margin of safety are `19,20,000; `25,60,000 and
`64,00,000 respectively, then break-even point will be :
(A) `44,80,000
(B) `85,33,333
(C) `38,40,000
(D) `48,00,000
65. Selling price per unit `20, Trade discount 5% of selling price, cash discount 2%
on sales, Material cost `3, Labour cost `4, Fixed overheads `22,000 and variable
overheads 80% of labour cost. What would be the net profit if sales are 10%
above the BEP ?
(A) `2,000
(B) `2,500
(C) `2,200
(D) `1,850
Standard : 196 kg material for 140 units of finished output @ `2 per kg.
Actual: Output 4,200 units, material used 5600 kg., cost of material `1,00,800.
Material usage variance will be
(A) `560 (F)
(B) `600 (A)
(C) `650 (F)
(D) `720 (A)
67. Records of Zed Ltd. reveal the following data :
Fixed overhead capacity variance = 3,000 (F)
Fixed overhead efficiency variance = 3,000 (F)
Fixed overhead expenditure variance=2,000 (A)
Fixed overhead cost variance will be:
(A) `6,000 (F)
(B) `2,000 (A)
(C) `4,000 (F)
(D) `2,000 (F)
68. Which one is not a method of disposing cost variances ?
(A) Transfer to costing P&L account
(B) Transfer to reserve account
(C) Pro rata allocation of variances to finished stock, WIP and cost of sales
(D) No treatment, only shown in report tor the purpose of control variances
69. Standard which is established for use, unaltered over a long period of time is
known as :
(A) Ideal standard
(B) Basic standard
(C) Expected standard
(D) Current standard
70. For producing one unit of product X, standard labour hours are 20. Wages rate is
`2 per hour. In June, 2018, output was 2,000 units. 38,000 labour hours actually
paid, costing `79,800. These 38,000 hours include 200 hours arise due to machine
breakdown. Labour rate variance was :
(A) `3,000 (A)
(B) `3,600 (A)
(C) `3,800 (F)
(D) `3,800 (A)
71. PQR Ltd. has normal monthly machine hour capacity of 120 machines working
8 hours per day for 25 working days in a month. The budgeted fixed overhead is
` 3,00,000. The actual production was 4,500 units. The actual fixed overhead
was `3,20,000. Expenditure variance = ?
(A) 30,000 (A)
(B) 20,000 (A)
(C) 20,000 (F)
(D) 18,000 (A)
72. Direct labour cost data are as follows :
Actual hours worked 25,000, Total direct labour cost `1,25,400, Direct labour
rate variance `2,900 (A), Direct labour efficiency variance `3,528 (F)
Standard labour hour rate will be _________
(A) `5.02
(B) `5.26
(C) `4.90
(D) `5.16
73. A firm manufactures 15,000 units per annum, each taking 1.5 direct labour
hours. The direct labour rate is `8 per hour and pay rise of 15% is awarded half
way through the year.
What is the total annual direct labour budget amount ?
(A) `1,20,000
(B) `1,93,500
(C) `1,80,000
(D) `2,07,000
74. The following information extracted from the records of P Ltd.
Sales for October, November and December, 2018 are `90,000, `1,10,000 and
`80,000 respectively. 40% of its sales are expected to be for cash. Of its credit
sales 70% are expected to pay in the month after sales and take 2% discount
on it. Balance is expected to pay in second month after sales and 3% of it is
expected to bad debts.
What are the sales receipts to be shown in cash budget for the month of
December?
(A) `92,990
(B) `1,23,174
(C) `95,609
(D) `1,25,793
75. Which of the following is not a step for successful implementation of the budgetory
control system ?
(A) Budget manual
(B) Budget controller
(C) Budget period
(D) Budget standard
76. Assertion (A) :
The purpose of performance budgeting is to focus on work to be done and
services to be rendered.
Reason (R) :
The main purpose of performance budgeting is not to inter-relate physical and
financial aspects of every programme, project or activity.
77. A budget designed for a specific planned output level and is not adjusted to the
level of activity attained is known as :
(A) Fixed budget
(B) Master budget
(C) Zero base budget
(D) Flexible budget
78. The following information are given :
Normal loss in production is 2.50% of input; Sales target is 9,600 units; Closing
stock is 1,650 units which has been estimated 10% more than previous year
quantity.
Input quantity required for production will be ________
(A) 8,000 units
(B) 11,500 units
(C) 10,000 units
(D) 8,500 units
79. A factory is presently working at 50% capacity and producing 4,000 units. The
cost data are as follows :
Material and labour cost per unit `15, Factory overheads (40% variable) `30,000.
What will be the works cost for 60% capacity ?
(A) `1,04,400
(B) `1,12,400
(C) `1,18,600
(D) `1,22,200
80. Maintenance of cost records relating to the utilisation of materials, labour and
other items of cost, in the manner as prescribed by specified class of companies
engaged in the ____________ .
(A) Production of goods only
(B) Providing services only
(C) Production of such goods and providing such services as may be prescribed
(D) Production of such goods or providing such services as may be prescribed
81. Every cost auditor, who conducts an audit of the cost records of a company,
shall submit report in :
(A) General form
(B) Form-CRA 1
(C) Form-CRA 2
(D) Form-CRA 3
82. 'Cost benefit analysis' falls under :
(A) Scientific techniques
(B) Accounting or economic techniques
(C) Personnel techniques
(D) Statistical techniques

83. Which is not a social purpose of cost audit ?
(A) Promoting corporate governance
(B) Facilitate in fixation of reasonable prices of goods and services
(C) Improvement of human productivity
(D) Pinpointing areas of inefficiency
84. Dividing net credit sales by average debtors would yield _______ .
(A) Current Ratio
(B) Return on Sales Ratio
(C) Debtors Turnover Ratio
(D) Average Receivables
85. ABC Ltd. has earned 12% returns on total assets of `8,00,000 and has a net
profit ratio of 8%. Sales of the firm shall be :
(A) `96,000
(B) `6,40,000
(C) `12,00,000
(D) `7,36,000
9% preference shares of `10 each `4,00,000, Equity shares of `10 each

`12,00,000, Profit after tax `4,20,000, Equity dividend paid 20%, Market price
of equity share `25 each. What will be the earnings per share ?
(A) `3.50
(B) `3.20
(C) `5.40
(D) `9.60
87. The average creditors are `74,000, creditors turnover ratio is 4.80. Amount of
credit purchases will be :
(A) `15,417
(B) `3,52,500
(C) `3,55,200
88. What will be the amount of stock if the current ratio is 2 : 1 and quick ratio is
1.5:1 and current liabilities are `90,000 ?
(A) `55,000
(B) `1,80,000
(C) `1,35,000
(D) `45,000
89. Conducted to ensure borrowing capacity of a concern to meet contingencies in
the near future is :
(A) Long-term Analysis
(B) Vertical Analysis
(C) Short-term Analysis
(D) Internal Analysis
90. A company has an inventory of `58,400, Debtors of `48,000 and inventory
turnover of 6 times. The gross profit margin is 20% on sales and its credit sales
are 40% of the total sales. What will be the credit sales ?
(A) `3,50,400
(B) `3,53,440
(C) `4,38,000
(D) `1,75,200
91. The following information is given for X Ltd.
Stock velocity 3.75 months, Gross profit `80,000 being 20% of sales. The
closing stock of the year is `25,000 more than the opening stock. What will be
the amount of opening and closing stocks ?
(A) `1,00,000 and `1,25,000
(B) `80,000 and `1,05,000
(C) `87,500 and `1,12,500
(D) `85,000 and `1,10,000
92. Which of the following statements is false ?
(A) Financial statements take into consideration only the financial factors.
(B) Financial statements are primarily prepared for shareholders.
(C) Financial statements not serving any purpose to the probable shareholders,
suppliers, lenders and other interested parties.
(D) Financial statements are essentially interim reports and therefore, cannot
be final because the final gain/loss can be computed only at the termination
of business.
93. A company has the following Current Assets :
Cash `40,000, Marketable securities `25,000, Debtors `20,000 and Inventory
`18,000. The total current liabilities were `65,400 (including the future tax liability
of `4,800 which will be made after one year)
What will be the quick ratio of the company ?
(A) 1.40 : 1
(B) 1.81 : 1
(C) 1.57 : 1
(D) 1.30 : 1
94. The following information of a non-financial enterprise is given :
Purchase of fixed assets `40,000; Proceeds from sale of equipments `35,000;
Interest received `3,000; Interest paid `6,000, Dividend received `4,000 and
Dividend paid `15,000.
Amount of cash from investing activities will be _________
(A) `1,000
(B) `(4,000)
(C) ` 2,000
(D) `(2,000)
95. Which of the following statement is correct ?
(A) A decrease in current liability during the year results in increase in working
capital.
(B) Only non cash expenses are added to net profit to find out funds from
operations.
(C) Conversion of debentures into equity shares appears in funds flow statement.
(D) Collection from debtors is a source of fund.
96. Assertion (A) :
MIS is a necessity of all the organisations.
Reason (R) :
MIS helps in strategic planning, management control, operational control,
transaction processing and decision-making.
Select the correct answer from the options given below ____________.
Depreciation provided during the year :
Furniture `15,000, Building `14,000.
The statement of P&L for the year :
Opening balance `38,500 Add : Profit for the year `40,300, Less : Goodwill
written off `15,000, Closing balance `63,800.
What will be the amount of funds from operations ?
(A) `69,300
(B) `54,300
(C) `78,800
(D) `25,300
98. Closing debtors are `8,00,000 which are 125 percent of opening debtors. Cash
sales is 25 percent of total sales. If the debtors turnover ratio is 4 times then the
amount of total sales will be ________ .
(A) `36,00,000
(B) `28,80,000
(C) `38,40,000
(D) `48,00,000
99. PQR Ltd. have the following balances :
Investment at the end of the year 2017-18 `85,000, Investment at the end of the
year 2018-19 `70,000. During the year the company had sold 40% of its original
investment at a profit of 50%. What will be the amount of cash inflow and cash
outflow from the investment:
(A) `51,000 and `36,000
(B) `51,000 and `19,000
(C) `1,21,000 and `85,000
(D) `1,21,000 and `19,000
100. According to Activity Based Costing System, use of consumables is :
(A) Unit level activity
(B) Batch level activity
(C) Product level activity
(D) Facility level activity
ANSWER KEY

1 B 34 B 68 D
2 B 35 A 69 B
3 C 36 D 70 D
4 D 37 B 71 B
5 D 38 C 72 C
39 D 73 B
6 C
40 C 74 A
7 D
41 C
8 B 75 D
42 B
9 C 76 C
43 A
10 A 77 A
44 B
11 B 78 C
45 A
12 A 79 A
46 A
13 A 80 D
47 B
14 D 81 D
48 A
15 D 49 D 82 B
16 B 50 B 83 A
17 D 51 C 84 C
18 B 52 B 85 C
19 B 53 A 86 B
20 B 54 D 87 C
21 A 55 A 88 D
22 B 56 B 89 C
23 A 57 A 90 D
24 A 58 B 91 C
25 C 59 C 92 C
26 D 60 C 93 A
27 B 61 D 94 C
28 B 62 D 95 A
29 D 63 C 96 A
30 B 64 B 97 A
31 A 65 C 98 C
32 B 66 A 99 B
33 D 67 C 100 A

1. Product cost includes :

(A) All direct costs
(B) All variable costs
(C) Full Factory cost
(D) Factory overheads
2. Conversion cost is :
(A) Sum of direct material, direct labour, direct expenses and factory overheads
(B) Sum of direct material, direct labour, direct expenses and variable factory
overheads
(C) Sum of direct labour and factory overheads
(D) Factory overheads only
3. Costs are classified as “Research and Development Costs” by the way of :
(A) Nature or Element
(B) Functions
(C) Degree of traceability
(D) Changes in Activity or Volume
4. Which one of the following industries adopts batch costing for determining the
total cost ?
(A) Computer manufacturing
(B) Oil Refinery
(C) Car manufacturing
(D) Drug industry
5. While allocating service departments costs to production departments which
one of the following is not a method of re-distribution ?
(B) Capital values method
(C) Direct distribution method
(D) Repeated distribution method
18
6. The following data obtained from the cost records of CS Limited :

Item Standard Actual
Output in units 40,000 50,000
Hours worked 2,500 2,400
Fixed Overheads `6,00,000 `9,00,000
Fixed Overhead Volume Variance will be :
(A) `1,20,000 (F)
(B) `3,00,000 (A)
(C) `1,50,000 (F)
(D) `1,50,000 (A)
7. Which of the following is an examples for Key Factor ?
(A) Raw material price
(B) No. of plants used in manufacturing
(C) Labour turnover
(D) Plant capacity
8. In ........................ both fixed and variable costs are charged to products.
(A) Marginal costing
(B) Multiple costing
(C) Absorption costing
(D) Direct costing
9. A devise used for the purpose of breaking up or separating costs into smaller
sub-divisions, is known as :
(A) Cost Centre
(B) Responsible Centre
(C) Cost Classification
(D) Cost Unit
10. ........................... encourages managers to identify which activities are value
added activities.
(A) Standard Costing
(B) Activity-based Costing
(C) Uniform Costing
(D) Direct Costing
11. Which of the following Cost Accounting Standards (CAS) is related to

“Depreciation and Amortisation” ?
(A) CAS-4
(B) CAS-12
(C) CAS-16
(D) CAS-21
12. Cost of Idle Time due to abnormal causes should be :
(A) Treated as part of cost of production
(B) Not included as a part of cost of production
(C) Charged to costing profit and loss account
(D) Separately shown in the financial statements
13. Total number of workers : 100
Idle time 10%, out of which 50% normal idle time
Working days per year @ 8 hours per day : 300 days
Factory overheads : `1,02,60,000
Direct labour hour rate will be :
(A) `42.75
(B) `45
(C) `47.5
(D) `47.025
14. ABC emphasise on :
(A) More precise profit analysis
(B) More accurate costing
(C) Improved cost control
(D) All of the above three
15. The following particulars are related to Job No. 131 :
Direct material `16,000
Direct labour `18,000

Direct expenses `2,400
Factory overheads are recovered on the basis of 150 percent on direct labour
cost and administrative overheads at 10 percent on factory cost. The total cost
of the job will be :
(A) `1,01,000
(B) `63,400
(C) `69,740
(D) `67,100
16. If the loss as per financial accounts is `1,65,000 and opening stock is overvalued
in cost accounts by `25,000 and closing stock is undervalued in cost accounts
by `32,000, the loss as per cost accounts will be :
(A) `1,08,000
(B) `1,58,000
(C) `1,72,000
(D) `2,22,000
17. The following are the data related to Job No. 102 :
Raw materials `21,000
Direct wages for 80 hours @ `150 per hour
Factory overhead incurred for all jobs `4,80,000 for 4,000 hours.
Factory cost of the Job No. 102 will be :
(A) `33,000
(B) `42,600
(C) `51,300
(D) `22,020
18. The monthly requirement of a component is 4,000 units. The cost per order is
`1,000 and the carrying cost per unit per annum is `24. The Economic Ordering
Quantity is :
(A) 2,000 units
(B) 4,000 units
(C) 577.35 units
(D) 1,825.74 units
19. During the time of inflation, which method of pricing of material issues leads to
a higher material costs for a job ?
(A) First in first out method
(B) Last in first out method
(C) Highest in first out method
(D) Standard pricing method
20. During the 48 hour week, Shri Sonu produced 2,100 units. The standard time
allowed to produce one unit is 2 minutes. If he received wages for a guaranteed
48 hours per week at the rate of `50 per hour and bonus according to Rowan
Plan, the total earnings will be :
(A) `2,950
(B) `2,400
(C) `3,500
(D) `3,154
21. P/V Ratio 40%; Sales `65,00,000 and BEP `47,50,000. Profit will be :
(A) `26,00,000
(B) `19,00,000
(C) `45,00,000
(D) `7,00,000
22. If standard output for 8 hours is 200 units and actual output in 10 hours is 350
units, the efficiency level will be :
(A) 175%
(B) 140%
(C) 57.14%
(D) 71.42%
23. Which of the following is not an objective of Management Accounting ?
(A) To formulate planning and policy
(B) To provide report
(C) To determine the selling price
(D) To assist in decision-making process
24. When loss as per cost accounts is `36,000 and factory overhead under absorbed
being `1,15,000, the loss/profit as per financial accounts should be :
(A) Loss `1,51,000
(B) Loss `79,000
(C) Profit `79,000
(D) Profit `1,51,000

25. The following information relates to a production department of Cheenu Limited:

`
Material used 5,00,000
Direct labour 4,00,000
Factory overhead 2,25,000
In an order carried out in the department, direct material amounted to `60,000
and direct labour amounted to `35,000. On the basis of prime cost, amount of
the factory overhead chargeable to this order will be :
(A) `19,688
(B) `23,750
(C) `27,000
(D) `42,750
26. From the following data, P/V Ratio will be :
Year Cost of Sales (`) Profit (`)
2016-17 40,00,000 5,00,000
2017-18 60,00,000 15,00,000
(A) 12%
(B) 25%
(C) 20%
1
(D) 33 3
%
27. Given, Sales `80 Lakh; Net Profit `8 Lakh and Fixed Cost `12 Lakh. On the
basis of the data, if sales is `120 Lakh, then the profit will be :
(A) `18 Lakh
(B) `12 Lakh
(C) `10 Lakh
(D) `6 Lakh
28. Which of the following is a situation in which the bonus under Halsey 50% Plan
as well as under Rowan Plan will be same ?
(A) When time saved is less than time taken
(B) When time saved is more than time taken
(C) When time saved is equal to time taken
(D) No such situation is possible
29. A factory engaged in manufacturing LED Lamps is working at 60% capacity and
produces 1,20,000 LED Lamps per annum.
The present cost-break-up and selling price for one LED Lamp is as under :
`
Direct Material 10
Direct Labour 16
Overheads 20 (60% fixed)
Selling Price 60
If the factory operates its 90% capacity, then profit will be :
(A) `16,80,000
(B) `32,40,000
(C) `25,20,000
(D) `67,20,000
30. The data given below :
Standard Actual
Labour Hours 5,000 6,000
Variable Overheads `1,00,000 `1,10,000
Output (Units) 10,000 8,000
Variable Overhead Efficiency Variance will be :
(A) `10,000 (A)
(B) `40,000 (A)
(C) `30,000 (A)
(D) `30,000 (F)
31. In .......................... technique of inventory control, quantities in hand of each

item or class of stock is reviewed periodically say, 30, 45 or 60 days.
(A) ABC Analysis
(B) Two-bin System
(C) Order Cycling System
(D) Perpetual Inventory System

32. If the Minimum Stock Level is 2,500 units, Normal Consumption is 150 units,
Maximum Re-order Period is 10 days and Normal Re-order Period is 8 days,
then Re-order Level will be :
(A) 1,500 units
(B) 4,000 units
(C) 1,200 units
(D) 3,700 units
33. If annual total carrying cost, per unit carrying cost and cost per order are `15,000,
`10 and `150 respectively, then Economic Order Quantity will be :
(A) 1,500 units
(B) 3,000 units
(C) 100 units
(D) 200 units
34. Which of the following documents records quantity and value of the material ?
(A) Bin card
(B) Stores ledger
(C) Both (A) and (B)
(D) None of (A) and (B)
35. Which one of the following methods of pricing of material issues is useful in
process costing ?
(A) First in first out method
(B) Last in first out method
(C) Simple average method
(D) Periodic weighted average method
36. .......................... is a budget which, by recognising different cost behaviour

patterns, is designed to change in relation to the volume of output.
(A) Production Budget
(B) Performance Budget
(C) Zero Base Budget
(D) Flexible Budget

37. Job card is a method of :

(A) Time-Keeping
(B) Time-Booking
(C) Payroll preparation
(D) Job Analysis
38. Time allowed for a job to Mr. W is 10 hours and time taken by him is 4 hours.
Wages rate is `75 per hour. If he wants to get higher amount of total wages,
then the incentive plan to be opted by him will be :
(A) Halsey 50% Plan
(B) Rowan Plan
(C) Halsey-Weir Plan
(D) Any of the above plans
39. The production cost of 1,000 units of an article is as follows :
Cost `
Direct Material 4,00,000
Direct Wages 3,00,000
Fixed and Variable Overheads 2,00,000
The company produced 5,000 units and sold at `1,000 per unit and earned a
profit of `10,00,000. The amount of Variable overhead per unit is :
(A) `200
(B) `75
(C) `100
(D) `120
40. Which of the following is not a method of segregating semi-variable costs into
fixed and variable costs ?
(A) Graphical presentation method
(B) Least square method
(C) Semi-average method
(D) High and low points method

41. Costs which are caused by a group of things being made or processed at a
single time are referred to as :
(A) Product-level costs
(B) Cost pool
(C) Organizational-level costs
(D) Batch level costs
42. Which of the following is not a benefit of Integrated Accounting System ?
(A) No need for reconciliation
(B) Easy method to maintain accounts and avoid unnecessary complications

(C) More amount of profit, as cost and financial account profits are taken together
(D) There is saving of time
43. Suitable costing system for repair shops is :
(A) Unit costing
(B) Operation costing
(C) Operating costing
(D) Job costing
44. Given, Contract price `40 Lakh, Work certified `25 Lakh and Cash received `20
Lakh. If loss amounted to `1.5 Lakh, then amount of loss transferred to profit
and loss account will be :
(A) `80,000
(B) `1,00,000
(C) `40,000
(D) `1,50,000
45. Contract price `200 Lakh, Profit recognized up to 31st March, 2017 `4.5 Lakh
and Cost of work certified during 2017-18 `72 Lakh. If Estimated Profit and
Estimated Total Cost respectively are `25.2 Lakh and `172.8 Lakh, profit to be
recognized as per AS-7 in 2017-18 will be :
(A) `9.072 Lakh
(B) `10.692 Lakh
(C) `6 Lakh
(D) `10.5 Lakh

46. The input in a process is 8,600 units and normal loss is considered at 5% of
input.If the actual output is 8,200 units, then there will be :
(A) Abnormal loss of 30 units
(B) Abnormal loss of 400 units
(C) Abnormal gain of 400 units
(D) Abnormal gain of 30 units
47. The input in a process is 10,000 units, Normal loss is considered as 5% of input
which valued at `10 per unit and actual output is 9,350 units. If the total cost of
the process is `2,71,000, then value of abnormal loss/gain will be :
(A) Abnormal loss `4,200
(B) Abnormal gain `4,200
(C) Abnormal loss `1,500
(D) Abnormal loss `4,279
48. ....................... is valued in terms of equivalent production units.
(A) Stock of raw material
(B) Stock of work-in-progress
(C) Stock of finished goods
(D) All the above three stocks
49. In oil refinery, during processing of crude oil, bitumen and chemical fertilizer are
also obtained with the main product. These are examples of :
(A) Joint products
(B) By-products
(C) Co-products
(D) Combined products
50. Which of the following is the commonly used method for apportioning joint process
costs over the joint products ?
(A) Standard cost method
(B) Opportunity cost method
(C) Survey method
(D) Replacement cost method

51. Standard output for 10 hours is 240 units, Actual output in 15 hours is 396 units
and wages rate is `80 per hour. The amount of gross wages under Emerson
Efficiency Plan will be :
(A) `1,260
(B) `1,309
(C) `1,320
(D) `1,560
52. If prime cost is `3,75,000; Factory cost is `6,00,000 and administrative
overheads are 50% of the factory overheads, then the administrative overheads
will be :
(A) `2,25,000
(B) `1,12,500
(C) `1,87,500
(D) `3,00,000
53. Opening stock, Production and Closing stock are 2,500 units, 32,500 units and
3,250 units respectively. If `15 per unit is spent on each unit sold, then total
selling expenses will be :
(A) `4,87,500
(B) `4,98,750
(C) `5,73,750
(D) `4,76,250
54. A hotel having 100 rooms of which 80% are normally occupied in summer and
40% in winter. Period of summer and winter will be taken as 6 months each and
normal days in a month be assumed to be 30 days. Total occupied room days
in a year will be :
(A) 28,800
(B) 21,600
(C) 14,400
(D) 36,000
55. P/V Ratio for the firm is 60%, Total fixed costs are `10,40,000 and variable cost
per unit is `720. If the sales are 20,000 units, then selling price per unit will be:
(A) `1,200
(B) `772
(C) `1,930
(D) `1,800
56. If the P/V Ratio is 30%, Margin of Safety is 40% and BEP is `48 Lakh, then
profit will be :
(A) `9.60 Lakh
(B) `14.40 Lakh
(C) `5.76 Lakh
(D) `24 Lakh
57. Fixed costs `45 Lakh, Variable costs `120 Lakh and Profit `35 Lakh, then P/V
Ratio is :
(A) 29.17%
(B) 37.5%
(C) 66.67%
(D) 40%
58. From the following information, the total passenger kilometers for the month of
May, 2018 will be :
Number of Buses 4
Round trips made by each bus per day 5
Distance of route 60 km
Capacity of bus 45 passengers
Normal passenger travelling 90% of capacity
Days operated in the month All days
(A) 15,06,600 Pass-km
(B) 7,53,300 Pass-km
(C) 7,29,000 Pass-km
(D) 14,58,000 Pass-km
59. Which of the following techniques of costing is also known as out-of-pocket

costing ?
(A) Standard Costing
(B) Historical Costing
(C) Marginal Costing
(D) Uniform Costing

60. Sales increased from `750 Lakh to `875 Lakh. If P/V Ratio is 30%, then increase
in the contribution will be :
(A) `262 Lakh
(B) `225 Lakh
(C) `37.50 Lakh
(D) `125 Lakh
61. The standard referred to the target which can be attained under the most
favourable conditions with no allowance for normal losses, waste and machine
down time, is known as :
(A) Normal Standard
(B) Attainable Standard
(C) Basic Standard
(D) Ideal Standard
62. Which of the following techniques is most suitable to measure the performance
of each segment of a concern ?
(A) Activity Based Costing
(B) Uniform Costing
(C) Absorption Costing
(D) Standard Costing
63. If MCV = `7,500 (A), MPV = `2,000 (F) and MMV = `6,200 (A), then MYV will
be :
(A) `700 (F)
(B) `3,300 (A)
(C) `3,300 (F)
(D) `8,200 (A)
64. Standard Mix Actual Mix
Material-X : 60 kg Material-X : 112 kg
Material-Y : 40 kg Material-Y : 68 kg
Loss @ 20% Loss @ 25%
Revised Standard Quantity (RSQ) will be :
(A) X – 81 kg and Y – 54 kg
(B) X – 108 kg and Y – 72 kg
(C) X – 72 kg and Y – 108 kg

(D) X – 48 kg and Y – 32 kg
65. Which of the following variance is always adverse ?
(A) Labour Rate Variance
(B) Efficiency Variance
(C) Labour Idle Time Variance
(D) Capacity Variance
66. If LEV, LITV and LMV are `6,300 (A), `600 (A) and `1,800 (F) respectively,
then LYV will be :
(A) `5,100 (A)
(B) `7,500 (A)
(C) `1,200 (F)
(D) `8,100 (A)
67. .......................... is an operating and financial plan of a business enterprise.
(A) Forecast
(B) Budget
(C) Estimate
(D) Standard
68. ............................ is based on the premise that every rupee of expenditure

requires justification.
(A) Zero Base Budgeting
(B) Programme Budgeting
(C) Performance Budgeting
(D) Appraisal Budgeting
69. Which of the following Sections of the Companies Act, 2013 deals with the audit
of Cost Accounting Records ?
(A) Section 128
(B) Section 145
(C) Section 147
(D) Section 148

70. Remuneration of cost auditor is to be determined in accordance with provisions

of :
(A) Section 148(3) of the Companies Act, 2013
(B) Section 143(12) of the Companies Act, 2013
(C) Section 147(1) of the Companies Act, 2013
(D) Section 148(5) of the Companies Act, 2013
71. Which of the following is not a commonly used method of analyzing financial
statements ?
(A) Common Size Statement
(B) Standard Size Statement
(C) Comparative Statement
(D) Funds Flow Statement
72. Total Assets Turnover Ratio is a :
(A) Profitability Ratio
(B) Activity Ratio
(C) Financial Ratio
(D) Market Test Ratio
73. Common Size Statements are examples for :
(A) Horizontal Analysis
(B) Vertical Analysis
(C) Lateral Analysis
(D) Cross Analysis
74. In case of financial enterprises, cash flow arising from interest and dividends
should be classified as cash flow from :
(A) Operating Activities
(B) Financing Activities
(C) Investing Activities
(D) Business Activities
75. Flow of funds takes place whenever :
(A) Non-current assets change into noncurrent liabilities
(B) Current assets change into current liabilities
(C) Non-current assets change into current liabilities
(D) All the above three occasions
76. If Working Capital is `24 Lakh, Total Debt is `52 Lakh and Long-term Debt is
`40 Lakh, then current ratio will be :
(A) 2 : 1
(B) 3 : 1
(C) 0.6 : 1
(D) 1.9 : 1
77. If Stock, Current Assets and Working Capital are `25 Lakh, `80 Lakh and `30
Lakh respectively, then liquid ratio will be :
(A) 2.67 : 1
(B) 1.45 : 1
(C) 1.83 : 1
(D) 1.1 : 1
78. If current ratio is 2.5 : 1 and Working Capital is `120 Lakh, then current liabilities
are :
(A) `48 Lakh
(B) `200 Lakh
(C) `80 Lakh
(D) `180 Lakh
79. If Average Inventory is `125 Lakh, Inventory Turnover Ratio is 8 times and
Profit is 20% on sales, then amount of sales will be :
(A) `1,000 Lakh
(B) `1,200 Lakh
(C) `800 Lakh
(D) `1,250 Lakh
80. Current Ratio is 2.5 : 1 and Liquid Ratio is 1.5 : 1. If inventory is `9,60,000, then
the amount of current assets will be :
(A) `9.6 Lakh
(B) `14.40 Lakh
(C) `24 Lakh
(D) `38.40 Lakh

81. Cost of Goods Sold is `90 Lakh, Purchases are `96 Lakh and Closing Stock is
`18 Lakh, then Stock Turnover Ratio will be :
(A) 5 times
(B) 6 times
(C) 6.4 times
(D) 4.29 times
82. If Closing balance of Profit and Loss Account is `50 Lakh, Depreciation is `5
Lakh, Goodwill written off is `15 Lakh, Non-operating income is `10 Lakh and
Opening balance of Profit and Loss Account is `15 Lakh, funds from operations
will be :
(A) `45 Lakh
(B) `35 Lakh
(C) `55 Lakh
(D) `40 Lakh
83. Investments at the beginning and at the end of the year 2017-18 were `255 Lakh
and `210 Lakh respectively. During the year 40 percent of original investments
were sold at a profit of `63 Lakh. Amount of cash inflow and outflow respectively
from investments will be :
(A) `102 Lakh and `57 Lakh
(B) `165 Lakh and `57 Lakh
(C) `45 Lakh and Nil
(D) `147 Lakh and `39 Lakh
84. If Market Price per share, Earning per share and Dividend per share are `150,
`16.50 and `15 respectively, then Price Earning Ratio will be :
(A) 10 times
(B) 9.09 times
(C) 1.1 times
(D) 0.91 times
85. Capital Gearing Ratio is categorized as :
(A) Profitability Ratio

(B) Activity Ratio
(C) Long-term Solvency Ratio
(D) Market Test Ratio
86. The Cost Accounting Standard (CAS) concerned with quality control cost is :
(A) CAS 21
(B) CAS 19
(C) CAS 14
(D) CAS 8
87. The under recovery or over recovery of overheads should be :
(A) Carried forward to the next period
(B) Charged by a supplementary rate
(C) Transferred to Costing Profit and Loss Account
(D) Adjusted by using any one of the above three
88. ............................ method of pricing of material issues is not popular as it
always undervalues the stock and leads to creation of secret reserve.
(A) Weighted Average Price
(B) Base Stock
(C) Highest in First Out
(D) Standard Price
89. Under Balance Sheet Method of preparing cash budget, budget is prepared on
the basis of :
(A) Current year balance sheet
(B) Previous year balance sheet
(C) Forecasted balance sheet
(D) Consolidated balance sheet
90. ........................ Level Activities are identified in traditional Absorption Costing.
(A) Unit
(B) Batch
(C) Product
(D) Business
91. Cost Audit as per the direction of the Central Government shall be conducted
by:
(A) A Chartered Accountant in practice
(B) A Cost Accountant in practice
(C) A Chartered Accountant or Cost Accountant in practice
(D) The Auditor General of India
92. In an organisation labour turnover rates for a period are computed under Flux
method, Replacement method and Separation method as 8%, 5% and 4%
respectively. If the number of workers replaced during that period is 40, the
average number of workers on roll is :
(A) 400
(B) 600
(C) 800
(D) 1,000
93. .......................... trace or link the cost of performing certain activities to cost
objects in Activity Based Costing system.
(A) Resource Drivers
(B) Cost Drivers
(C) Cost Pools
(D) Cost Objects
94. Under Bedauxe Point system, the standard points fixed for a job is 600. A
worker while completing the job earned 720 points. If the time rate per hour is
`30, the bonus for the worker is :
(A) `60
(B) `45
(C) `30
(D) `15
95. Most companies use ............................ standards as the standards are more
realistic.
(A) Basic
(B) Current
(C) Attainable
(D) Ideal
96. Blanket overhead rate is used in a factory :
(A) Where only one product is produced continuously
(B) Where several products are produced and all products are pass through all
departments
(C) Where several products are produced and all products are processed for
same length of time in each department
97. Cost auditor who conducts an audit of the cost records of a company shall
submit his report along with :
(A) Form CRA-1
(B) Form CRA-2
(C) Form CRA-3
(D) Form CRA-8
98. Which of the following is a service department ?
(A) Machining Department
(B) Inspection Department
(C) Finishing Department
(D) Polishing Department
99. In integrated system of accounting only .......................... accounts are prepared.
(A) Personal and Real
(B) Real and Nominal
(C) Personal and Nominal
(D) Personal, Real and Nominal
100. By-products are distinguished from ...................... only in respect of degree of
importance and value.
(A) Joint Products
(B) Waste
(C) Scrap
ANSWER KEY

1 C 33 B 67 B
2 C 34 B 68 A
3 B 35 D 69 D
4 D 36 D 70 A
5 B 37 B 71 B
6 C 38 A 72 B
7 D 39 B 73 B
8 C 40 C 74 A
41 D 75 C
9 D
42 C 76 B
10 B
43 D 77 D
11 C
44 D 78 C
12 C
45 C 79 D
13 B
46 D 80 C
14 D
47 A 81 B
15 C
48 B 82 A
16 D 49 B 83 B
17 B 50 C 84 B
18 A 51 D 85 C
19 B 52 B 86 A
20 D 53 D 87 D
21 D 54 B 88 C
22 B 55 D 89 C
56 A 90 A
23 C
57 D 91 B
24 A
58 * 92 C
25 B
59 C 93 B
26 D 94 B
60 C
27 A 61 D 95 B
28 C 62 D 96 D
29 B 63 B 97 C
30 B 64 B 98 B
31 C 65 C 99 A
32 D 66 B 100 D
*Q.58 : The correct answer is 30,13,200 pass-km.


1. Which one of the following is false ?
(A) If cash outflows exceed cash inflows on an ongoing basis, the business
will eventually run out of cash
(B) Rapidly expanding companies can sometimes face a cash shortage
(C) Cash is the lifeblood of a business and without it the business will die
(D) A profitable company will never run out of cash
2. ................... is the cost of selecting one course of action and the losing of
other opportunities to carry out that course of action.
(A) Sunk Cost
(B) Joint Cost
(C) Differential Cost
(D) Opportunity Cost
3. A flexible budget is :
(A) A budget that is designed to furnish budgeted costs at different activity

levels
(B) A budget that will be changed at the end of the month in order to reflect
the actual costs of a department
(C) A budget that comprises variable costs only
(D) A budget that is designed for a specific planned output level
4. ……….. is a method of recording details of time with reference to the jobs or

work orders undertaken by the workers.
(A) Weekly time sheet
(B) Payroll
(C) Job card
(D) Daily time sheet

17
5. If the overtime arises for completing a job within a specified time as requested
by the customer, then the entire amount of overtime including overtime premium
should be charged :
(A) To that job directly
(B) To general overheads
(C) To costing profit and loss account
(D) To a particular department
6. Which of the following items can be classified as “C” as per ABC analysis of
inventory control ?
Items Annual usage Value per unit
Unit `
1 5,000 60
2 2,000 100
3 32,000 17
4 28,000 12
5 60,000 3
(A) Item number 5 only
(B) Item number 2 only
(C) Item numbers 3 and 4
(D) Item numbers 1 and 2
7. Stores ledger is maintained to record :
(A) Quantity as well as value of the material received, issued and balance
(B) Quantity of the material received, issued and balance
(C) Value of the material received, issued and balance
(D) Labour attendance
8. Company X uses activity-based costing for its two products: Product A & B.
One of the activity cost pools is parts administration. The total estimated overhead
cost for that pool was `5,50,000 and the expected activity was 2,000 part types.
If the Product B requires 1,200 part types, the amount of overhead allocated to
it would be :
(A) `2,75,000
(B) `3,00,000
(C) `3,30,000
(D) `3,45,000
9. X Limited provides you the following data for the month May, 2017 :
Closing stock as on 31st May, 2017 80 units
Production 280 units
Sales 330 units
Based on the above data, the opening stock as on 1st May, 2017 would be :
(A) 70 units
(B) 130 units
(C) 50 units
(D) 410 units
(A) Standing charges, running charges & maintenance costs
(B) Fixed cost, normal cost & standard cost
(C) Variable cost, fixed cost & marginal cost
(D) Standard cost, marginal cost & fixed cost
11. A transport company is running five buses between two towns, which are 50 km
apart. Seating capacity of each bus is 50 passengers. Actual passengers carried
by each bus were 75% of seating capacity. In April, 2017, all the buses ran on
all days of the month. Each bus made one round trip per day. Total passenger
km for the month April, 2017 would be :
(A) 2,81,250
(B) 1,87,500
(C) 5,62,500
12. The division of activities into unit level, batch level, product level, and facility
level categories is commonly known as a :
(A) Cost object
(B) Cost application
(C) Cost hierarchy
(D) Cost estimation
13. Service costing helps an organization in ascertaining :
(A) Inter-departmental service prices
(B) Benchmarking process/operations
(C) Tracking and controlling the excess cost
14. If the sales of a product is `94,080 and the profit margin on cost 12%, the
amount of profit will be :
(A) `7,800
(B) `11,290
(C) `8,580
(D) `10,080
15. Assertion (A) :
Management accounting can be defined as processing and presenting of
accounting, cost accounting and other economic data.
Reason (R) :
It is analysis of all the transactions, financial and physical, to enable effective
comparison to be made between the forecasts and actual performance.
(A) Both A and R are true and R is the correct explanation of A
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true but R is false
(D) A is false but R is true
16. …………………. is relevant for price fixation during recession or when make or
buy decision is to be made.
(A) Sunk cost
(B) Out-of-pocket cost
(C) Differential cost

(D) Joint cost
17. When analyzing material variances, which of the following variance would not
be calculated :
(A) Mix variance
(B) Price variance

(C) Capacity variance
(D) Usage variance
18. When calculating cost variance under standard costing system we must :
(A) Compare actual costs with budgeted costs.
(B) Compare standard costs with actual costs at the standard level of activity
(C) Compare actual costs with standard costs at the actual level of activity
(D) Compare actual outputs against budgeted outputs
19. ABC Ltd. has forecast its sales for the next three months as follows :
May : 12,000 units
June : 20,000 units
July : 25,000 units
As per the company policy, closing stock should be equal to 20% of the coming
month’s sales forecast. How many units should be produced in June :
(A) 20,000 Units
(B) 11,000 Units
(C) 21,000 Units
(D) 25,000 Units
20. ABC Ltd. shows break even sales ` 40,500 and budgeted sales `50,000.
Compute the margin of safety ratio ?
(A) 19%
(B) 81%
(C) 1.81%
(D) Require more data to calculate
21. If the P/V ratio of a product is 25% and selling price is `25 per unit, the marginal
cost of the product would be :
(A) `18.75
(B) `16
(C) `15
(D) `20
22. In case of large contracts the system of progress payment is adopted. The
amount of such progress payment will be equal to :
(A) Value of work certified – Retention money
(B) Value of work certified + Retention money
(C) Value of work certified + Work uncertified – Retention money

(D) Value of work certified + Work uncertified + Material in hand – Retention
money
23. Contracts in which reimbursement is based on actual allowable cost plus a

fixed fee is called :
(A) Special contract
(B) Cost plus contract
(C) Regular contract
(D) Cost contract
24. The total profit on a contract for `3,00,000 is `60,000 when the contract is 60%
complete and has been duly certified. If the retention money is 20% of the
certified value, the amount of profit that can be prudently credited to profit and
loss account is :
(A) `28,000
(B) `32,000
(C) `40,000
(D) `60,000
25. If material worth `500 is purchased for special job and directly received for job
from the supplier, then which of the following entry will be passed if accounts
are maintained under Non-integrated system ?
(A) Work in Progress
Control A/c Dr. 500
To General Ledger Control A/c 500
(B) Store Ledger
Control A/c Dr. 500
To General Ledger Control A/c 500
(C) General Ledger
Control A/c Dr. 500
To Store Ledger Control A/c 500
(D) Store Ledger
Control A/c Dr. 500
To Work in Progress Control A/c 500

26. ……................. is a system of accounting, whereby cost and financial accounts

are kept in the same set of books.
(A) Non-Integrated Accounting
(B) Integrated Accounting
(C) Inter-Connected Accounting
(D) Inter-Transfer Accounting
27. P Ltd. provides you the following information for the year 2017-18 :
Balance as on 1st April, 2017 1,240
Materials purchased 4,801
Material issued to :
— Jobs 4,774
— Maintenance works 412
— Administration offices 34
— Selling department 72
What will be the closing balance of material control account as on 31st March,
2018 ?
(A) 749 units
(B) 794 units
(C) 855 units
(D) 889 units
28. In which of the following method “Line of the best fix” is drawn to find out “variable
overheads” and “fixed overheads” out of “semi-Variable” Overheads ?
(A) Graphical Presentation Method
(B) Analytical Method
(C) High & Low Point Method
29. Under or over absorption of overheads due to abnormal factors is :
(A) Charged to costing P & L A/c
(B) Charged to production using supplementary overhead rate

(C) Charged to product cost
(D) Separately shown in the cost sheet
30. Percentage of direct material cost method of overhead absorption is suitable :

(A) If sub-standard material is used in production process.
(B) If material prices are not stable.
(C) If material is a smaller part of the cost of units made in the cost Centre.
(D) If material is a major part of the cost of units made in the cost Centre.
31. The total production cost to produce one unit of finished goods was `45. Direct
materials were 1/3 of the total cost, and direct labour was 40% of the combined
total of direct labour and direct materials. The cost for direct materials, direct
labour, and factory overhead was :
(A) `15, 18 & 12 respectively
(B) `15, 12 & 18 respectively
(C) `15, 16 & 14 respectively
(D) `15, 10 & 20 respectively
32. Compute the machine hour rate from the following information :
Cost of a machine `9,50,000
Cost of installation `50,000
Scrap value of the machine after 10 years `1,00,000
Estimated Repairs `5,000 per annum
Power consumed 2 units per hour @ `1.5 per unit
Estimated working hours 10,000 per annum
(A) `12.50
(B) `9.50
(C) `10
(D) `12
33. Assertion (A) :
Overheads are recovered in costing based on predetermined rates.
Reason (R) :
This solves the problem of treatment of under- recovery or over recovery of
overheads. Select the correct answer from the options given below :

34. Which of the following does not come under the scope of management accounting
?
(A) Formation, installation and operation of accounting, cost accounting, tax
accounting and information system.
(B) The compilation and preservation of vital data for management planning.
(C) Providing and installing an effective system of feed back.
(D) Publishing the financial statements and get them audited by statutory
auditors
35. ………............ is the method of assigning the organisation’s resources through
activities performed to produce the products.
(A) Historical Costing
(B) Absorption costing
(C) Activity based costing
(D) Marginal costing
36. Which of the following is not a cost price method of pricing of material issues ?
(A) First-in-first-out (FIFO)method
(B) Last-in-first-out (LIFO) method
(C) Standard price method
(D) Specified price method
37. Contribution is the difference between :
(A) Selling price and Fixed cost
(B) Selling price and Total cost
(C) Selling price and Variable cost of sales
(D) Selling price and Profit
38. Which of the statement is not true in respect of cost-volume-profit analysis ?
(A) In order to forecast profit accurately, it is essential to know the relationship
between profits and costs on the one hand and volume on the other.
(B) Cost-volume-analysis is not suitable for setting up flexible budgets which
indicates costs at various levels of activity
(C) Cost-volume-profit analysis is of assistance in performance evaluation
for the purpose of control.
(D) Analysis of cost-volume-profit relationship may assist in formulating price
policies to suit particular circumstances by projecting the effect which
different price structures have on costs and profits.
39. Which of the following is not correct for calculation of re-ordering level of
inventory?
(A) Maximum consumption × Maximum re-order period
(B) (Maximum consumption × Lead time) + Safety stock
(C) Minimum level + Consumption during time lag period
(D) (Maximum consumption × Lead time) – Safety stock
40. ………………..... is a value based system of inventory control, in which materials
are analysed according to their value so that costly and more valuable materials
are given greater attention.
(A) MAX-MIN plan
(B) Review of slow and non moving items
(C) ABC Analysis
(D) Order cycling system
41. Which of the following is not a group bonus plan ?
(A) Priestman Production Bonus Plan
(B) Scanlon Plan
(C) Towne Gain Sharing Plan
(D) Halsey Weir Plan
42. The cost accountant of Zed Ltd. has computed the following labour turnover
rates for the quarter ended 31st March, 2017 :
Under Flux Method 15%
Under Replacement Method 10%
Under Separation Method 6%
If the number of workers replaced during the quarter is 75, find out the number of
workers left and discharged :
(A) 48
(B) 45
(C) 30
(D) 64
43. Which of the following statement is not true in respect of Activity based costing?
(A) Activity based costing improves control over overheads costs.
(B) Setting up equipment is a batch level activity.
(C) In Activity based costing each cost pool has its own predetermined
overhead rate.
(D) Activity based costing is less expensive to implement than traditional
costing.
44. The ratio that explains how efficiently companies use their assets to generate
sales is :
(A) Revenue asset ratio
(B) Receivable turnover ratio
(C) Income ratio
(D) Fixed Asset turnover ratio
45. Profit before interest and tax of AB Ltd. was `3,40,000. Their net fixed assets
were `2,10,00,000 and working capital was `27,70,000.
Return on investments = ?
(A) 1.34%
(B) 0.57%
(C) 1.43%
(D) 1.57%
46. Debtor velocity = 3 months
Sales `25,00,000
Bills receivable & bills payable were `60,000 and 36,667 respectively
Sundry debtors = ?
(A) `6,25,000
(B) `5,25,000
(C) `5,65,000
(D) `6,65,000
47. Which of the following involves a movement of cash ?
(A) A bonus issue
(B) A right issue
(C) Depreciation of fixed assets
(D) Provision for taxes

48. The following items would be classified as operating activities in the statement
of cash flows :
(A) Acquisition of equipment, payment of dividends
(B) Proceeds from borrowing, payment of interest
(C) Payment of salaries, cash received from sale of goods
(D) Payments on loan, payments for taxes
49. When the installment paid in respect of a fixed asset acquire on deferred payment
basis includes both interest and loan, the interest element is classified
under.................. activities and the loan element is classified under ..................
activities.
(A) Financing, Investing
(B) Investing, Operating
(C) Operating, Financing
(D) Investing, Operating
50. Calculate the prime cost from the following information :
Direct material purchased : `1,00,000
Direct material consumed for production : `90,000
Direct labour : `60,000
Direct expenses : `20,000

Manufacturing overheads : `30,000
(A) `1,80,000
(B) `2,00,000
(C) `1,70,000
(D) `2,10,000
51. Total cost of a product : `10,000
Profit : 25% on Selling Price
Profit is :
(A) `2,500
(B) `3,000
(C) `3,333
(D) `2,000
52. Which of the following is not the work of purchase department :

(A) Receiving purchase requisition
(B) Exploring the sources of material supply
(C) Preparation and execution of purchase orders
(D) Accounting for material received
53. Calculate Re-order level from the following :
Consumption per week : 100-200 units
Delivery period : 14-28 days
(A) 5600 units
(B) 800 units
(C) 1400 units
(D) 200 units
54. Which of the following is not a method of cost absorption ?
(A) Percentage of direct material cost
(B) Machine hour rate
(C) Labour hour rate
55. Most suitable basis for apportioning insurance charges of machines would be :
(A) Floor Area
(B) Value of Machines
(C) No. of Workers
(D) No. of Machines
56. During the year ended 31st March, 2017 the profits of A Ltd. stood at `36,450
as per financial records. The company provides you the following information :
Factory overheads under recovered
in cost accounts `2,500
Depreciation over-recovered
in cost accounts `1,500
Interest on investment not
included in cost accounts `5,000
The profit as per cost records would be :
(A) `38,950
(B) `32,450
(C) `27,450
(D) `33,650
57. During the month July, 2017, 15,000 units were completed in process I and
transferred to the process II. Opening Stock as on 1st July, 2017 was 5,000
units and closing stock as on 31st July, 2017 was 10,000 units. Degree of
completion for both opening and closing stock :
Material 100%
Labour and overhead 40%
Equivalent production units for labour and overheads using FIFO method are :
(A) 18,000 units
(B) 17,000 units
(C) 20,000 units
(D) 25,000 units
58. Following information is available in relation to Process Q :
Input of raw material
@ `50 per unit 1,000 units
Other materials `8,500
Direct wages `10,000
Production overheads `7,500
Output transferred to
process R 900 units
Normal loss 5%
The amount of abnormal loss to be transferred to costing profit and loss account
would be :
(A) `4,000
(B) `4,026
(C) `3,040
(D) `8,000
59. Which of the following is not used in analyzing Financial statements ?
(A) Variance analysis
(B) Trend Ratio
(C) Ratio analysis
(D) Common size statement
60. Working capital ratio is also known as :

(A) Quick ratio
(B) Current ratio
(C) Debt equity ratio
(D) Liquidity ratio
61. For the financial year ended 31st March, 2017, the figures extracted from the
balance sheet of EXE Ltd. are as follow :
Opening stock `29,000
Closing stock `31,000
Cost of goods sold `2,40,000
The stock turnover ratio will be :
(A) 12 times
(B) 10 times
(C) 8 times
(D) 9 times
62. Debt service coverage ratio is obtained by dividing net profit before interest and
taxes by :
(A) Taxes
(B) Income
(C) Equity
(D) Interest charges
63. If Capacity variance is `3,520 (F) and Efficiency variance is `480 (F), then the
Fixed overhead volume variance would be :
(A) `4,000 (F)
(B) `4,000 (A)
(C) `3,040 (F)
(D) `3,040 (A)
64. Wage rate variance occurs due to :
(A) Higher wages paid on account of overtime for urgent work
(B) Change in basic wage structure
(C) Change in piece work rate
65. Budget which remain unchanged regardless of the actual level of the activity is
known as :
(A) Fixed Budget
(B) Functional budget
(C) Flexible budget
(D) Cash budget
66. An input of 10,000 Kg of material is introduced into the process K. The expected
normal loss in that process is 5%. If the actual output from the process is 9,800
Kg, the abnormal gain would be :
(A) 500 Kg
(B) 300 Kg
(C) 700 Kg
(D) 200 Kg
67. ………….. is prepared for the estimation of plant capacity to meet the budgeted
production during the budgeted period.
(A) Plant utilization budget
(B) Production budget
(C) Manufacturing overhead budget
(D) Labour budget
68. Every cost auditor, shall submit the cost audit report along with his or its
reservation or qualification or suggestions, if any, in form :
(A) CRA-1
(B) CRA-2
(C) CRA-3
(D) CRA-4
69. Which of the following statement is not correct ?
(A) Cost audit helps to the Government in the fixation of ceiling price of
essential commodities.
(B) Cost audit helps in improvement of productivity of human, physical and
financial resources of the enterprises.
(C) The cost auditor submits the report in annual general meeting organised
by shareholders.
(D) Cost auditor is appointed by the board of directors with the previous
approval of the Central Government
70. .......................... Department prepares plans and specifications of each job,

supervise production activities, undertake time and motion studies, perform job
analysis etc.
(A) Personnel
(B) Industrial engineering
(C) Payroll
(D) Cost
71. Performing periodic maintenance on buildings and general use equipments is
an example of :
(A) Facility level activity
(B) Unit level activity
(C) Batch level activity
(D) Product level activity
72. Which of the following is not indirect costs ?
(A) Advertising, legal charges, audit fees, bad debts etc.
(B) Cost of making a design, pattern for a specific job
(C) Lighting and heating of office building
(D) Depreciation, repairs and maintenance of plant and machinery
73. Which of the following statement is not true ?
(A) Retention money is withheld to ensure completion of entire contract and
compliance with the terms of the contract.
(B) In the case of large contracts, the system of progress payment is adopted.
(C) Profits on incomplete contracts should be considered in respect of work
certified and uncertified both.
(D) Cost-plus contract ensures that a reasonable profit accrues to the contractor
even in risky projects.
74. Every cost auditor shall forward his duly signed report to the board of directors
of the company within a period of ................ from the closure of the financial
year to which the report relates.
(A) 30 days
(B) 120 days
(C) 90 days
(D) 180 days
75. A manufacturing company provides you the following information for the coming
month :
Budgeted sales revenue `7,50,000
Budgeted contribution `3,00,000
Budgeted profit `75,000
What will be the budgeted break-even sales volume ?
(A) `9,37,500
(B) `5,25,000
(C) `5,62,500
(D) `6,75,000
76. Which of the following is not a Statistical technique of Cost Audit ?
(A) Activity Sampling
(B) Attitude Survey
(C) Exponential Smoothing
(D) Monte Carlo Simulation
77. A company, which has a margin of safety of `2,00,000 makes profit of `40,000.
If the fixed cost is `2,50,000, break-even sales of the company would be :
(A) `15,00,000
(B) `12,50,000
(C) `10,00,000
(D) `20,00,000
78. In cash flow statement, proceeds from sales of an asset will be considered as:
(A) Investing activity
(B) Financing activity
(C) Operating activity
79. The net income of a company after deducting preference dividend is `4,00,000
and the number of the equity shares is 50,000. Find out price earning ratio if
market price of the share is `32 ?
(A) 4 times
(B) 2 times
(C) 3 times
(D) 8 times
80. Which of the following is to be included while preparing a cost sheet ?

(A) Dividend paid
(B) Income tax paid
(C) Salesman’s commission
(D) Goodwill written off
81. Cost of production plus opening stock of finished goods minus closing stock of
finished goods equals to :
(A) Cost of goods sold
(B) Sales
(C) Prime cost
(D) Manufacturing cost
82. If material mix variance is `500 (F) and material yield variance is `800 (A), then
the material usages variance will be :
(A) `1,300 (A)
(B) `1,300 (F)
(C) `300 (A)
(D) `300 (F)
83. Working capital will not change if there is :
(A) Increase in current assets
(B) Payment to the creditors
(C) Decrease in current liabilities
(D) Decrease in current assets
84. Long term solvency is indicated by :
(A) Debt equity ratio
(B) Proprietary ratio
(C) Fixed assets ratio
85. Welfare expenses like canteen, medical, recreation services provided to the
employees are examples of :
(A) Direct expenses
(B) Indirect expenses
(C) Notional expenses
(D) Selling and distribution expenses
86. A Construction company received a contract of `540 lakh to build an over bridge
which will take two years to complete. Which method of costing should be used
by the company ?
(A) Job costing
(B) Single-output costing
(C) Contract costing
(D) Batch costing
87. Which of the following is not an objectives of the Cost Accounting Standards,
which has been issued by the Institute of Cost and Works Accountants of
India?
(A) Provide better guidelines on standard cost accounting practices.
(B) Enable the comparability of Financial statements and improve reliability
and usefulness of Financial statements.
(C) Assist cost accountants in preparation of uniform costs statements.
(D) Help Indian industry and the Government towards better cost management.
88. 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 + Fixed cost
89. The P/V ratio of a company is 50% and margin of safety is 40%. If present
sales is `30,00,000 then Break Even Point will be :
(A) `9,00,000
(B) `18,00,000
(C) `5,00,000
90. When the sales increase from `40,000 to `60,000 and profit increases by `5,000,
the P/V ratio is :
(A) 20%
(B) 30%
(C) 25%
(D) 40%
91. Which of the following is not a reason for an idle time variance ?
(A) Wage rate increase
(B) Machine break down
(C) Injury to worker
(D) Non- availability of material
92. A manufacturing unit provides you the following information :
Total input of material 10,000 units
Normal spoilage of the material 4% of the input
Total spoiled units 550 units
Total cost of the material@ `10 per unit `1,00,000
Sales value of the spoiled units `1 per unit
Calculate the net cost of abnormal spoilage to be transferred to costing profit
and loss account.
(A) `1,344
(B) `1,494
(C) `1,556.25
(D) `1,406.25
93. Bee Ltd. follows Halsey plan for remuneration to workers. A worker Ram, has a
rate of wages of `3,000 per week for 48 hours, plus a cost of living bonus of `25
per hour worked. He is given an 8 hours task to perform, which he accomplishes
in 6 hours. He is allowed 40% of the time saved as premium bonus.
What would be his total earning for that task ?
(A) `575
(B) `525
(C) `425
(D) `650
94. If EOQ is 200 units, ordering cost is `20 per order and total purchases is 4,000
units. The carrying cost per unit will be :
(A) `4
(B) `6
(C) `8
(D) `2
95. A job requires 2,400 actual labour hours for completion and it is anticipated that
there will be 20% idle time. If the wage rate is `10 per hour, what is the budgeted
labour cost for the job ?
(A) `19,200
(B) `24,000
(C) `28,800
(D) `30,000
96. Assertion (A) :
Marginal costing furnishes a better and more logical basis for fixation of sales
prices as well as tendering for contracts.
Reason (R) :
Marginal cost provides management with the information regarding the behavior
of costs and incidence of such cost on the profitability of an undertaking.
97. Which of the following is false in respect of Bills of materials ?
(A) Suitable action for purchase of material can be taken on the basis of the
bills of materials.
(B) It serves as an advance intimation to stores department about the raw
material requirement.
(C) Bills of material is prepared by the purchase department.
(D) A Bill of material is a comprehensive list of material required for a particular
job, process or service.
98. Actual overheads for the year ending 31st March, 2017 were `21,000, whereas
the overhead absorbed shows an over absorption of `1,000 for the same period.
If the direct labour cost is `1,00,000, then overhead absorption rate based on
direct wages would be :
(A) 20%
(B) 21%
(C) 22%
(D) 25%
99. Which of the following is generally used as cost unit in cement industry ?
(A) Per tonne
(B) Per kilolitre
(C) Per gallon
100. Which of the following method is not used for segregating semi-variable costs
into fixed and variable costs ?
(A) Graphic presentation method
(B) Least square method
(C) Comparison by period or level of activity method
ANSWER KEY

1 D 36 C 70 B
2 D 37 C 71 A
3 A 38 B 72 B
4 C 39 D 73 C
5 A 40 C
74 D
6 A 41 D
75 C
7 A 42 B
8 C 76 B
43 D
9 B 77 B
44 D
10 A 45 C 78 A
11 C 46 C 79 A
12 C 47 B 80 C
13 D 48 C 81 A
14 D 49 A 82 C
15 A 50 C 83 B
16 B 51 C 84 D
17 C 52 D
85 B
18 C 53 B
86 C
19 C 54 D
20 A 87 B
55 B
21 A 56 B 88 B
22 A 57 B 89 B
23 B 58 A 90 C
24 B 59 A 91 A
25 A 60 B 92 D
26 B 61 C 93 A
27 A 62 D 94 A
28 D 63 A
95 D
29 A 64 D 96 A
30 D
65 A 97 C
31 D
66 B 98 C
32 A
33 C 67 A 99 A
34 D 68 C 100 D
35 C 69 C

1. In cost accounting interest on internally generated funds is classified as ............

(A) Committed Cost
(B) Imputed Cost
(C) Policy and Managed Cost
(D) Discretionary Cost
2. Match the following Cost Accounting Standards with the titles :
CAS Title
(a) CAS 2 (1) Material Cost
(b) CAS 6 (2) Direct Expenses
(c) CAS 10 (3) Pollution Control Cost
(d) CAS 14 (4) Capacity Determination
Codes :
(a) (b) (c) (d)
(A) (2) (3) (1) (4)
(B) (1) (3) (4) (2)
(C) (4) (2) (3) (1)
(D) (4) (1) (2) (3)
3. Practical difficulty in the installation of a costing system is :
(A) Lack of support from top management
(B) Shortage of trained staff
(C) Resistance from existing staff
4. Where the nature of the product is complex and the costs cannot be charged
directly, the most suitable method of costing to compute cost is :
(A) Output costing
(B) Multiple costing
(C) Terminal costing
(D) Process costing
5. Management Accounting and Cost Accounting are ......... to each other.
(A) Completementary
(B) Supplementary
21
(C) Opposite
(D) Independent
6. Management Accounting works on the output of :
(A) Financial Accounting
(B) Cost Accounting
(C) Statistics
7. In Management Accounting, Analysis of accounting data are carried out with
the help of :
(A) Tools and Techniques
(B) Statutory Forms
(C) Auditors
(D) Legal provisions
8. In most of the organizations material control is generally made as the specific
responsibility of :
(A) Production Manager
(B) Purchase Manager
(C) Financial Manager
(D) Sales Manager
9. Which of the following differences in material stock adjusted by considering as
part of material cost ?
(A) Apparent differences
(B) Differences due to abnormal causes
(C) Differences due to avoidable causes
(D) Differences due to unavoidable causes
10. This type of loss is connected with both inputs and output :
(A) Waste
(B) Scrap
(C) Defectives
11. Decision regarding centralized purchase of materials has to be taken on the
basis of :
(A) Geographical Separation of plants
(B) Homogeneity of products
(C) Type of materials to purchased
12. The rate per kg. of materials P, Q, R and S are respectively `12, `15, `18 and
`21. The input-Output Ratio of the materials are respectively 140%, 130%,
120% and 110%. If so, the most economical material for production is :
(A) P
(B) Q
(C) R
(D) S
13. During the time of inflation, the method of pricing material issues which leads to
a lower material costs for a job is :
(A) FIFO
(B) LIFO
(C) HIFO
(D) Standard Pricing Method
14. ABC Ltd. manufactures a product and the following particulars are collected as
below :
Normal Usage (unit per week) 50
Minimum Usage (unit per week) 25
Maximum Usage (unit per week) 75
Re-order period (weeks) 4—6
You are required to calcualte re-order level :
(A) 100 units
(B) 200 units
(C) 150 units
(D) 450 units
15. If the annual carrying cost of material Z is `4 per unit and its total carrying cost
is `12,000 p.a., the economic order quantity of the material is :
(A) 3,000 units
(B) 4,000 units
(C) 5,000 units
(D) 6,000 units
16. The most suitable inventory control technique for spare parts is :
(A) ABC analysis
(B) VED analysis
(C) JIT analysis
(D) Control ratios
17. Under LIFO method, the purchases and issues are as follows :
March 1 Purchased 300 units @ `3 each
March 6 Issued 500 units

March 16 Issued 800 units
The value of closing stock shall be :
(A) `900
(B) `1,200
(C) `1,500
(D) `2,100
18. Wages and salaries paid to ........... are indirect labour costs.
(A) Foremen
(B) Clerks
(C) Supervisors
List I
(a) Time-booking
(b) Overtime
(c) Idle time
(d) Labour turnover
List II
(1) Power cut
(2) Lack of training
(3) Working due to seasonal rush
(4) Apportionment of overhead
Codes :
(a) (b) (c) (d)
(A) (3) (1) (4) (2)
(B) (4) (3) (1) (2)
(C) (3) (4) (1) (2)
(D) (3) (2) (4) (1)
20. ............. should be a principle for an ideal wage payment system.
(A) Fair and equitable remuneration
(B) Effective control on labour cost
(C) Equal pay for equal work
(D) Attract qualified and efficient workers
21. Which of the following incentive methods of wage payment shall be used for
indirect workers ?
(A) Gantt’s Task and Bonus Plan
(B) Rowan Plan
(C) Bedaux Plan
22. Piece rate system of wage payment is more suitable in which of the following
circumstances ?
(A) There is an uninterrupted flow of work
(B) Where the work can be closely supervised
(C) As there is no hurry to finish the work
(D) Where the output of a worker is not in his control
23. When the time saved by a worker while doing a work is less than 50% of the
standard time fixed for the work then from worker’s earnings point of view :
(A) Rowan Plan is better
(B) Halsey Plan is better
(C) Both are equal
(D) Both are independent, not have any such relationship
24. In ............. group bonus plan, in addition to eligible wages, half of the savings
in labour cost is paid to workers and supervisors as bonus.
(A) Priestman
(B) Rucker
(C) Scanion
(D) Towne
25. Assertion (A) : Excessive labour turnover is not advantageous to organizations.
Reason (R) : Labour turnover allows injection of fresh blood into the organizations.
Codes :
(A) (A) is true, but (R) is false
(B) (A) is false, but (R) is true
(C) Both (A) and (R) are true and (R) is the correct explanation of (A)
(D) Both (A) and (R) are true but (R) is not the correct explanation of (A)
26. Under Hasley-Wier plan, the time allowed for a job is 49 hours and time taken by
a workers is 40 hours. The rate of wages per hour is `30. The earnings of the
worker is :
(A) `1,200
(B) `1,470
(C) `1,335
(D) `1,290
27. For a period of 10 hours, standard output fixed as 260 units and actual output
achieved by a worker is 299 units. If so, the rate of bonus under Emerson
Efficiency plan is :
(A) 15%
(B) 20%
(C) 22%
(D) 35%
28. During the third week of March, Mr. R. produced 420 units. The standard time
allowed to produce one unit is 10 minutes. If he received wages for a guaranteed
48 hours per week at the rate of `5 per hour and bonus according to Hasley
Plan, the total earning was :
(A) `295
(B) `350
(C) `240
(D) `276.67
29. To produce 1,000 units of a product JK Ltd., spend `50,000 on direct material
and `40,000 on direct labour. Factory overhead was charged at the rate of 10%
on prime cost amounted to `12,000. The amount of direct expenses was :
(A) `9,000
(B) `24,000
(C) `30,000
(D) `36,000
30. The criteria used for secondary distribution of overheads which is considered as
inequitable is :
(A) Use method
(B) Incentive method
(C) Ability to pay method
(D) Survey method
31. Overhead expenses of stores keeping department often apportioned on the
basis of :
(A) Number of material requisitions
(B) Quantity of materials supplied
(C) Value of materials supplied
(D) Any of the above
32. The amount of under/over absorbed overhead at the end of the year is carried
forward to next year for adjustment when :
(A) The normal business cycle is more than one year
(B) The project is an old one
(C) The output is high in the initial years
(D) The overhead control system is lacking in the current year
33. In a manufacturing concern there are three production departments namely A, B

and C. Their direct wages for a period are respectively `75,000, `20,000 and
`30,000. During the same period the overheads of the departments are `60,000,
`30,000 and `15,000 respectively. For this concern, the Blanket Overhead Rate
shall be :
(A) 80%
(B) 84%
(C) 150%
(D) 200%
34. The most logical basis for absorption of selling and distribution overheads is :
(A) Sales value
(B) Cost of goods sold
(C) Number of orders
(D) Gross profit on sales
35. In traditional absorption costing, costs are first traced to :
(A) Activities
(B) Organizational Unit
(C) Products
(D) Cost Centres
36. The main reason for the usage of Activity Based Costing, by replacing the
traditional costing system is that :
(A) The overhead recovery rates used in traditional costing system are
inappropriate for decision-making
(B) The companies deal with more number of products at present
(C) No scope for cause and effect relationship in traditional costing
(D) The new manufacturing technology needs information for feedback of
performance even the product is in progress
37. In Activity Based Costing, inspection of products is a ............ level activity.
(A) Unit
(B) Batch
(C) Product
(D) Facility
38. Assertion (A) : Implementing an ABC system requires subtantial resources
which are costly to maintain.
Reason (R) : Activity Based Costing is a two-stage product costing.
(B) Both (A) and (R) are true but (R) is not the correct explanation of (A)
(C) (A) is true but (R) is false
(D) (A) is false but (R) is true

List I
(a) Unit level activity
(b) Batch level activity
(c) Product level activity
(d) Facility level activity
List II
(1) Material ordering
(2) Plant security
(3) Use of indirect materials
(4) Parts management
Codes :
(a) (b) (c) (d)
(A) (3) (1) (4) (2)
(B) (3) (2) (4) (1)
(C) (1) (3) (2) (4)
(D) (2) (4) (1) (3)
40. Fast Ltd., manufactures three types of products A, B and C following ABC
system. During a period the company incurred `73,000 as inspection cost and
it was worked for 10, 20 and 9 production runs respectively for producing
products A, B and C. The inspection hours required per production run was 3,
4 and 4 respectively. The total inspection costs for product B under ABC
system was :
(A) `15,000
(B) `40,000
(C) `18,000
(D) `24,000
41. ................. Accounts have direct relevance in ascertaining the cost of products.
(A) Real
(B) Nominal
(C) Personal
(D) Real and Nominal
42. The items of accounts excluded from non-integrated accounting system and
represented by cost ledger control account are :
(A) Purchases
(B) Expenses
(C) Balance-sheet items
43. Non-Integrated Account System followed in an organization enables it to achieve:

(A) High level of efficiency
(B) Greater control over the organization
(C) No delay in getting data
44. When finished goods are sold at total sales value, the account to be debited is:
(A) General Ledger Adjustment Account
(B) Cost of Sales Account
(C) Stores Ledger Control Account
(D) Finished Goods Stock Ledger Control Account
45. If the loss as per cost books are to be `16,000 and closing stock is overvalued
in cost books by `4,000 and opening stock is undervalued in cost books by
`7,000, the loss as per financial accounts is :
(A) `12,000
(B) `5,000
(C) `27,000
(D) `9,000
46. Which of the following items is added to profit as per cost accounts to arrive at
financial profit ?
(A) Under absorbed overheads
(B) Over absorbed overhead
(C) Over valuation of closing stock
(D) Goodwill written off
47. In a firm the cost and financial transactions are integrated. Under this situation
the firm paid wages amounted to `1,20,000 in which 25% is indirect in nature.
Then the journal to be passed to account the indirect wages is :
(A) Wages Control A/c Dr. 30,000
To Bank A/c 30,000
(B) Factory overheads Control A/c Dr. 30,000
To Wages Control A/c 30,000
(C) Factory overhead Control A/c Dr. 30,000
To Bank A/c 30,000
(D) No need of separate entry
48. The work-in-progress Control Account of JK Ltd., shows a total of `9,30,000.

The Stores Ledger Control Account `1,44,000 and the closing balance of `72,000
are in the credit side. Then the balance `7,14,000 being the balancing figure
transferred to :
(A) Stores Ledger Control Account
(B) Cost Ledger Control Account
(C) Costing Profit and Loss Account
(D) Finished Goods Account
49. Materials consumed `6,000
Wages paid `9,000
Works on cost 50% on wages
Office on cost 20% on works cost
Selling on cost 10% on works cost
Profit 20% on cost
If so, the selling price is :
(A) `30,420
(B) `30,300
(C) `32,640
(D) `31,220
50. Which of the following is not a features of job costing ?
(i) Outputs are identical.
(ii) Production is undertaken against customer’s order.
(iii) Each job is a cost unit.
(iv) Production is continuous.
Codes :
(A) (i) only
(B) (i) and (iv) only
(C) (ii) and (iv) only
(D) (ii) and (iii) only
51. The following are the data relating to Job
No. 767 :
Raw materials `3,400
Direct wages for 80 hours @`3
Variable overhead incurred for all jobs
`6,000 for 4,000 hours.
If 20% profit on selling price is expected, the selling price is :
(A) `4,512
(B) `3,760
(C) `4,700
(D) `4,320
52. In batch costing, at the level of production of economical lot size :
(A) Carrying cost is minimum
(B) Setup cost is minimum
(C) Total cost of product is minimum
(D) Computation of cost of production is easy
53. In Batch Costing, with increase in batch size :
(A) There is an increase in carrying cost and set-up cost per unit
(B) There is a decrease in carrying cost and set-up cost per unit
(C) There is an increase in carrying cost and set-up cost per unit is reduced
(D) There is a decrease in carrying cost but the set-up cost per unit is increased
54. The annual demand for a component is 2,000 units. The set-up cost per batch
and the carrying cost per unit per annum are respectively `100 and `10. The
Economic Batch Quantity is :
(A) 200 units
(B) 300 units
(C) 400 units
(D) 166.67 units
55. A contract is completed to the extent of two-thirds. The contract account shows
a loss of `15,000 at the end of the accounting period. If so, the amount to be
transferred to profit and loss account is :
(A) `15,000
(B) `10,000
(C) 2/3rd of `15,000 as reduced by the percentage of cash received
(D) `15,000 + anticipated future loss
56. In contract agreements, escalation clause is incorporated to safeguard the
contractor against any :
(A) Increase in material price
(B) Increase in labour rate
(C) Increase in quantity of material and labour utilized for contract
57. The following details are relating to a contract :
Contract Price `15,00,000
Notional Profit `1,98,000
Cash received `6,00,000
Work certified `7,50,000
Work uncertified `1,50,000

Amount of profit to be transferred to profit and loss account :
(A) `1,98,000
(B) `1,05,600
(C) `1,32,000
(D) `1,58,400
58. The following are the information taken from the cost records of a contract
which was 90% completed :
`
Total expenditure to date 20,50,000
Contract Price 32,00,000
Work certified 27,00,000
Work uncertified 1,80,000
Cash received 22,50,000
Estimated future expenditure to complete the contract 1,50,000
The estimated profit is :
(A) `2,00,000
(B) `10,00,000
(C) `11,50,000
(D) `50,000
59. When the total cost of a process is `1,61,000, sales value of scrap is `8,000,
normal loss is 150 units, actual input is 1,000 units and actual output is 830
units, the value of abnormal loss is:
(A) `3,686.75
(B) `3,879.52
(C) `3,788.24
(D) `3,600
60. In a company adopting process costing, the output of a process is transferred
to next process by adding 25% profit on transfer price. In a particular period the
total cost and profit of the process amounted to `70,500 and `9,500 respectively.
The total value of closing stock was `6,000. Then the value of unrealized profit
in closing stock of the process is :
(A) `712
(B) `768
(C) `816
61. The output quantities of ............. remain in linear relationship among them.
(A) By-products
(B) Joint products

(C) Co-products
62. A manufacturing concern produced two joint products A and B whose sales
values were `1,52,000 and `1,68,000 respectively and selling expenses were
`20,000 and `80,000 respectively. The joint cost was `1,67,600. If the joint
cost was apportioned on cost of sales basis, it is :
(A) `33,520 and `1,34,080
(B) `79,610 and `87,990
(C) `1,00,560 and `67,040
(D) `83,800 and `83,800
63. In the reverse cost method, manufacturing cost applicable to the by-product
ending inventories should be reported in the :
(A) Income statement
(B) Balance sheet
(C) Both (A) and (B)
List I
(a) Retention Money
(b) Process Costing
(c) Service Costing
(d) Joint Products
List II
(1) Standing Charges
(2) Contract Costing
(3) Survey Method
(4) Abnormal Gain
Codes :
(a) (b) (c) (d)
(A) (1) (4) (2) (3)
(B) (2) (4) (1) (3)
(C) (3) (2) (1) (4)
(D) (2) (3) (1) (4)
65. Marginal Costing in America is called as :
(A) Differential costing
(B) Out-of-pocket costing
(C) Direct costing
(D) Variable costing
66. Statement—I :
Break-even analysis has gradually become a popular service tool for modern
financial management.
Statement—II :
No concrete limitations have been raised any where against the utility of break-
even analysis.
Select the correct answer from the option given below :
(B) Both statements are wrong
(C) Statement I is correct but statement II is not correct
(D) Statement I is not correct but statement II is not correct
67. When fixed costs are `90,000, ratio of variable cost to sales is 75% and the
break-even point occurs at 60% of the capacity sales, the capacity sales is :
(A) `4,50,000
(B) `5,60,000
(C) `6,00,000
(D) `7,50,000
68. The P/V ratio of a company is 40%. If the company reduces its selling price by
20%, the required percentage of increase in sales value to maintain the same
profit is :
(A) 20%
(B) 40%
(C) 60%
(D) 75%
69. Mr. R’s sales and profit in 2015 were respectively `1,20,000 and `8,000. His
sales and profit in 2016 were `1,40,000 and `13,000 respectively. In this case
his margin of safety in 2016 was :
(A) `32,000
(B) `52,000
(C) `88,000
(D) `1,36,000
70. Z Ltd., has a margin of safety of 4,000 units and break-even sales at 1,000
units. If its margin of safety sales is `2,00,000, total sales shall be :
(A) `8,00,000
(B) `6,00,000
(C) `4,00,000
(D) `2,50,000
71. R.V. Ltd., made a sale for `4,50,000 in the first half and for `5,00,000 in the
second half of 2016. In this year the total cost for the first and the second half
of the year were respectively `4,00,000 and `4,30,000. If there is no change in
selling price and variable cost and that the fixed expenses are incurred equally,
the break-even sales for the whole year is :
(A) `6,50,000
(B) `6,00,000
(C) `5,00,000
(D) `4,50,000
72. The following are the particulars relating to products P and Q :
P Q
Selling Price p.u. (`) 100 120
Marginal cost p.u. (`) 60 60
Material required p.u. (Kgs.) 5 5
Labour hours p.u. (Hrs.) 4 8
Which product is more profitable when :
(a) Material is the key factor.
(b) Labour hour is the key factor.
(c) Sales potential in units is the key factors.
(d) Sales potential in rupees is the key factors.
Codes :
(a) (b) (c) (d)
(A) (Q) (Q) (P) (Q)
(B) (Q) (P) (Q) (Q)
(C) (Q) (Q) (P) (P)
(D) (P) (Q) (P) (Q)
73. Standard Costing is basically a ............ technique.
(A) Cost computation
(B) Cost control
(C) Cost reduction
(D) Performance evaluation
74. Material Yield Variance is a sub-variance of :
(A) Material Cost Variance
(B) Material Usage Variance
(C) Material Price Variance
(D) Material Volume Variance
75. In a manufacturing firm normal capacity is 5,000 hours. Its budgeted fixed
overhead rate is `10 per standard hour. The actual level of activity is 4,400
standard hours and the actual fixed overhead is `52,000. The firm’s fixed overhead
volume variance is :
(A) `6,000 A
(B) `6,000 F
(C) `2,000 A
(D) `8,000 A
76. In an analysis of labour cost variance it was ascertained that the labour rate
variance was `750 A, actual time was 1,500 hours and standard rate per hour is
`1.50. The actual rate per hour was :
(A) `1.00
(B) `2.00
(C) `2.5
77. The selection of a method for disposition of variances depends on :
(A) Type of variances
(B) Size of variances
(C) Causes for variances
78. A short-term budget, broken down into a quarterly or monthly period and reviewed
and modified in the light of changing conditions is :
(A) Current Budget
(B) Flexible Budget
(C) Rolling Budget
(D) Zero Base Budget
79. While preparing a flexible budget indirect wages was considered as a semi-
variable expense. At 50% level of production it was estimated as `1,50,000. If
it has a tendency to increase by 10% between 60% and 75% capacity and
further will increase by another 5% when production crosses 75%, the amount
of indirect wages at 90% level of production is :
(A) `1,65,000
(B) `1,72,500
(C) `1,73,250
80. At 60% level of production the amount of factory overhead is `40,000 (40%
fixed). At 100% level of production it amounts to :
(A) `16,000
(B) `24,000
(C) `40,000
(D) `56,000
81. The units to be sold for different months are as follows :

Jan. Feb. Mar. Apr. May Jun.
1,200 1,300 1,600 2,000 2,400 3,000
There will be no work-in-progress at the end of any month. Finished units equal
to half the sales for the next month will be in stock at the end of each month.
The required production for April will be :
(A) 2,800 units
(B) 2,200 units
(C) 2,400 units
(D) 3,200 units
82. In ................ budgeting there was a shift from financial classification to objective
classification in respect of functions, activities etc.
(A) Programme
(B) Performance
(C) Zero base
83. The Central Government by an order can direct a company to include in its
books of accounts, particulars relating to utilization of :
(A) Materials
(B) Labour
(C) Other items used for production of goods or for providing services
84. The audit of cost accounting records, according to section 148 (2) of the
Companies Act, 2013, shall be conducted by a practicing :
(A) Chartered Accountant
(B) Cost Accountant
(C) Company Secretary
(D) Any of them
85. A PSU company shall within 30 days from the date of receipt of the report of the
cost auditor furnish explanation on every reservation or qualification contained
therein to :
(A) The Registrar
(B) Central Government
(C) The Shareholders
(D) The Parliament
86. The social purpose of cost audit is :
(A) Detection of errors and frauds
(B) Facilitating the fixation of prices of goods and services
(C) Promoting corporate governance

(D) Inculcation of cost consciousness
87. Every PSU company, within a period of 30 days from the date of receipt of cost
audit report, furnish to the central government with such report full explanation
on every reservation or qualification contained in the report in :
(A) Form CRA 3
(B) Form CRA 4
(C) Form CRA 5
(D) Form CRA 6
88. Section 148 of the Companies Act, 2013 gives :
(A) No powers to the cost auditor as the financial auditor has U/S 143 of
Companies Act, 2013
(B) Same powers to the cost auditor as the financial auditor has U/S 143 of
Companies Act, 2013
(C) More powers to the cost auditor than the financial auditor has U/S 143 of
Companies Act, 2013
(D) Lesser powers to the cost auditor than the financial auditor has U/S 143
of Companies Act, 2013
89. Profitability and productivity measurement technique used by cost auditor while
doing cost audit is categorized under :
(A) Economic Techniques
(B) Statsitical Techniques
(C) Personnel Techniques
(D) General Techniques
90. Non-compliance of which attribute of financial statements makes a company,
besides invoking penalties, impairs the confidence of the public investors :
(A) Authenticity
(B) Compliance with Law
(C) Freedom from Bias
91. .............. is a primary ratio.
(A) Current Ratio
(B) Gross Profit Ratio
(C) Return on Investment Ratio
(D) Debt-Equity Ratio
92. If Current Ratio is 2.5, Acid Test Ratio is 1.5 and Current Liabilities are `50,000,
the value of inventory is :
(A) `50,000
(B) `75,000
(C) `1,25,000
(D) `1,50,000
93. RK Ltd., supplies the following information for the year ended on 31st March,
2017.
Credit sales `1,50,000; Cash sales `2,50,000; Return inward `25,000; Opening
Stock `20,000; Closing Stock `30,000 and the Gross Profit Ratio is 20%. The
Inventory Turnover Ratio of RK Ltd. is :
(A) 8 times
(B) 10 times
(C) 12 times
(D) 15 times
94. The balances of some of the assets and liabilities as on 31-3-2017 are :
Cash `10,000; plant `2,00,000; Bills Receivable `5,000; Goodwill `90,000;
Debtors `25,000; Stock `20,000; Creditors `20,000; Bills Payable `10,000 and
Cost of Sales `1,80,000. In this case, the Working Capital Turnover Ratio is :
(A) 4 times
(B) 5 times
(C) 6 times
(D) 10 times
95. If the number of equity shares 3,000; Net profit `22,000; Dividend per equity
share Re. 0.30; Provision for taxation `12,000 and preference dividend paid
`4,000, the Pay-out ratio is :
(A) 15%
(B) 10%
(C) 5%
(D) 18%
96. In case of financial enterprises, cash flows arising from ......... are classified as
cash flows from operating activities.
(A) Interest Paid
(B) Interest Received
(C) Dividend Received
97. Some of the account balances of KK Ltd. are as follows in its balance sheet :
2016 2017
(`) (`)
Share Capital 2,50,000 4,50,000
10% Debenture 2,00,000 1,50,000
Share Premium 25,000 50,000
If the interest paid on debentures was `20,000, the net cash flows from financing
activities were :
(A) `1,75,000
(B) `1,55,000
(C) `2,05,000
(D) `2,25,000
98. Both cash flow statement and fund flow statement are :
(A) Prepared on cash basis
(B) Prepared on the basis of working capital
(C) Useful for long-term analysis
99. In fund flow statement, flow of fund will occur when a transaction is happened
between :
(A) Current Assets and Current Liabilities
(B) Non-current Assets and Non-current Liabilities
(C) Current Assets and Non-current Assets
100. While analyzing the opening and closing balance sheet of a company the following
are observed :
Total increase in current assets `20,000
Total increase in current liabilities `80,000
Total decrease in current assets `1,30,000
Total decrease in current liabilities `30,000
The net change in working capital is :
(A) No change in working capital
(B) Net increase in working capital `1,60,000
(C) Net decrease in working capital `60,000
ANSWER KEY

1 B 35 B 70 D
2 D 36 B 71 A
3 D 37 B 72 B
4 B 38 B
73 B
5 A 39 A
74 B
6 D 40 B
75 A
7 A 41 D
76 B
8 B 42 D
43 D 77 D
9 D
44 A 78 C
10 C
45 C 79 B
11 D
46 B 80 D
12 A
47 B 81 B
13 A
48 D 82 B
14 D
49 A 83 D
15 D 50 B
16 B 84 B
51 C
17 A 85 B
52 C
18 D 86 B
53 C
19 B 54 A 87 B
20 C 55 A 88 B
21 D 56 D 89 C
22 A 57 B 90 B
23 A 58 B 91 C
24 D 59 D 92 A
25 D 60 A 93 C
26 D 61 B
94 C
27 D 62 C
95 A
28 A 63 C
96 D
29 C 64 B
30 C 97 B
65 C
31 D 66 C 98 D
32 A 67 C 99 C
33 B 68 C 100 D
34 A 69 B

1. The chief objective of cost accounting is to:

(A) Earn more profit
(B) Increase production
(C) Provide information for management for planning and control
(D) Fix the price
2. Cost accounting differs from financial accounting in respect of :
(A) Recording Cost
(B) Ascertaining Cost
(C) Control of Cost
(D) Reporting of Cost
3. A power house which generates and supplies power is called :
(A) Profit Centre
(B) Production Centre
(C) Cost Centre
(D) Service Cost Centre
4. Over-absorption of factory overheads due to inefficiency of management should
be disposed by :
(A) Use of supplementary rate
(B) Transfer to costing profit and Loss account
(C) Carry forward to next year
(D) Transfer to production account
5. Costs which can be identified easily and indisputably with a unit of operation or
costing unit or cost centre is called :
(A) Variable Cost
(B) Direct Cost
(C) Product Cost
(D) Fixed Cost
20
6. The following information relates to the production department of a factory :

Materials used `30,000
Direct labour `20,000
Overheads `5,000
On an order carried out in the department, direct wages amounted to `3,000.
Find out the overheads chargeable to this order on the basis of direct wages :
(A) `700
(B) `650
(C) `800
(D) `750
7. Salary of a foreman should be classified as a:
(A) Fixed overhead
(B) Variable overhead
(C) Semi-fixed or semi-variable overhead
8. The costing method in which fixed factory overheads are added to the inventory
is :
(A) Direct Costing
(B) Marginal Costing
(C) Absorption Costing
(D) Standard Costing
9. The primary documents used for collection of production overheads are :
(A) Stores rcquisitions for indirect materials
(B) Wages analysis sheet for indirect labour
(C) Cash book for indirect expenses
10. Which of the following costs is not a factory overhead expense ?
(A) Depreciation of equipment used in the research department
(B) Salary of quality control inspector
(C) Overtime premium paid to direct labour
(D) Machine maintenance labour cost
11. A method of dealing with overheads involves spreading common costs over
cost centres on the basis of benefit received. This is known as :
(A) Overhead absorption
(B) Overhead apportionment
(C) Overhead identification
(D) Overhead analysis
12. Which of the following is not a means whereby factory overheads can be charged
out of production ?
(A) Direct labour rate
(B) Overtime rate
(C) Machine-hour rate
(D) Blanket rate
13. An organisation is divided into number of departments and overheads are
collected, allocated or apportioned to respective departments, is called :
(A) Service departments
(B) Divisionalisation
(C) Departmentalisation
(D) Classification
14. Ramya Ltd. furnishes the following information:
Production 10,000 units, Sales 10,000 units, Selling price `12 per unit, Variable
cost `6 per unit, Fixed costs `40,000 per annum (normal capacity of 10,000
units) Profit/Loss under marginal costing method will be :
(A) `10,000
(B) `30,000
(C) `20,000
(D) `25,000
15. A manufacturer produces 2,00,000 units of a product at a cost of `3.25 per unit.
Later on he produces 2,75,000 units at a cost of `3.20 per unit, when its fixed
overheads have increased by 10%. The original fixed overheads will be :
(A) `50,000
(B) `55,000
(C) `30,000
(D) `40,000
16. Mr. Mahesh has a sum of `3,00,000 which invested in a business. He wishes
15% return on his fund. It is revealed from the present cost data analysis that
variable cost of operation are 60% of sales and fixed costs are `1,50,000 p.a.
On the basis of this information, you are required to find out the sales volume to
earn 15% return.
(A) `4.875 Lakhs
(B) `4.675 Lakhs
(C) `4.775 Lakhs
(D) `5.875 Lakhs
17. A radio manufacturer finds the while it costs `6.25 per unit to make component
M-140 and the same is available in the market at `5.75 each. Continuous supply
is also fully assured. The break-down cost per unit as follows :
Materials `2.75, Labour `1.75 other variable expenses `0.50, Depreciation and
other fixed cost `1.25 . What would be your decision, if the supplier offered the
component at `4.85 per unit ?
(A) Make
(B) Buy
(C) Sell
18. ln a purely competitive market, 10,000 pocket transistors can be manufactured
and sold and certain profit is generated. It is estimated that 2,000 pocket
transistors need to be manufactured and sold in a monopoly market to earn the
same profit. Profit under both the conditions is targeted at `2,00,000. The variable
cost per transistor is `100 and the total fixed costs are `37,000. You are required
to find out unit selling price per transistor under competitive condition.
(A) `125.70
(B) `123.70
(C) `128.70
(D) `228.70
19. A firm has given the following data :
Fixed expenses at 50% `15,000, Fixed expenses when factory is close down
`10,000, Additional expenses in closing down `1,000, Production at 50% capacity
5,000 units, contribution per unit `1. Advise whether to run the factory or close
it down :
(A) Close
(B) Run
(C) Continue
20. From the following data, P/V ratio will be:

Year Sales ` Profit `
2015 50,00,000 5,00,000
2016 75,00,000 10,00,000
(A) 50%
(B) 10%
(C) 20%
(D) 40%
21. You are requested to report to top management of Eastem India Engineering
Company the point of sales in terms of rupee to break-even. For the purpose,
you obtain that :
Fixed overheads remain constant at `12,000
Variable costs will rise zero to `12,000
Selling price is `600 per ton
The tonnage produced and sold is 30 tons.
(A) `36,000
(B) `32,000
(C) `30,000
(D) `38,000
22. In a period sales amount to ` 2,00,000, net profit `20,000 and Fixed overheads
are `30,000. If sales `3,00,000 profit will be:
(A) `48,000
(B) `50,000
(C) `40,000
(D) `45,000
23. Reliance Furniture House places before you the following trading results :
Year Units Total Costs Sales
` `
2015 10,000 80,000 1,00,000
2016 12,000 90,000 1,20,000
Fixed cost will be :
(A) `15,000
(B) `10,000
(C) `30,000
(D) `60,000
24. A factory engaged in manufacturing plastic buckets is working at 40% capacily

and produces 10,000 buckets per annum. The present cost-break-up for one
bucket is as under :
Materials `10
Labour `3
Overheads `5 (60% fixed)
The selling price per bucket `20. If factory operates 90% of capacity the profit
will be:
(A) `75,000
(B) `80,000
(C) `82,500
(D) `92,500
25. Rowan premium plan is an improvement over :
(A) Taylor plan
(B) Gantt bonus plan
(C) Halsey premium plan
26. A company has fixed cost of `90,000 with sales of `3,00,000 and profit of
`60,000. Margin of safety will be :
(A) `1,00,000
(B) `1,20,000
(C) `1,50,000
(D) `1,30,000
27. A company sells its product at `15 per unit. In a period if it produces and sells
8,000 units, it incurs a loss of `5 per unit. If the volume is raised to 20,000 units,
it earns a profit of `4 per unit. Break-even point in units will be :
(A) 13,000 units
(B) 12,000 units
(C) 14,000 units
(D) 10,000 units
28. The cost accountant of M Ltd. has ascertained the selling price of a product is
`20 per unit. Variable cost is `15 per unit and break-even point is 21,600 units.
Management has decided to treat 12,000 units of B.E.P. because production
department cannot produce more than this at the moment. The selling price for
`12.000 units B.E.P. will be :
(A) `20 per unit
(B) `24 per unit
(C) `26 per unit
(D) `28 per unit
29. Yadhav Co. has annual fixed cost of `1,20,000. In 2015 sales amounted to
`6,00,000 as compared to `4,50,000 in 2014 and profit in 2015 was `50,000
higher than in 2014. If there is not need to expand the company's capacity. The
profit or loss in 2016 on a forecasted sales of `9,00,000 will be :
(A) `1,80,000
(B) `1,90,000
(C) `1,70,000
(D) `1,85,000
30. A company manufactures and sells three types of product namely A, B and C.
Total sales per month is `80,000 in which the share of these three products are
50%, 30% and 20% respectively. Variable cost of these products are 60%,
50% and 40% respectively.
The combined P/V Ratio will be :
(A) 49%
(B) 48%
(C) 47%
(D) 50%
31. A plant produces a product in the quantity of 10,000 units at a cost of `3 per
unit. If 20,000 units are produced, the cost per unit will be `2.50. Selling price
per unit is `4. The variable cost per unit will be :
(A) `2
(B) `3
(C) `4
(D) `1
32. A plant is operating at 60% capacity. The fixed costs are `30,000, the variable
costs are `1,00,000 and the sales amount to `1,50,000. The percentage of
capacity at which the plant should operate to earn a profit of `40,000 will be :
(A) 80%
(B) 84%
(C) 90%
(D) 94%
33. The standard cost card shows the following details relating to material
requirements for production one kg of groundnut oil :
Quantity of groundnut 3 kg.
Price of groundnut `1.50 per kg.
Actual production data are :
Production during the month 1,000 kg.
Quantity used 3,500 kg.
Price of groundnut `2.00 per kg.
Material cost variance will be :
(A) `2,500 (A)
(B) `2,000 (A)
(C) `3,000 (A)
(D) `4,500 (A)
34. When demand forecasting is difficult, budget which is prepared :
(A) Sales Budget
(B) Production Budget
(C) Financial Budget
(D) Flexible Budget
35. Standard set for material consumption was
100 kg. @ `2.25 per kg.
In a cost period opening stock was 100 kg.
@ `2.25 per kg.
Purchase made 500 kg. @ `2.15 kg.
Consumption 110 kg.
The material price variance will be :

(A) `50 (F)
(B) `50 (A)
(C) `100 (F)
(D) `100 (A)

Materials purchased 3,000 kg.
Value of materials purchased `9,000
Standard quantity 25 kg. for one kg. finished goods
Standard price `2 per kg.
Closing stock of materials 500 kg.
Finished goods produced 80 kg.
Material usage variance will be :
(A) `1,000 (F)
(B) `1,000 (A)
(C) `1,500 (F)
(D) `1,500 (A)
37. Given for a factory :
Normal number of workers in the department 50
Normal hours paid for in a week 40
Standard rate of wages per hour `0.80
Standard output of the department per hour taking into account normal 20 units
In the first week of March, 2016, it was ascertained that 1,000 units were
produced despite 20% idle time due to power failure and actual rate of wages
was `0.90 per hour. Labour Cost variance will be :
(A) `300 (F)
(B) `300 (A)
(C) `200 (A)
(D) `200 (F)
38. The following information relate to manufacturing process of a company :
Number of employees 200
Weekly hours worked 40
Standard wages rate 50 paise per hour
Standard output 250 units per hour
During the first week of February 2016, four employees were paid at 45 paise
per hour and two employees at 55 paise per hour, the rest of the employees
were paid at standard rate. Idle time is one hour per employee. Actual output
was 10,250 units. Labour efficiency variance will be :
(A) `200 (F)
(B) `300 (F)
(C) `250 (F)
(D) `400 (F)
39. The data given below :

Standard Actual
Labour hours 10,000 12,000
Variable overheads `2,000 `3,000
Units output 5,000 4,000
Variable Overhead Expendittue variance will be:
(A) `600 (A)
(B) `700 (A)
(C) `600 (F)
(D) `700 (F)
40. Dividend per share
Dividend per share

x 100 = ................
Market price per share
(A) Payout ratio
(B) Earning yield ratio
(C) Dividend yield ratio
(D) Dividend ratio
41. The branch of accounting which primarily deals with processing and accounting
data for internal use in a concern is :
(A) Financial accounting
(B) Cost accounting
(C) Management accounting
42. Material cost variance is due to :
(A) Change in price of material
(B) Change in quantity used
(C) Change in material mix

43. In cash flow, income tax paid is treated as :
(D) Not shown any where
44. When margin of safety is 20% and P/V ratio is 60%, the Profit will be :
(A) 30%
1
(B) 33 %
3
(C) 12%
45. Proprietor's net capital employed is known as :
(A) Net worth
(B) Equity shares
(C) Long-term loans
(D) Fixed assets
46. Which of the following is not applied in Management Accounting ?
(A) Comparative Statement
(B) Managerial reporting
(C) Double entry system
(D) Operation research
47. EBIT/Total assets ratio is :
(A) Liquidity ratio
(B) Profitability ratio
(C) Solvency ratio
(D) Turnover ratio
48. lf the total cost of producing 20,000 units of a product is `90,000 and if 25,000
units will be produced, then the total cost will be `1,05,000 and the selling price
is `8 per unit. The break-even Point will be :
(A) 10,000 units
(B) 8,000 units
(C) 6,000 units
(D) 5,000 units
49. P/V ratio 25% , Sales `1,20,000 and Fixed costs `17,500, Profit will be :
(A) `12,500
(B) `30,000
(C) `17,500
(D) `20,000
50. Under marginal costing system, product costs are :

(A) Equal to fixed cost plus variable costs
(B) Equal to only marginal costs
(C) Equal to semi-variable costs
51. A, B, C analysis is....................
(A) a system of profit planning
(B) a technique of financial analysis
(C) a technique of inventory control
(D) a technique of profit determination
52. In differential cost analysis, managerial decisions are based on :
(A) P/V ratio
(B) Comparison of cost differential and income differential
(C) Difference in costs between two altematives
(D) Both (B) and (C)
53. The difference between the standard hours for the actual output and actual
hours for actual output and multiplied by standard rate per hour is :
(A) Labour rate variance
(B) Overhead cost variance
(C) Labour efficiency variance
(D) Overhead volume variance
54. The difference between actual price and standard price multiplied by actual
quantity will result into :
(A) Material quantity variance
(B) Material mix variance
(C) Material price variance
(D) Material yield variance
55. The budget which usually takes the form of profit and loss account and balance
sheet is known as :
(A) Cash budget
(B) Master budget
(C) Flexible budget
(D) Labour budget
56. A fixed budget is one which:

(A) is a plan for capital expenditure in monetary terms
(B) is designed to remain unchanged irrespective of the volume of output or
turnover attained
(C) deals with income and expenditure applicable to a particular function
(D) deals with none of these
57. A good costing system gives equal emphasis on cost ascertainment and
cost..........
(A) Reduction
(B) Control
(C) Maximisation
58. The method of costing used both in a cinema and a hospital is .......................
costing.
(A) operating
(B) marginal
(C) job
(D) process
59 ................. is a location, person or item of equipment for which cost may be
determined and used for the purpose of cost control.
(A) Profit centre
(B) Cost centre
(C) Cost unit
(D) Cost driver
60. Difference between standard normal loss and actual normal loss is :
(A) Material variance
(B) Material loss variance
(C) Material yield variance
(D) Material cost variance
61. Prime cost plus variable overheads gives :
(A) Cost of sales
(B) Marginal costs
(C) Works cost
(D) Cost of production
62. One of the most significant tools in cost planning is :

(A) Direct material
(B) Budget
(C) Marginal costing
(D) Direct labour
63. Cost of goods produced consists of :
(A) Work-in-progress and finished goods inventory
(B) Production cost, work-in-progress and finished goods inventory
(C) Production cost and work-in-progress
(D) Prime cost and wages
Cost of Sales  Operating Expenses

64. x 100 is :
Sales
(A) Sales ratio

(B) Sales operating ratio
(C) Operating ratio
(D) Cost sales ratio
65. Two avoidable reasons for the difference between bin card and physical quantity
of material may be ............... and wrong posting in the bin card.
(A) Pilferage
(B) Normal
(C) Abnormal
(D) Reasonable
66. When prices fluctuate widely, which of the following method will even out the
effect of fluctuations ?
(A) Weighted average
(B) FIFO
(C) LIFO
(D) Simple average
67. In which of the following methods, material issues are priced at pre-determined
rate ?
(A) Replacement Price method
(B) Specific Price method
(C) Inflated price method
(D) Standard price method
68. Which of the following does not normally appear on a material requisition form ?
(A) Job number
(B) Unit cost
(C) Supplier's name
(D) Quantity requisitioned
69. ..................... is defined as the rate of exchange of labour force in an
establishment during a particular period.
(A) Sales turnover
(B) Labour capacity
(C) Material turnover
(D) Labour turnover
70. Overtime wages arising out of abnormal conditions. eg. flood, strike etc. should
not be charged to .......................
(A) Cost of production
(B) Trading Account
(C) Profit & Loss Account
71. When standard output is 10 units per hour and actual output is 14 units per hour,
the efficiency level will be :
(A) 60%
(B) 120%
(c) 140%
72. Given that Standard Time for a job is 10 hours, actual time taken is 6 hours and
the rate of wages is `3 per hour. The total wages under Halsey scheme will be:
(A) `28
(B) `20
(C) `24
(D) `10
73. Maximum possible production capacity of a plant when operating time is fully
utilised is its:
(A) Practical Capacity
(B) Theoretical Capacity
(C) Normal Capacity
(D) Capacity based on sale expectancy
74. Research cost undertaken at the request of the consumer should be charged to:
(A) Costing Profit & Loss A/c
(B) The Customer
(C) Selling Overheads
(D) Factory Cost
75. When direct materials are issued to production, the accounting entry is to debit
....................... control a/c and credit stores ledgers control a/c.
(A) Work-in-progress
(B) Finished goods
(C) Trading
(D) Profit & Loss A/c
76. Which of the following items is not included in cost accounts ?
(A) Debenture interest
(B) Interest received on bank deposits
(C) Dividend paid on share capital
77. When costing loss is `6,500, administrative overhead under absorbed being
`500, the loss as per financial accounts should be :
(A) `7,000
(B) `6,500
(C) `6,000
(D) `8,000
78. In big contracts the completion of work is certified by :
(A) Contractor
(B) Surveyor
(C) CEO
(D) Manager
79. Batch production is suitable for :
(A) Mass production in batches
(B) Production of homogeneous articles in batches
(C) Production of articles in mass scale
(D) Mass production in jobs
80. The stage of production where separate products are identified is called ............
(A) Split off point
(B) Border point
(C) Edge point
(D) Normal point
81. Costs incurred upto the point where individual products can be identified are
called ........ .
(A) Mixed
(B) Joint
(C) Separate
82. The method of costing is suitable in chemical industries is :
(A) Job Costing
(B) Contract Costing
(C) Batch Costing
(D) Process Costing
83. Individual products, each of a significant sales value, produced simultaneously
from the identical raw materials are called :
(A) Joint Product
(B) Common Product
(C) By-Product
(D) Main Product
84. Credit sales `3,00,000, Opening balance of accounts receivable `50,000 and
Closing balance of accounts receivable `70,000 (assuming 360 days in a year).
Debtors turnover ratio will be :
(A) 5
(B) 6
(C) 4
(D) 7
85. Profit on sale of machinery should be ............. from net profit to get funds from
operations.
(A) Deducted
(B) Deleted
(C) Avoided
86. Short-term solvency is indicated by :

(A) Debtors turnover ratio
(B) Liquid ratio
(C) Price eaming ratio
(D) Stock turnover ratio
87. Which of the following is not, true ?
Profit
(A) Profit Volume Ratio = x 100
Margin of Safety
Fixed Cost
(B) Break-even Point =
P/V ratio
Fixed Cost
(C) Break-even Point = x 100
P/V ratio
Fixed Cost
(D) Profit Volume Ratio =
B.E.P. (in `)
88. By 'Cash Equivalents' we mean :
(A) Bank Balance
(B) Short-term highly Liquid Securities
(C) Investnents
(D) Investments in debenture
89. Management Accounting aims at :
(A) Presentation of accounting information
(B) Assist in long-term planning
(C) Assist in day to day activities
90. Assertion (A) :
In management accounting firm decisions on pricing policy can be taken.
Reason (R) :
As marginal cost per unit is constant from period to period within a short span of
time.
Codes :
(A) A is true, but R is false
(B) A is false, but R is true
(C) Both A & R are true and R is the correct explanation of A
(D) Both A & R are true but R is not the correct explanation of A
91. Net Profit + Non-Cash expenses =

(A) Gross Profit
(B) Profit after tax
(C) Fund from opeation
(D) Distributable profit
92. Assertion (A) :
Profit volume ratio is considered to be the best indicator of the profitability on
the business.
Reason (R) :
If profit volume ratio improved it will result in better profits.
Codes :
(A) A is false, but R is true
(B) A is true, but R is false
(C) Both A & R are true but R is not the correct explanation of A
(D) Both A & R are true and R is the correct explanation of A
93. Statement I :
Margin of safety represents the difference between the sales at break-even
point and the total sales.
Statement II :
Margin safety can be expressed as a percentage of total sales or in value or in
terms of quantity.
Codes :
(A) Statement I is correct but statement II is incorrect
(B) Statement I is incorrect but statement II is correct
(C) Both statements are correct
(D) Both statements are incorrect

List I List II
(a) Classification of costs into fixed (1) Contribution
and variable cost
(b) Difference between sales and (2) P/V ratio
variable cost
(c) Both fixed and variable cost are (3) Marginal Costing
charged to product
(d) Relative profitability (4) Absorption
Codes :
(a) (b) (c) (d)
(A) (4) (3) (2) (1)
(B) (3) (1) (4) (2)
(C) (3) (4) (1) (2)
(D) (4) (3) (1) (2)
List I List II
(a) Cash flow statements (1) Inflow of fund
(b) Inflow of cash (2) Short-term financial planning
(c) lnvestment (maturity (3) Financing activity
period 3 months)
(4) Payment of dividend (4) Cash equivalent
Codes :
(a) (b) (c) (d)
(A) (2) (4) (1) (3)
(B) (2) (1) (4) (3)
(C) (4) (3) (1) (2)
(D) (3) (4) (1) (2)
Match the following :
96. List I List Il
(a) Prepaid expenses (1) Solvency ratio
(b) Sales ratio (2) Net profit margin x investment ratio
(c) Return on investment (3) Turnover ratio
(d) 100 - Proprietary ratio (4) Current assets
Codes :
(a) (b) (c) (d)
(A) (4) (3) (2) (1)
(B) (4) (3) (1) (2)
(C) (2) (1) (4) (3)
(D) (2) (4) (1) (3)
97. Match the following ;

List I List II
(a) Increase in fund (1) Application of funds
(b) Goods purchased on credit (2) Drain in working capital
(c) Commission outstanding (3) Source of fund
(d) Net loss (4) No flow of funds
Codes :
(a) (b) (c) (d)
(A) (4) (3) (2) (1)
(B) (4) (3) (1) (2)
(C) (3) (4) (2) (1)
(D) (3) (4) (1) (2)
98. Consider the following statements :
(1) Marginal costing and absorption costing are the same.
(2) For decision-making, absorption costing is more suitable than marginal
costing.
(3) Cost-volume-profit relationship also denote break-even Point.
(4) Marginal costing is based on the distribution between fixed and variable
costs.
Which of the statements given above are correct ?
(A) 4 and 2
(B) 2 and 3
(C) 3 and 4
(D) 1 and 2
99. Which of the following are advantages of marginal costing ?
(1) Pricing decision
(2) True profit
(3) Difficulty to classify
(4) Ignores time value
(5) Break-even analysis
(6) Contribution is not final
(7) Control over expenditure
(A) 1, 3, 5 and 7
(B) 1, 2, 5 and 7
(C) 3, 4, 6 and 7
(D) 1, 2, 6 and 7
100. Arrange the following categories of cash inflows and cash outflows in a correct
order:
(1) Cash from investing activities
(2) Cash from financing activities
(3) Cash from operating activities
Codes :
(A) 2, 1 and 3
(B) 1,3 and 2
(C) 3, 2 and 1
(D) 3, 1 and 2
ANSWER KEY

1 C 35 A 70 A
2 C 36 B 71 C
3 D 37 D
38 A 72 C
4 B
39 A 73 B
5 B 40 C 74 B
6 D 41 C
75 A
7 C 42 D
8 C 76 D
43 A
9 D 77 A
44 C
10 A 45 A 78 B
11 B 46 C 79 B
12 B 47 B 80 A
13 C 48 C 81 B
14 C 49 A 82 D
15 A 50 B 83 A
16 A 51 C 84 A
17 B 52 D
85 A
18 B 53 C
19 B 86 B
54 C
20 C 87 C
55 B
21 A 56 B 88 B
22 D 57 B 89 D
23 C 58 A 90 C
24 C 59 B 91 C
25 C 60 C 92 D
26 B 61 B 93 C
27 B 62 B 94 B
28 B 63 C
29 A 95 B
64 C
30 C 96 A
65 A
31 A 97 D
66 A
32 B 67 D 98 C
33 A 68 C 99 B
34 D 69 D 100 D
***

1. Which one is not the objective of Cost Accounting Standards -

(A) To bring uniformity and consistency in the principles and methods
(B) To help industry and the Govemment towards better cost management
(C) To control accounting policies of companies so as to protect investors'
interest
(D) To determine the pollution control costs with reasonable accuracy.
2. Which of the following is/are tool(s) and technique(s) of management accounting-
(A) Ratio analysis
(B) Linear programming
(C) Trend analysis
(D) All of the above.
Statements Objects
(P) Collection of cost information and 1. Budgeting
recording them under suitable heads
(Q) Monitoring idle time, workers 2. Cost reduction
efficiency and labour tumover
(R) Estimation (both quantities and 3. Ascertainment of cost
value) before the start of activity
(S) Procedures and techniques used to 4. Cost control
bring down the estimated cost
Select the correct answer from the options given below -
(P) (Q) (R) (S)
(A) (3) (4) (2) (1)
(B) (3) (4) (1) (2)
(C) (3) (1) (2) (4)
(D) (4) (3) (2) (1)
4. Statement - I
Sunk cost is one that has alleady been incurred and cannot be avoided by
decisions in the future.
Statement - II
For decision making, it is required that such cost should be incurred.
20

(A) Both statement are correct
(C) Statement-I is incorrect, but Statement-Il is correct
(D) Statement-I is correct, but Statement-Il is incorrect
5. The prime function of management accounting is to -
(A) Record business transactions
(B) Interpret financial data
(C) Assist the management in performing its functions effectively
(D) Assist tax authorities.
6. Multiple costing is followed in -
(A) Biscuit factory
(B) Steel industry
(C) Brick making
(D) Cycle manufacturing
7. Following information relates to the production department of a factory :
Materials used : `80,000
Overheads : `40,000
On an order carried out in the department, materials consumed amounted to
`16,000. The overheads chargeable to this order on the basis of direct materials
will be —
(A) `8,000
(B) `9,000
(C) `8,500
(D) `9,800
8. When the amount of overheads absorbed is less than the amount of overheads
incurred, it is called -
(A) Under-absorption of overheads
(B) Over-absorption of overheads
(C) Proper absorption of overheads
(D) None of the above.
9. A common absorption rate used throughout a factory for all jobs and units of
output irrespective of the department in which they were produced is called -
(A) Machine hour rate
(B) Department absorption rate
(C) Overall absorption rate
(D) Blanket absorption rate.
10. Raj Ltd. furnishes the following information :

Production : 10,000 units
Sales : 5,000 units
Selling price : `12 per unit
Variable cost : `6 per unit
Fixed costs : `40,000 per annum
Profit/loss under marginal costing method will be -
(A) `10,000 (Profit)
(B) `10,000 (Loss)
(C) `20,000 (Profit)
(D) `20,000 (Loss).
11. Following information is available :
Input of raw material : 1,000 unit @ `25 per unit
Direct material : `7,500
Direct wages : `4,500
Production overheads : `6,000
Actual output transferred
to next process : 900 units
Normal loss : 5%
Value of scrap : `10 per unit
The cost of output transfened to next process will be -
(A) `38,700
(B) `40,263
(C) `38,250
(D) `43,500
12. A company reported current year profit of `12,00,000 which includes the following:
Profit on sale of equipment : `2,00,000
Share issue expenses : `1,50,000
Dividend income : `80,000
Tax : `90,000
Profit on revaluation of fixed assets : `2,50,000
The amount of funds from operations will be -
(A) `11,90,000
(B) `8,20,000
(C) `10,70,000
(D) `10,50,000
13. A radio manufacturer finds that while it costs `6.25 per unit to make a component,
the same is available in the market at `5.75 each. Continuous supply is also
fully assured. The break-up of costs per unit is as follows :
Materials : `2.75
Labour : `1.75
Other variable expenses : `0.50
Depreciation and other
fixed costs : `1.25
The best option for the manufacturer will be -
(A) To make
(B) To buy
(C) To sell
14. Following data is obtained from the cost records of Moon Ltd. :
Year Sales (`) Total Cost (`)
2015 1,00,000 80,000
2016 1,20,000 90,000
P/V ratio will be -
(A) 40%
(B) 46%
(C) 52%
(D) 50%.
15. Following information is obtained from a standard cost card :
Labour rate : 90 paise per hour
Standard hours : 3 hours per unit
Actual production data :
Units produced : 250
Labour rate : `1.05 per hour
Hours worked : 800
The labour cost variance will be -
(A) `175 (A)
(B) `165 (A)
(C) `190 (A)
(D) `165 (D).
16. Standard set for material consumption was 100 kgs. @ `2.25 per kg. In a cost
period, opening stock was 100 kgs. @ `2.25 per kg.; purchases made 500 kgs.
@ `2.15 per kg; and actual consumption 110 kgs.
The material usage variance will be -
(A) `24.25 (A)
(B) `22.50 (A)

(C) `32.50 (A)
(D) `23.75 (A).
17. Material quantity variance arises due to -
(A) Frequent breakdown of machines
(B) Improper inspection and supervision of workers
(C) Excessive wastage, leakages, shrinkages, etc.
18. Cost of abnormal wastage is charged to -
(A) Production cost
(B) Costing profit and loss account
(C) Partly to the product and partly to costing profit and loss account
(D) Selling and distribution cost.
19. Following information is given :
`
Direct material purchased : 6,00,000
Direct material consumed : 7,00,000
Direct labour : 3,00,000
Direct expenses : 2,50,000
Manufacturing overheads : 3,00,000
Prime cost will be -
(A) `14,50,000
(B) `11,50,000
(C) `12,50,000
(D) `15,50,000
20. Which of the following is the main cost driver of customer order processing
activity -
(A) Flow of the product from assembly line
(B) Order Value
(C) Number of problem suppliers
(D) Number of machine charges.
21. Income from investments is a cash flow from -
(A) Operating activities
(B) Investing activities
(C) Financing activities
22. Retum on investment (ROI) is calculated to measure -

(A) Long-term solvency of business
(B) Earning power of net assets of business
(C) Short-term liquidity position of business
(D) Goods sold and inventory level of business.
23. The ascertainment of costs after they have been incurred is called -
(A) Marginal costing
(B) Historical costing
(C) Differential costing
24. Which of the following is considered as normal loss of material -
(A) Pilferage
(B) Loss due to flood
(C) Loss due to accident
(D) Loss arising from careless handling of material.
25. The maximum and minimum lead time is 4 weeks and 3 weeks respectively. If
the maximum and minimum weekly consumption is 25 units and 20 units
respectively, the re-ordering level will be —
(A) 100 Units
(B) 110 Units
(C) 120 Units
(D) 140 Units.
26. The budget which usually takes the form of budgeted profit and loss account
and balance sheet is known as -
(A) Cash budget
(B) Master budget
(C) Flexible budget
(D) Sales budget.
27. While preparing cash budget, which of the following items would not be included-
(A) Interest paid to debentureholders
(B) Salaries and wages
(C) Bonus shares issued
(D) Income-tax paid.
28. Interest coverage ratio is obtained by dividing EBIT by -
(A) lnterest
(B) Tax
(C) Income
(D) Sales.
29. If price-earnings ratio is 0.05 and earnings per share is `8, the market price of
share will be -
(A) `120
(B) `100
(C) `160
(D) `0.40
30. In a purely competitive market, 10,000 pocket transistors can be manufactured
and sold and certain profit is generated. It is estimated that 2,000 pocket
transistors need to be manufactued and sold in a monopoly market to earn the
same profit. Profit under both the conditions is targeted at `2,00,000. The variable
cost per transistor is `100 and total fixed costs are `37,000. Unit selling price
per transistor under monopoly condition will be -
(A) `218.50
(B) `234.50
(C) `267.25
(D) `274.35
31. A technique where standardised principles and methods of cost accounting are
employed by a number of different companies is termed as -
(A) Uniform costing
(B) Absorption costing
(C) Standard costing
(D) ABC costing.
32. A cost centre is -
(A) A production or service location, function, activity or item of equipment
whose costs may be attributed to cost units
(B) A centre for which an individual budget is drawn-up
(C) A centre where cost is classified on the basis of variability
(D) An amount of expenditure attributable to an activity.
33. As on 31st March, 2016, the profit of a company was `36,450 as per financial
records. The following summary of transactions is given for the same period :
`
Obsolescence loss in respect of
machinery charged in financial accounts 2,450
Administrative overheads over recovered
in cost accounts 1,650
Closing stock understated in cost accounts 4,600
The amount of profit as per cost accounts will be
(A) `36,950
(B) `35,950
(C) `32,650
(D) `41,850
34. Sun Ltd. has furnished the following relevant data of financial statements as on
31st March, 2016 :
`
Equity share capital (1,00,000 equity shares
of `10 each) 10,00,000
General reserve 2,00,000
15% Debentures 2,80,000
Current liabilities 8,00,000
Fixed assets 30,00,000
Current assets 18,00,000
Additional information :
Annual fixed cost excluding interest `2,80,000
Variable cost ratio 60%
Total assets turnover ratio 2.5 times
Tax rate 30%
Earnings per share (EPS) will be -
(A) `31.35
(B) `15.80
(C) `20.00
35. A firm requires 12,800 units of a certain component which it buys @ `60 each.
The cost of placing an order and following it up is `150 and annual storage
charges work out to 10% of the cost of items. Number of units to be ordered to
get maximum benefit to the firm are -
(A) 1,000
(B) 900
(C) 800
(D) 320
36. Which of the following are advantages of perpetual inventory system :
(i) No interruption of production process
(ii) More wastage of material
(iii) Detect loss of stock due to theft, shrinkage, fire, etc.
(iv) Ascertain stock without physical verification
(A) (i), (ii) and (iii)
(B) (ii), (iii) and (iv)
(C) (i), (ii) and (iv)

(D) (i), (iii) and (iv).
37. Following statements are either true (T) or false (F) :
(P) FIFO method of valuing material issues is suitable in time of rising prices
(Q) Valuation of closing stock is same under both FIFO and LIFO method
(R) Bin card makes a record of the quantity and value of materials kept in the
stores
(S) A bill of material gives a complete list of all material required with quantities
for a particular job.
Select the correct answer from the options given below —
(P) (Q) (R) (S)
(A) (F) (F) (T) (T)
(B) (T) (T) (F) (F)
(C) (F) (F) (F) (T)
(D) (T) (F) (T) (F)
(P) Visible or invisible loss that cannot be collected 1. Defectives
and in certain cases it involves further costs of
disposing
(Q) Residue which is measurable and has a minor 2. Spoilage
value
(R) Components so damaged in process and cannot 3. Scrap
be repaired
(S) Imperfections may arise because of sub-standard 4. Waste
work, can be made perfect by paying some
additional expenses
(P) (Q) (R) (S)
(A) (4) (3) (2) (1)
(B) (3) (4) (2) (1)
(C) (3) (2) (1) (4)
(D) (2) (4) (3) (1)
39. The relevant data from financial statements of Ross Ltd. as on 31st March,
2016 is given below :
`
Cash 1,50,000
Trade receivables 4,00,000
lnvestrnent (short - term) 3,30,000
Stock 25,00,000
Prepaid expenses 50,000

Current liabilities 10,00,000
The quick ratio will be -
(A) 0.88 : 1
(B) 0.93 : 1
(C) 3.43 : 1
(D) 3.1 : 1
40. A written comprehensive order, with specification, material code and quantity
sent to inform the purchase department, of a need for material is called -
(A) Purchase order
(B) Bill of material
(C) Purchase requisition
(D) Bin card.
41. Choose the correct statements from the following :
(1) All the indirect taxes are added to the purchase price of material
(2) Trade and cash discounts are deducted from the cost of material
(3) ABC analysis is a value based system of material control
(4) In the garment manufacturing, the cost of thread and buttons are indirect
material costs.
Select the answer from the options given below -
(A) (1) and (2)
(B) (2), (3) and (4)
(C) (3) and (4)
(D) (1), (3) and (4).
42. ln a factory, the standard output in 8 hours is 220 units. A worker actually
produces 242 units in the standard time. Wage rate is `8 per hour.
The total wages paid to the worker under Emerson's plan will be -
(A) `83.20
(B) `76.80
(C) `193.60
(D) `99.20
43. Amaze Ltd. had an opening inventory of 5,000 units costing `5 per unit on 1st
April, 2016. Following receipts and issues took place in April, 2016 :
5th April, 2016 : Purchased 800 units @ `8 per unit
12th April, 2016 : Purchased 200 units @ `8 per unit
15th April, 2016 : Issued 3,000 units
25th April, 2016 : Purchased 1,000 units @ `9 per unit
Cost of inventory as on 30th April, 2016 under weighted.average basis will be -

(A) `25,500
(B) `27,000
(C) `20,000
(D) `23,500
44. Which of the following is not replacement cost of labour turnover :
(1) Cost of recruitment/selection
(2) Cost of providing medical services
(3) Cost of training
(4) Retirement benefits
(5) Decline in quality
(A) (1) and (2)
(B) (2), (3) and (4)
(C) (3), (4) and (s)
(D) (2) and (4).
45. Statement - I
Low time wages do not necessarily mean low cost of production and high wages
mean high cost of product.
Statement - II
Time and motion study, which is a function of engineering departrnent, is useless
for the determination of wages.
Select the corect answer from the options given below -
(D) Statement-I is correct, but Statement-Il is incorrect.
46. Standard output per day per worker is 40 units. Incentive bonus for efficiency
above 80% is `50 for every 1% increase up to 90% and above this `80 for every
1% increase. Kapil worked for 25 days and produced 910 units.
The amount of incentive paid to him will be -
(A) `580
(B) `550
(C) `450
(D) `530
47. From the books of Raja & Co., following details as on 31st March, 2016 are
collected :
`
Equity share capital : 20,00,000
Retained eamings : 10,00,000
10% Debentures : 20,00,000

Current liabilities : 10,00,000
Profit before interest and tax : 12,00,000
Interest : 1,60,000
Tax : 3,12,000
The rate of return on capital employed will be -
(A) 30%
(B) 24%
(C) 14.56%
(D) 17.76%.
48. Assertion (A)
Activity based costing is not normally used for external reporting purpose.
Reason (R)
Activity based costing does not conform to generally accepted principles.
(D) A is false, but R is true.
49. The net profit margin of Rose Ltd. is 8%, its total assets are `6,00,000 and the
return on investrnent is 18%. Total assets turnover will be -
(A) 2.05
(B) 3.15
(C) 2.25
50. A homogeneous cost pool is one that -
(A) Does not change over time
(B) Needs many activity drivers to be allocated to a cost object
(C) Can be explained with a single activity driver
(D) Has only one type of material assigned to it.
51. Statement - I
Production departments and service departments are equally important for
manufacturing industry.
Statement - II
To calculate cost of a product, service department cost should be redistributed
among production department on a reasonable basis.

(C) Statement-I is incorrect, but Statement- II is correct
52. Match the following service department cost with basis of apportionment :
(P) Employment/personnel department 1. Floor area
(Q) Store keeping department 2. No. of requisitions
(R) Power house 3. Rate of labour turnover
(S) Payroll or time department 4. Direct labour hours
5. Hours worked
(P) (Q) (R) (S)
(A) (1) (3) (2) (4)
(B) (2) (4) (1) (5)
(C) (4) (5) (3) (1)
(D) (3) (2) (1) (4)
53. Relevant data regarding number of workers on roll is given below for June, 2016:
At the beginning of the month 750
At the end of the month 850
During June, 2016, 10 workers left, 30 workers were discharged and 100 workers
leaving, while the rest were engaged for an expansion scheme.
The labour turnover rate according to replacement method for June, 2016 is -
(A) 18.67%
(B) 16.47%
(C) 17.50%
(D) 17.33%
54. Which of the following is not a method of overheads absorption -
(A) Percentage of direct material cost
(B) Machine hour rate
(D) Labour hour rate.
55. A company produces three joint products A, B and C. The company has chosen
'physical quantity method'. Up to the point of split off, the total production ofA, B
and C is 80,000 kgs. The quantity of A, B and C produced is 25,000 kgs.,
35,000 kgs. and 20,000 kgs. respectively. Total joint cost is `5,00,000.
Joint cost allocated to product 'A' is -
(A) `1,25,000
(B) `2,18,750
(C) `1,56,250
(D) `1,66,666
56. Following information has been collected from cost records of Bright Ltd. :
Direct material : `5,00,000
Direct labour : `3,00,000
Factory overheads : 20% of factory cost
The amount of factory overheads will be-
(A) `1,60,000
(B) `2,00,000
(C) `1,80,000
(D) `1,96,000
57. ln a factory, research and development expenditure is budgeted to `9,00,000.
This is the normal expenditure on research activities. Due to some reasons,
research is unsuccessful. The research and development expenditure will be -
(A) Treated as deferred expenditure
(B) Written-off to costing profit and loss account
(C) Treated as direct product cost
(D) Treated as factory overheads.
58. A company produces a single product for which following data is available :
Average production per week : 200 units
Usage per unit : 10 Kgs.
Re-order level : 8,000 Kgs.
Delivery time required : 2 weeks
The minimum level of stock required will be —
(A) 3,000 Kgs.
(B) 5,000 Kgs.
(C) 4,000 Kgs.
(D) 2,500 Kgs.
59. Following information is related to Product-A :
In 2015, variable cost was `200 per unit and fixed cost `40 per unit. Production
was 1,20,000 units. It is expected that production in 2016 will increase to 1,60,000
units. The variable cost will increase by 25% and fixed cost by 10% in 2016.
The amount of fixed cost in 2016 will be —
(A) `52,80,000
(B) `70,40,000
(C) `64,00,000
(D) `48,00,000
60. Match the following

(P) Certain percentage of profit over total 1. Escalation clause
cost of work
(Q) Safeguard against any likely changes 2. Cost plus contract
in the price of material and labour
(R) Entrusted to other contractor for 3. Job costing
specialised work
(S) Cost first allocated to cost centres 4. Sub contract
and then to individual work
5. Contract near to
completion
Select the correct answer from the options given below
(P) (Q) (R) (S)
(A) (1) (3) (2) (4)
(B) (2) (4) (1) (5)
(C) (4) (5) (3) (1)
(D) (2) (1) (4) (3)
61. Assertion (A)
Cash is withheld by the contractee under the terms of the contract when payment
of the value of work certified is being made.
Reason (R)
Retention money is treated as safeguard against any damage or bad quality
work in the contract and released after certain time period of completion of the
contract.
62. Following information is given for a contract :
`
Estimated profit on completion of contract 2,20,000
Contract price 10,00,000
Cash received being 80% of work certified 6,40,000
The amount of profit to be credited to statement of profit and loss will be -
(A) `1,28,000
(B) `1,40,800
(C) `1,76,000

(1) Most of the items of costs are direct in contract costing than in job costing
(2) Foreseeable losses estimated for a contract should be written-off
immediately
(3) A debit balance on the contractee account is shown as current liability in
the balance sheet
(4) Final contract price to be paid is certain in cost plus contract.
Select the answer from the options given below
(A) (2) and (4)
(B) (3) and (4)
(C) (1) and (2)
(D) (1), (2) and (3)
64. Which of the following is not a part of job order cost sheet —
(A) Direct material
(B) Direct labour
(C) Actual factory overheads
(D) Applied factory overheads.
65. A hotel has 200 rooms accommodation. The normal occupancy in summer is
90% and winter 40%. The period of summer and winter is taken 8 months and 4
months respectively. Assume 30 days in each month.
The total rooms occupancy in a year will be -
(A) 1,760
(B) 52,800
(C) 7,800
(D) 72,000
66. For a factory, following information is given :
8,400 kgs. material @ `12.50 per kg. were actually consumed resulting in a
price variance of `4,800 (A) and usage variance of `3,600 (F).
The standard material cost of actual production will be -
(A) `1,03,800
(B) `1,06,200
(C) `1,05,000
67. Budgeted standard hours of a factory are 15,000. The capacity utilisation ratio
for May, 2016 is 85% and efftciency ratio for the month is 120%. The standard
hours for actual production in the month will be -
(A) 12,750
(B) 18,000
(C) 15,300
(D) 18,000
68. Which of the following statement(s) is/are not correct with reference to labour
idle time variance :
(1) Idle time variance is the portion of labour cost variance which arises due
to abnormal idle time of workers specified
(2) Idle time variance may be favourable or adverse
(3) Idle time variance is calculated as abnormal idle time X actual rate per
hour
(4) Idle time variance arises due to machine break-down, power failure, etc.
(A) (2) and (3)
(B) (2) only
(C) (1) and (2)
(D) (2), (3) and (4)
69. The standard rate of payment is `10 per direct labour hour. The actual direct
labour cost is `39,200 for 4,000 direct labour hours worked. The direct labour
price (rate) variance will be -
(A) `800 (A)
(B) `680 (A)
(C) `680 (F)
(D) `800 (F).
70. Assertion (A)
Material yield variance is that portion of direct material usage variance which is
due to the difference between standard yield and actual yield obtained.
Reason (R)
Yield variance arises due to wastage of material during the process and standard
material yield is determined by subtracting the standard wastage from standard
quantity of material.
71. The total cost variance is `5,000 (F). The material variance is `2,000 (F). The
total labour variance is twice the total overheads variance.
The total overheads variance is -
(A) `500 (F)
(B) `1,000 (F)
(C) `1,500 (F)

(D) `2,000 (F).
72. Following information is given for a product of a manufacturing company :
Material `18 per unit; other variable cost `22 per unit; and fixed expenses `18
per unit. Selling price is `75 per unit. Company is presently producing 80,000
units at 80% capacity. The company received an offer for 20,000 units from a
foreign customer.
The minimum price to be accepted from foreign customer, if the company wants
to earn 20% on foreign sales will be -
(A) `50
(B) `58
(C) `72.50
(D) `69.60
73. Satluj Transport Co. is running six buses between two towns which are 60 Kms.
apart. Seating capacity of each bus is 50 passengers. Actual passengers carried
by each bus were 80% of seating capacity. All buses run on all days of month
(30 days). Each bus makes two round trips per day.
Passenger Kms. per month are -
(A) 8,64,000
(B) 4,32,000
(C) 5,40,000
(D) 17,28,000
74. Margin of safety in a company can be improved by :
(1) Reducing the fixed cost and variable cost
(2) Increasing sales volume and price of sales
(3) Increasing stock of material in the expectation of price rise
(4) Expanding business to fulfill the demand of market
(5) Changing the product mix to increase contribution.
(A) (1), (2) and (3)
(B) (1), (2) and (5)
(C) (1), (3) and (4)
(D) (2), (3) and (5)
75. Ram Casting furnished following information for production of 4,800 units:
Standard materials : 10 Kgs. per unit
@ `10 per Kg.
Actual material used : 50,000 Kgs.
costing `5,25,000
Material cost variance will be -

(A) `45,000 (A)
(B) `25,000 (F)
(C) `30,000 (A)
(D) `45,000 (F).
76. Statement - I
When there are no inventories, profit figure under marginal costing and absorption
costing is identical.
Statement - II
Inventories are valued at cost of production in absorption and marginal costing
systems.
Select the correct answer from the options given below :-
77. Assertion (A)
The whole budget involving all functions such as sales budget, material budget
and production budget will have to be built after assessing the key factor.
Reason (R)
The budget key factor will limit the activities of an undertaking which is taken
into account in preparing budget.
78. A company has annual sales of `150 lakh entirely on credit. It keeps an average
inventory sufficient to meet sales demand for half a month and gives its customers
one month credit, Its average current liabilities are `10 lakh. The company
must maintain cash and bank balance to have current ratio of 2.
The amount of cash balance will be -
(A) `1,25,000
(B) `3,00,000
(C) `13,75,000
(D) `7,50,000
79. Budgeted sales of Product-X for March, 2016 are 25,500 units. At the end of
production process, 10% of net production units are scrapped as defective.
Opening stock of Product-X for March is budgeted to be 15,000 units and closing
stock will be 12,000 unit . All stock of finished goods must have successfully
passed the quality control check.
The production budget of Product-X for March, 2016 is -
(A) 25,000 Units
(B) 25,500 Units
(C) 25,950 Units
(D) 20,250 Units.
80. Which of the following is not a limitation of financial statements -
(A) Financial statements are essentially interim reports and therefore, cannot
be final because the final gain or loss can be computed only at the
termination of the business
(B) The values ascribed to the assets presented in the statements depend
upon the standards of the person dealing with them
(C) Financial statements fail to bring out the significance of non-financial
factors
(D) Financial statements serve as a useful guide for the stakeholders of the
company.
81. Assertion (A)
Accountants do not take into consideration the price level changes while valuing
various assets in different period.
Reason (R)
It is difficult to determine the value of assets, as value of assets changes with
change in time.
82. In the management information system (MIS), top level management uses -
(A) Operational information
(B) Tactical information
(C) Transactional information
(D) Srategic information.
83. A cash flow statement is based upon ____________ while fund flow statement
recognises ___________.
(A) Cash basis of accounting; accrual basis of accounting
(B) Accrual basis of accounting; conventional basis of accounting
(C) Mercantile basis of accounting; cash basis of accounting
(D) Cash basis of accounting; cash basis of accounting.
84. Gross profit ratio for a firm was 20% in the year 2015 and 2016 but the net profit
ratio was 15% in the year 2015 and 12% in the year 2016. The reason for such
behaviour could be -
(A) Increase in manufacturing expenses
(B) lncrease in indirect expenses
(C) lncrease in cost of goods sold
(D) Decrease in sales.
85. The capital of Juhi Ltd. is as follows :
10% Preference shares of `10 each : `5,00,000
Equity shares of `100 each : `7,00,000
Other information :
Profit (after tax @ 50%) : `1,55,000
Depreciation : `60,000
P/E ratio : 12 times
The market price of equity share will be -
(A) `265.71
(B) `162.86
(C) `180
(D) `156
List-I List - II
(P) The standard ratio 2:1 is (1) Retum on assets
considered satisfactory
(Q) It measues profitabifity (2) Current ratio
of the firm in terms of
assets employed
(R) Ratio which measures (3) Gearing ratio
long-term solvency of a firm
(S) Ratio which indicates how (4) Debt-equity ratio
much of the business is
funded by borrowings
(P) (Q) (R) (S)
(A) (2) (3) (1) (4)
(B) (3) (2) (1) (4)
(C) (2) (1) (3) (4)
(D) (2) (1) (4) (3)
Total sales : `24,00,000
Inventory tumover ratio : 4.80 times on basis of cost of goods sold

Gross profit ratio : 25% on cost of goods sold
Closing inventory is `60,000 more than opening inventory.
The amount of opening stock and purchases respectively will be -
(A) `3,70,000 and `19,80,000
(B) `3,45,000 and `18,60,000
(C) `3,75,000 and `19,20,000
88. Statement - I
Working capital is a short-term capital which is financed from long-term sources.
Statement - II
Working capital turnover measures the relationship of working capital with sales.
(A) Both statements are corrrect
(C) Statement-I is incorrect, but Statement - II is correct
(D) Statement-I is correct, but Statement-II is incorrect.
89. Consider the following statements :
(1) Depreciation reduces tax liability, hence it is a source of funds.
(2) Decrease in current liabilities during the year results in an increase in
working capital.
(3) The term cash equivalents includes short-term martetable investments.
(4) Conversion of debentures into equity shares appears in funds flow
statement.
(5) Only non-cash expenses are added to net profit to find out funds from
operation.
Select the incorrect statements from the options given below -
(A) (1), (3), (4) and (5)
(B) (1), (2), (4) and (5)
(C) (1),(4) and (5)
(D) (2), (3) and (4)
90. Preference share capital of `5,00,000 was redeemed at a premium of 10%,
partly out of proceeds of issue of 20,000 equity shares of `10 each issued at
10% premium and partly out of profits otherwise available for dividends.
Choose the correct effect on different activities of cash flow statement from the
options given below :
(A) In financing activities, cash outflow `5,50,000 and cash inflow `2,20,000.
(B) In financing activities, cash outflow `5,50,000 and in investing activities,

cash inflow `2,20,000
(C) Net `3,30,000 will be outflow in operating activities
(D) In investing activities cash oufflow of `5,50,000 and in financing activities
cash inflow of `2,20,000.
91. Assertion (A)
In integrated accounting system, there is no need of reconciliation of cost
accounting profit and financial accounting profit.
Reason (R)
Only one set of books provide information for the ascertainment of cost as well
as preparation of a balance sheet as per legal requirement.
92. Following data are given for the month of June, 2016 :
Budgeted Actual
Variable overheads for the month (`) 10,000 9,000
Output for the month (units) 5,000 4,000
Hours for the month 1,000 820
The variable overheads efficiency variance will be -
(A) `2,000 (A)
(B) `200 (F)
(C) `400 (A)
(D) `200 (A).
93. A company has a normal capacity of 120 machines, working 8 hours per day for
25 days in a month. The fixed overheads are budgeted at `1,44,000 per month.
The standard time required to manufacture one unit of product is 4 hours. In
April, 2016, the company worked 24 days of 840 machine hours per day and
produced 5,305 units of output. The actual fixed overheads were `1,42,000.
The efficiency variance will be -
(A) `6,360 (F)
(B) `6,360 (A)
(C) `6,460 (F)
(D) `6,460 (A).
Materials purchased : 3,000 kgs.
Value of materials purchased : `9,000
Standard quantity : 25 kgs. for one finished unit

Standard price : `2 per kg.
Closing stock of materials : 500 kgs.
Finished goods produced : 80 units
Material cost variance will be -
(A) `3,500 (A)
(B) `3,500 (F)
(C) `3,650 (F)
(D) `3,650 (A).
95. The P/V ratio of Akhil & Co. is 50% ard margin of safety is 40% . The company
sold 500 units for `5,00,000.
The break-even point sales will be -
(A) `2,50,000
(B) `3,00,000
(C) `3,50,000
(D) `4,00,000
96. The price of material actually used rose by 5%. lt was, however, anticipated and
was included in setting the standard material cost. This price rise would result in
-
(A) Unfavourable material price variance
(B) Favourable material price variance
(C) Favourable material usage variance
(D) No variance.
97. Which of the following is an irrelevant cost —
(A) Sunk cost
(B) Replacement cost
(C) Opportunity cost
98. Administrative overheads are absorbed on the basis of -
(A) Direct materials
(B) Direct wages
(C) Prime cost
(D) Works cost.
List - I List - II
(P) Advertising (1) Operating costing
(Q) Sugar company (2) Job costing
(R) Readymade garments (3) Process costing

(S) Transport (4) Batch costing
(P) (Q) (R) (S)
(A) (2) (3) (4) (1)
(B) (4) (3) (2) (1)
(C) (1) (2) (3) (4)
(D) (3) (4) (2) (1)
100. Following information is available :
Owners' equity : `1,00,000
Current debt to total debt : 0.40
Total debt to owners' equity : 0.60
Fixed assets to owners'equity : 0.60
Total assets turnover : 2 times
lnventory turnover : 8 times
Fixed assets will be -
(A) `70,000
(B) `60,000
(C) `65,000
(D) `72,000
***
ANSWER KEY
Qno Ans Qno Ans Qno Ans
1 C 35 C 69 D
2 D 36 D 70 A
3 B 37 C 71 B
4 D 38 A 72 A
5 C 39 A 73 D
6 D 40 B 74 B
7 A 41 C 75 A
8 A 42 A 76 D
9 D 43 A
77 A
10 B 44 D
78 A
11 B 45 D
79 A
12 B 46 A
80 D
13 A 47 B
81 B
14 D 48 A
15 B 49 C 82 D
16 B 50 C 83 A
17 D 51 A 84 B
18 B 52 D 85 C
19 C 53 * 86 D
20 B 54 C 87 A
21 B 55 C 88 A
22 B 56 B 89 C
23 B 57 D 90 A
24 A 58 C 91 A
25 A 59 A 92 D
26 B 60 D 93 A
27 C 61 A 94 A
28 A 62 B or C
95 B
29 D 63 C
96 D
30 A 64 C
97 A
31 A 65 B
98 D
32 A 66 A
99 A
33 C 67 C
34 A 100 B
68 A
Q. 53 : None of the option was found to be correct. The correct answer is 1.875%.
Q. 62 : Two options (B & C) are found to be correct.
Note : The inconsistency or ambiguity in the Question(s), if any, is/are taken care of while evaluating the
answer sheets.
1. Which of the following statements are true —
(i) Conversion costs and overheads are interchangeable terms
(ii) Notional cost and imputed cost means the same thing
(iii) Cost accounting is not needed by a non-profit organisation
(iv) Rent on owned building is included in cost accounts.
(A) (i) and (ii)
(B) (iii) and (iv)
(C) (ii) and (iv)
2. XYZ Ltd. had 4,000 units of inventory in hand on 1st March, 2016, costing
`4 per unit. Purchases and issues of material during the month were as
follows :
Date Purchase Issue
March 8 500 units @ `5 per unit —
March 15 — 2,000 units
March 20 6,000 units @ `6 per unit —
March 28 — 4,000 units
The cost of inventory as on 31st March, 2016 under FIFO and weighted
average cost method will be —
(A) `27,000 and `24,498
(B) `27,000 and `23,625
(C) `22,000 and `23,625
(D) `22,000 and `24,498

18
3. What journal entry is to be passed in non-integrated accounting system when

finished goods are sold at cost —
(A) Debit General ledger adjustment account and Credit Costing profit and
loss account
(B) Debit General ledger adjustment account and Credit Finished goods
stock ledger account
(C) Debit Cost of sales account and Credit Costing profit and loss account
(D) Debit Cost of sales account and Credit Finished goods stock ledger
control account.
4. Match the following industry/product with appropriate cost unit :
Industry/Product Cost unit
(i) Toy Industry (a) Per batch
(ii) Steel Industry (b) Tonne-kilometre
(iii) Chemical (c) Tonne
(iv) Transport (d) Gallon
Select the correct answer using the codes given below —
(i) (ii) (iii) (iv)

(A) (a) (c) (d) (b)
(B) (a) (b) (d) (c)
(C) (a) (d) (c) (b)
(D) (b) (a) (c) (d)
5. Which one of the following statements is false —
(A) Management accountant uses cost accounting tools and techniques for
planning and decision making
(B) Management accounting is mostly historical in its approach and it

projects the past
(C) Cost accounting system can be installed without management accounting
(D) Management accounting focuses on wealth maximisation.
6. 4,000 Kgs. of material is purchased @`2 per Kg. Normal wastage is estimated
at the rate of 10%. The wastage has recovery value of `1.10 per Kg. Calculate
cost of material of work order of 600 units, if each unit requires 1.5 Kg. of
material —
(A) `1,260
(B) `1,800
(C) `1,620
(D) `1,890
7. What is the treatment of unrealised profit in process costing —
(A) Transferred to profit and loss account
(B) Closing stock valued at transfer price
(C) Eliminated by creating stock reserve
(D) Treated as abnormal gain.
8. Cost-Volume-Profit analysis is based on several assumptions. Which one of

the following is not one of these assumptions —
(A) Sales mix of the products is constant

(B) The behaviour of both sales and variable cost is linear throughout the
relevant range
(C) Variable cost per unit will remain constant
(D) Productivity and operational efficiency will change according to output.
9. Which of the following is/are not a purpose of time keeping —
(i) Ascertaining labour cost of a job/product/activity
(ii) Evaluating labour performance by comparing actual and budgeted time
(iii) Providing internal check against dummy workers.
(A) (i) and (ii)
(B) (ii) and (iii)
(C) (i) and (iii)
(D) (ii) only.
10. Pride Ltd. has profit after tax `90,000, depreciation `17,000, and decrease of
debtors `20,000. The cash generated from operating activities will be —
(A) `87,000
(B) `93,000
(C) `1,27,000
(D) `53,000
11. Classify the following expenses as direct (D) and indirect (I) —
(i) Royalties charged as a rate per unit
(ii) Cost of making a design, pattern for a specific job
(iii) Salesman's commission
(iv) Power, fuel, lighting of factory and office.
Select the correct answer usisng the codes given below —
(i) (ii) (iii) (iv)
(A) (D) (D) (I) (I)
(B) (D) (D) (I) (D)
(C) (D) (D) (D) (D)
(D) (D) (D) (D) (I)
12. Under Merrick's multiple piece rate system, 110% of the ordinary piece rate
is given to workers whose level of performance lies between _______ of the
standard output.
(A) 83% and 100%
(B) 73% and 100%
(C) 83% and 90%
(D) 80% and 90%.
13. Current liabilities of a firm are `1,50,000. Its current ratio is 3:1 and liquid ratio
is 1:1. The value of stock will be —
(A) `3,00,000
(B) `4,50,000
(C) `2,50,000
(D) `1,50,000
14. The state of production at which separate products are identified is known
as—
(A) Split-off point
(B) Break-even point
(C) Re-order point
(D) Cost indifference point.

15. Under marginal costing, unit product cost would most likely be increased by—
(A) A decrease in the number of units produced
(B) An increase in the number of units produced
(C) An increase in the commission paid to salesman for each unit sold
(D) A decrease in the commission paid to salesman for each unit sold.
16. A company reported current year profit as `70,000 after the following
adjustments:
Loss on sale of equipment : `9,000
Premium on debenture redemption : `1,500
Tax provision : `22,000
Dividend income : `4,000
Profit on revaluation of fixed asset : `2,500
The amount of fund from operations will be —
(A) `96,000
(B) `93,000
(C) `78,000
(D) `61,000
17. In process costing, abnormal effectives would arise if —
(A) Actual units lost during the process were more than the normal loss
(B) Closing stock at end of the period was higher than opening stock
(C) Actual units lost during the process were less than the normal loss
(D) Estimate of cost per unit was below the actual cost per unit of output.
18. A company producing three products, viz., X,Y and Z has sales mix in the
ratio of 2:1:3. The profit volume ratio of the products X, Y and Z are 15%,
30% and 20% respectively. The total fixed cost of the company is `3,50,000.
The break-even point of the company will be —
(A) `16,15,390
(B) `17,50,000
(C) `23,33,333
(D) `11,66,667
19. Which one of the following is a non-current item —
(A) Securities premium
(B) Outstanding wages
(C) Trade payables
(D) Bank balance.
Overheads Basis of apportionment
(i) Insurance of stock (a) Floor area
(ii) Rent and other building expenses (b) Number of workers
(iii) Fringe benefits (c) Direct wages
(iv) Holiday pay (d) Capital value
(i) (ii) (iii) (iv)

(A) (a) (c) (d) (b)
(B) (d) (a) (b) (c)
(C) (d) (b) (a) (c)
(D) (c) (a) (b) (c)
21. Match the following statements with prescribed forms :
Statements Forms
(i) Cost Audit Report to Central (a) CRA 3

Government by the company
(ii) Cost Auditor to submit report to (b) CRA 2

the Board of Directors
(iii) Intimation of appointment of Cost (c) CRA 4

Auditor to MCA by the company
(i) (ii) (iii)
(A) (a) (b) (c)
(B) (c) (a) (b)

(C) (b) (a) (c)
(D) (c) (b) (a)
22. Identify the cost which is not relevant or useful for decision making —
(A) Shut down cost
(B) Marginal cost
(C) Imputed cost and replacement cost
(D) Sunk cost.
23. EOQ is 200 units, ordering cost `20 per order and total purchases 4,000
units. The carrying cost per unit will be —
(A) `2
(B) `6
(C) `4
24. From the following particulars, calculate the selling price per unit, if the break-
even point is brought down to 10,000 units :
Selling price per unit : `20
Variable cost per unit : `16
Fixed expenses : `60,000
Choose the correct option —
(A) `25
(B) `20
(C) `22
(D) `32
25. Standard time allowed for a job is 20 hours @ `2 per hour. Actual time taken
by a worker is 15 hours. The earning and effective wage rate under Halsey
Plan (50% sharing) will be —
(A) `35 and `2.33
(B) `35 and `1.75

(C) `40 and `2.67
(D) `40 and `2.00
26. Operating and accounting figures for the month of January, 2015 with respect
to overheads were as under :
Actual overheads `8,600
Actual direct labour hours `6,000
Standard labour hours `5,000
Budget equation = `3,000 +

(90 paise × Actual direct hours)
Absorption equation = `1.50

× Standard direct labour hours
The budgeted overheads amounted to `8,400 and absorbed overheads to

`8,250.
The overheads volume variance is —
(A) `150 (A)
(B) `158 (F)
(C) `142 (A)
(D) `140 (F).
27. Assertion (A) : A current ratio of 2:1 is considered satisfactory as a rule of

thumb but it should not be followed blindly.
Reason (R) : The greatest weakness of current ratio is the possibility of
window dressing and manipulation.
(B) Both A and R are true, but R is not the correct explanation of A
28. What is the proper sequence of events in an 'activity based costing' system—
(i) Calculation of overheads application rates.

(ii) Identification of cost drivers
(iii) Identification of cost pools
(iv) Assignment of overheads cost to products.
(A) (i), (iii), (iv), (ii)
(B) (ii), (iii), (i), (iv)
(C) (iii), (ii), (i), (iv)
(D) (ii), (iii), (iv), (i)
29. Calculate machine hour rate from the following :
Cost of machine : `19,200
Estimated scrap value : `1,200
Average repair and maintenance charges per month : `150
Standing charges allocated to machine per month : `50
Effective working life of machine : 10,000 hours
Running time per month : 166 hours
Power used by machine 5 units per hour @ : 19 paise per unit
(A) `4
(B) `3.95
(C) `5.95
(D) `3.50
30. During the year ended 31st March, 2015, the profit of the company is `63,450
as per financial records. The following details are given :
Opening stock overstated in cost accounts : `8,500

Closing stock understated in cost accounts : `7,600
Factory overheads under recovered in cost accounts : `4,500
The profit as per cost accounts will be —
(A) `69,950
(B) `65,950
(C) `51,850
(D) `56,950
31. Cost Accounting Standard ____________ is related to bringing uniformity and

consistency in the principles and methods of determining the selling and
distribution overheads with reasonable accuracy.
(A) 10
(B) 12
(C) 15
(D) 4
32. Which of the following statements is wrong with reference to contract costing—
(A) Cost plus contract is suitable where it is not possible to compute the
cost in advance
(B) Upward and downward revision may be possible in contract price by
inserting escalation/de-escalation clause
(C) If certified work-in-progress is ¼ or more but less than ½ of the contract

price, no profit is to be transferred to profit and loss account
(D) Loss on incomplete contracts should be transferred to profit and loss

account.
33. Which one of the following statements is true in ABC classification of

materials—
(A) 'C' items of material have moderate % of cost and high % of quantity
(B) 'A' items of material have high % of cost and low % of quantity
(C) 'A' items of material have high % of cost and high % of quantity
(D) 'B' items of material have moderate % of cost and low % of quantity.
34. Aman Ltd. sells its products at `16 per unit. In a period, if it produces and
sells 20,000 units, it incurs a loss of `2 per unit. If the volume is doubled,
it earns a profit of `2.20 per unit. The amount of fixed cost and break-even
point (in units) will be —
(A) `1,68,000 and 26,250 units
(B) `8,000 and 53,333 units
(C) `1,60,000 and 25,000 units
(D) `1,70,000 and 42,500 units.

35. In a situation of rising prices, profit and tax liability would be lower under
_______ method than under _______ method of material issue pricing.
(A) FIFO; LIFO
(B) LIFO; FIFO
(C) LIFO; Average
(D) FIFO; Average.
36. The purchase of machinery by issuing long-term notes payable should be
reported as a —
(A) Non-cash investing and financing activity
(B) Cash outflow in the operating activity
(C) Cash outflow in the investing activity
(D) Cash outflow in the financing activity.
37. A standard that represents the most likely scenario can be referred to as —
(A) Attainable standard
(B) Basic standard
(C) Ideal standard
(D) Normal standard.
38. Stock turnover : 6 times
Total sales : `3,00,000
Gross profit ratio : 20%
Closing stock : `4,000 more than opening stock
The opening stock is —
(A) `36,000
(B) `38,000
(C) `40,000
(D) `42,000
39. To produce one unit of 'A', two ingredients, i.e., 2 Kgs. of X and 3 Kgs. of
Y are required :
Stock levels Opening Closing
A (Units) 5,000 8,000

X (Kgs.) 11,000 14,000
Y (Kgs.) 18,000 21,000

What will be the quantity of consumption of ingredients X and Y, if 20,000

units of A are sold —
(A) 46,000 Kgs. and 69,000 Kgs. respectively
(B) 49,000 Kgs. and 72,000 Kgs. respectively
(C) 40,000 Kgs. and 60,000 Kgs. respectively
(D) 43,000 Kgs. and 63,000 Kgs. respectively.
40. Which one of the following would not form part of master budget —
(A) Cash budget
(B) Statement of profit and loss
(C) Statement of financial position
41. Standard time for a job is 40 hours @ `2 per hour. Actual time taken by a
worker is 30 hours. His total earnings under Rowan plan and Halsey plan will
be —
(A) `75 and `70 respectively
(B) `70 and `75 respectively
(C) `60 and `70 respectively
(D) `75 and `60 respectively.
42. Section ___________ of the Companies Act, 2013 gives the cost auditor
same power as the financial auditor has under section __________ of the
Companies Act, 2013.
(A) 148, 143
(B) 143, 148
(C) 147, 148
(D) 143, 144
43. Balance of investment account is `20,000 on 31st March, 2014 and `30,000
on 31st March, 2015. As per additional information, dividend received `3,000
includes `1,000 from pre-acquisition profit which is credited to investment
account. The amount of investment purchased/ sold during the year 2014-
15 is —
(A) `13,000 purchased

(B) `11,000 purchased
(C) `9,000 purchased
(D) `9,000 sold.
44. Which one of the following statements is correct —
(A) Lower debt equity ratio means lower financial risk
(B) Increase in net profit ratio means increase in sales
(C) A higher receivable turnover is not desirable
(D) Interest coverage ratio depends upon tax rate.
45. Direct labour cost will include —
(A) All labour cost attributable to a production department
(B) Labour cost of production and production support services
(C) Cost of direct labour engaged in converting raw materials into

manufactured articles
(D) Cost of labour recruited directly by the management and through

contractors.
46. Following information is provided in respect of a contract :
Contract price : `10,00,000
Cost incurred : `5,60,000
Cash received : `5,40,000
Work not certified : `60,000
Deduction by way of retention money : 10%
The amount of notional profit is —
(A) `40,000
(B) `1,00,000
(C) `4,40,000
47. Those fixed costs which continue to be incurred even when there is no
production are called —
(A) Period costs
(B) Discretionary costs
(C) Committed costs
(D) Output costs.
48. Which one of the following is not a part of reciprocal method for re-distribution
of service departments' overheads to production departments —
(B) Step method
(D) Trial and error method.
49. Profit : `50,000
Contribution : `70,000
Sales : `7,00,000
The amount of margin of safety will be —
(A) `4,00,000
(B) `5,00,000
(C) `2,50,000
(D) `1,45,000
50. Which one of the following is not an advantage of budgetary control —
(A) Maximisation of profit through effective planning
(B) Planned approach for expenditure
(C) Create necessary conditions for setting-up of standard costs
(D) Based on quantitative data and represent only an impersonal appraisal

to the conduct of business activity.
51. Job analysis is the analysis of each job to determine a list of _______ needed
by workers to perform the work satisfactorily.
(A) Qualifications
(B) Manual methods
(C) Mechanical methods
(D) Various jobs.

52. The technique of economic order quantity is losing significance since the
development of —
(A) Perpetual inventory

(B) Just-in-time
(C) First-in-first-out
(D) ABC analysis.
53. A firm plans to produce 1,980 units of a product per 8 hour shift. The standard
productivity is 2 units per man hour. Average labour efficiency is 91%, idle
time is 15% of attendance time and absenteeism is 20%. How many workers
should be recruited to produce planned output —
(A) 200
(B) 124
(C) 136
(D) 151
54. Two articles A and B are produced in a factory. Their specifications show that
4 units of A or 2 units of B can be produced in one hour. The budgeted
production for January, 2015 is 800 units of A and 200 units of B. The actual
production for the month was 900 units of A and 180 units of B. Actual labour
hours spent were 350.
The efficiency ratio for January, 2015 is —
(A) 80%
(B) 85%
(C) 90%
(D) 95%.
55. A direct cost is a cost which can be classified on the basis of —
(A) Behaviour
(B) Traceability
(C) Controllability
(D) Relevance.
Input raw material 2,000 units @`20 per unit
Direct material : `8,400

Direct wages : `13,000
Production overheads : `12,350
Output transferred to Process-II : 1,800 units
Normal loss of input : 5%
Scrap value per unit : `6
Value of abnormal loss will be —
(A) `3,657.50
(B) `3,881.60
(C) `3,850.00
(D) `3,687.50
57. The original standard rate of pay in a factory was `4 per hour. Due to
settlement with Trade Unions, this rate of pay per hour was increased by
15%. During a particular period, 5,000 actual hours were worked whereas
work done was equivalent to 4,400 hours. Actual labour cost was `24,000.
Labour cost variance will be —
(A) `6,400 (A)
(B) `6,000 (A)
(C) `6,400 (F)
(D) `6,000 (F).
58. Following information relates to a travel agency :
Distance of one way route : 40 Kms.
Round trips per day : 3
Days operated in a month : 25
Seating capacity (80% occupied) : 50 passengers
The effective passenger-km per annum will be —
(A) 2,40,000
(B) 28,80,000
(C) 14,40,000
(D) 24,00,000
59. Which method of joint cost apportionment is suitable where further processing
costs after separation point are not incurred proportionately or all the joint
products are not subject to further processing —
(A) Physical unit method
(B) Contribution margin method
(C) Relative market value method
(D) Market value after further processing method.
60. The ratio of variable cost to sales is 75%. The break-even point occurs at
64% of the capacity sales when fixed cost is `1,20,000. The 100% capacity
sales will be —
(A) `4,80,000
(B) `2,50,000
(C) `7,50,000
61. Which of the following statement(s) is/are true :
(i) Common size balance sheet is vertical financial analysis
(ii) Financial analysis performed on behalf of shareholders is called internal

analysis
(iii) Trend percentage may be used for both balance sheet and profit and
loss account.
(A) (i) and (ii)
(B) (ii) and (iii)
(C) (i) and (iii)
(D) (ii) only.
Standard fixed overheads rate per hour : `5

Budgeted hours : 12,500
Standard number of working days : 25
Actual hours : 11,500
Actual number of working days : 22
Calendar variance will be —
(A) 2,840 (A)
(B) 5,000 (A)

(C) 2,500 (A)
(D) 7,500 (A).
63. Management accounting does not include the function of —
(A) Planning and control
(B) Product costing
(C) Preparation of financial statements
(D) Decision-making.
64. Kriti Ltd. has provided following information for the quarter January to March :
January February March
Sales @ `20 per unit (units) 1,000 2,000 3,000
Closing debtors (`) 16,000 40,000 64,000
20% of the sales are on cash basis and balance on credit basis. The amount
to be collected from debtors in the month of February and March will be —
(A) Zero and `8,000 respectively
(B) `8,000 and `16,000 respectively
(C) `8,000 and `24,000 respectively
(D) `16,000 and 36,000 respectively.
65. Following information is given for Component 'A' :
Normal usage 50 units per week, maximum usage 75 units per week, reorder
period 4 to 6 weeks. The minimum level of stock will be —
(A) 250 Units
(B) 150 Units
(C) 450 Units

(D) 200 Units.
66. From the following financial data, compute stock turnover ratio and stock
velocity (assume 360 days in a year) —
Opening stock : `58,000
Purchases : `5,02,000
Return outwards : `18,000
Sales : `6,53,000
Return inwards : `13,000
Gross profit : 25% on sales
(A) 8 times; 45.62 days
(B) 8 times; 45 days
(C) 10.67 times; 33.75 days
(D) 7.74 times; 46.51 days.
67. Which statement contains opening as well as closing balances of cash and
cash equivalents and prepared on accrual basis —
(A) Cash flow statement

(B) Fund flow statement
(C) Both (A) and (B) above
(D) Statement of income and expenditure.
68. Quarterly consumption of materials : 2,000 Kgs.
Cost of placing an order : `50
Cost per unit : `40
Storage and other carrying costs : 8% of average inventory
The economic order quantity and number of orders to be placed per quarter
of the year will be —
(A) 400 Kgs. and 5 orders
(B) 500 Kgs. and 4 orders
(C) 500 Kgs. and 12 orders
(D) 400 Kgs. and 6 orders.
69. Which of the following account will be debited under the integrated accounting
system when materials are purchased on credit —
(A) Purchases account
(B) Stores ledger control account

(C) Cost ledger control account
70. Cost of production for 10,000 units : `1,60,000
Opening stock of finished goods (1,000 units) : `18,000
Closing stock of finished goods (FIFO) : 2,000 units
Selling and distribution overheads : `2 per unit sold
Profit mark-up on selling price : 20%
The amount of profit will be —
(A) `39,800
(B) `40,500
(C) `41,000
(D) `40,800
71. 8% Preference share capital : `3,00,000
Equity share capital (`10 per share) : `8,00,000
Profit after 30% tax : `2,80,000
Market price of equity share : `40
The earnings per share and the price-earnings ratio will be —
(A) `3.50 and 11.43
(B) `5 and 8
(C) `4.70 and 8.51
(D) `3.20 and 12.50
72. Re-order quantity : 300 Kgs.
Minimum usage : 20 Kgs. per day
Minimum lead time : 5 days
Maximum stock level : 400 Kgs.
Re-order level will be —
(A) 350 Kgs.
(B) 200 Kgs.

(C) 375 Kgs.
(D) 150 Kgs.
73. Cost of maintenance of an equipment for 12,000 hours of running is `1,70,000

and for 18,500 hours of running, it is `2,09,000. The cost of maintenance for
14,000 hours will be —
(A) `1,81,500
(B) `1,80,000
(C) `1,82,000
(D) `1,90,000
74. For a department, the standard overheads rate is `2.50 per hour and the
overheads allowances are as follows :
Activity level Budget overheads

(hours) allowance (`)
3,000 10,000
7,000 18,000
11,000 26,000
Calculate the normal capacity level on the basis of which the standard
overheads rate has been worked out —
(A) 8,000 Hours
(B) 7,000 Hours
(C) 6,000 Hours
(D) 9,000 Hours.
75. Acute Ltd. is committed to supply 24,000 bearings per annum to Mighty Ltd.
on a steady basis. It is estimated that it costs 10 paise as inventory holding
cost per bearing per month and that the set-up cost per run of bearing
manufacture is `324.
The optimum run size for bearing manufacture would be —
(A) 3,800 Units
(B) 4,000 Units
(C) 3,600 Units
(D) 3,400 Units.

76. Following information is supplied regarding a contract in progress :
Details Amount Stage of completion

(`) (%)
Erection cost to date 7,500 25
Fabrication cost to date :
Material 60,000 60
Wages and other expenses 47,500 50
Contract value 2,00,000
The estimated profit or loss at the completion of the contract will be —
(A) `25,000 (Profit)
(B) `25,000 (Loss)
(C) `26,000 (Profit)
(D) `26,000 (Loss).
77. Which one of the following is the correct sequence of the purchase procedure
of inventory —
(A) Indenting for material, issuing tenders, receiving quotations, and placing
order
(B) Issuing tenders and receiving quotations, indenting for material, and
placing order
(C) Placing order, issuing tenders and receiving quotations, and indenting
for material
(D) Indenting for material and placing order.
78. PQR Ltd. has prepared the budget for the production of one lakh units of the
only commodity manufactured by them for a costing period as follows :
Cost elements ` (in lakh)
Raw material 252

Direct labour 75
Direct expenses 10
Works overheads (60% fixed) 225
Administrative overheads (80% fixed) 40
Selling overheads (50% fixed) 20
If the actual production during the period was 60,000 units, the revised budget
cost per unit will be —
(A) `740
(B) `800
(C) `700
(D) `840
79. Match the following overtime reasons to charge in cost accounting :
Reason Charged to
(i) Overtime due to circumstances (a) Job directly
beyond control
(ii) Overtime due to negligence (b) General overheads
or delay of workers
(iii) Overtime resorted due to desire (c) Costing profit and
of customer loss account
(iv) Overtime due to general (d) Particular department
pressure of work
(i) (ii) (iii) (iv)
(A) (c) (a) (d) (b)
(B) (c) (d) (a) (b)
(C) (d) (a) (b) (c)
(D) (b) (c) (a) (d)
80. There are two similar plants under the same management. The management
desires to merge these two plants. The following particulars are available :
Details Plant-I Plant-II
Capacity operation 100% 60%
`(in lakh) `(in lakh)
Sales 600 240
Variable costs 440 180
Fixed costs 80 40
The capacity of the merged plant to be operated for the purpose of break-
even will be —
(A) 45.14%
(B) 48.12%
(C) 50.76%
(D) 46.16%.
81. Following information is given for an order :
Materials (direct) : `25,000
Wages (direct) : `20,000
Factory overheads : 75% of wages (direct)
Sales : `85,800
Profit : 10% on cost of production
Office overheads are charged as a percentage of factory cost. The amount
of office overheads and its percentage to factory cost will be —
(A) `78,000 and 30%
(B) `18,000 and 30%
(C) `25,800 and 43%
(D) `33,000 and 55%.
82. Total number of workers : 100
Idle time : 5%
Working days per year : 300
Factory overheads : `11,400
No. of hours worked per day : 8
Direct labour hour rate will be —
(A) 6 paise per hour
(B) 4 paise per hour
(C) 8 paise per hour

(D) 5 paise per hour.
83. Match the following events with type of activity :
Event Type of activity
(i) Material ordering (a) Product level activity
(ii) Designing the product (b) Facility level activity

(iii) Production manager salary (c) Unit level activity
(iv) Use of consumables (d) Batch level activity
(i) (ii) (iii) (iv)
(A) (d) (c) (b) (a)
(B) (d) (c) (a) (b)
(C) (a) (d) (b) (c)
(D) (d) (a) (b) (c)
84. From the following particulars relating to Job No. 555, ascertain the total cost:
Direct materials 16,000
Direct labour 8,000
Direct expenses 1,600
Works overheads are recovered on the basis of 50% on prime cost and
administrative overheads at 10% of works cost.
(A) `45,000
(B) `45,240
(C) `42,240
(D) `43,000
85. In financial analysis, 'time series analysis' refers to —
(A) Making a time series of various ratios to assess a firm's profitability
(B) A graphical comparison of a firm's sources of finance
(C) The comparison of financial ratios over a period of time to assess the
direction of change and the financial performance of a firm
(D) A comparison of time values for various ratios of a firm.
86. Input material : 10,000 units
Normal loss of total input : 8%

Closing work-in-progress : 900 units
Degree of completion for closing stock of work-in-progress and abnormal loss:
Material – 100%
Labour – 70%
Output transferred to next process 7,900 units.
From the above information, equivalent production units for material and
labour are :
(A) 9,200 and 8,930 respectively
(B) 9,200 and 8,810 respectively
(C) 8,800 and 8,930 respectively
(D) 8,800 and 8,810 respectively.

87. The standard material required to manufacture one unit of Product-A is 5 Kgs.
and the standard price per Kg. of material is `3. The cost accountant's
records, however, reveal that 16,000 Kgs. of material costing `52,000 were
used for producing 3,000 units of Product-A.
Material price variance will be —
(A) `4,000 (A)
(B) `4,000 (F)
(C) `4,300 (A)
(D) `4,300 (F).
88. Which of the following statements is/are false :
(i) Product can be sold below marginal cost in certain special circumstances
(ii) Cost per unit of key factor is the basis of ranking products on profitability
(iii) When there are no inventories, profit figures under marginal and
absorption costing are identical.
(A) (ii) only
(B) (i) and (ii)

(C) (i) and (iii)
(D) (ii) and (iii).
89. Which of the following is/are the characteristics of service costing :
(i) Use of composite cost units
(ii) Documents like daily log sheet, cost sheet, etc. are used for collection
of cost data
(iii) Expenses are divided on functional basis as in unit costing.
(A) (i) only
(B) (i) and (ii)
(C) (ii) and (iii)
(D) (i) and (iii).
90. Following data are given :
Product–A Product–B
Contribution per unit (`) 30 28
Direct labour (hours per unit) 5 4
Maximum possible production (units) 10,000 10,000
Direct labour hours available 72,000 hours.
What should be the number of units of A and B to be produced to maximise

profit of the company —
(A) A-10,000 units, B-5,500 units
(B) B-10,000 units, A-5,500 units
(C) B-10,000 units, A-6,400 units
(D) 10,000 units of each A and B.
91. The formula for computing overheads efficiency variance is —
(A) Absorbed overheads – Standard overheads
(B) Standard overheads – Revised budgeted overheads
(C) Absorbed overheads – Budgeted overheads
(D) Absorbed overheads – Actual overheads.
92. If average collection period is 15 days and average account receivables is

`45,000, the total amount of credit sales will be (assume 360 days in a
year)—
(A) `10,80,000
(B) `16,20,000
(C) `6,75,000
(D) `1,87,500
93. A process in which management is looking outward to examine how others

achieve their performance levels and to understand the process they use, is
called —
(A) Balanced score card

(B) Target costing
(C) Bench marking process
(D) Performance analysis.
94. Cost of goods sold : `4,00,000

Administration and office expenses : `35,000
Selling and distribution expenses : `45,000
Net credit sales : `4,75,000
Cash sales : `1,25,000
Operating profit ratio will be —
(A) 30%
(B) 35%
(C) 20%
(D) 25%.
95. Which one of the following is not a statistical technique of cost audit —
(A) Monte-Carlo simulation

(B) Inter-firm comparison
(C) Network analysis
(D) Exponential smoothing.
96. If provision for taxation is treated as a current liability, then payment of tax
is —
(A) An application of funds

(B) A source of funds
(C) No flow of funds
97. Margin of safety is `8,000 which represents 40% of sales. P/V ratio is 50%.
Fixed cost will be —
(A) `6,000
(B) `5,500
(C) `6,500
(D) `7,000
98. What is the proper sequence in standard costing to control cost and measure
efficiency —
(A) Try to achieve targets, compare actual costs with targets, set targets
(B) Set targets, compare actual costs with targets, try to achieve targets
(C) Set targets, compare actual costs with targets, report to management,
revise the targets
(D) Set targets, try to achieve targets, compare actual with targets, report
to management.
99. Direct material cost `45,000
Direct labour cost is 40% of direct material cost
Royalties on production `4,000
Other direct expenses are 20% of prime cost.
Prime cost will be —
(A) `78,750
(B) `83,750
(C) `80,400
100. A budget in which a responsibility centre manager must justify each planned
activity and its budgeted total cost is called —
(A) Traditional budget
(B) Zero based budget
(C) Master budget

(D) Functional budget.
ANSWER KEY

1 C 35 B 69 B
2 A 36 A 70 C
3 D 37 A 71 D
4 A 38 B 72 B
5 B 39 A 73 C
6 D 40 D 74 A
7 C 41 A 75 C
8 D 42 A 76 B
9 D 43 B
77 A
10 C 44 A
78 A
11 Either A or D or both 45 C
79 B
12 A 46 B
80 D
13 A 47 C
81 B
14 A 48 B
15 C 49 B 82 D
16 A 50 D 83 D
17 C 51 A 84 C
18 B 52 B 85 C
19 A 53 A 86 B
20 B 54 C 87 A
21 B 55 B 88 A
22 D 56 C 89 B
23 C 57 A 90 C
24 C 58 B 91 A
25 A 59 C 92 A
26 A 60 C 93 C
27 A 61 C 94 C
28 C 62 D
95 C
29 B 63 C
96 C
30 C 64 C
97 A
31 C 65 D
98 D
32 C 66 B
99 B
33 B 67 B
34 A 100 B
68 B
Q. 11: Both the options (A and D) are correct.

1. In a company, weekly minimum and maximum consumption of Material-A is 25

and 75 units respectively. The re-order quantity as fixed by the company is 300
units. The material is received within 4 to 6 weeks from issue of supply order.
Maximum level of Material-A is —
(A) 640 Units
(B) 650 Units
(C) 175 Units
(D) 560 Units.
2. Following data is given for Gopal Ltd. which produces and sells three products
X, Y and Z :
Product Units Selling Marginal
sold price per cost per
unit (`) unit (`)
X 1,000 100 60
Y 500 120 90
Z 800 50 25
Overall P/V ratio of the company will be —
(A) 42.5%
(B) 37.5%
(C) 42.8%
(D) 46.7%.
3. Item(s) excluded from cost sheet are —
(A) Direct material
(B) Administrative overheads
(C) Provision for taxation
4. Job card is a method of recording details of time with reference to —
(A) Work orders undertaken
(B) Performance
(C) Skill
(D) Rating.
20
5. The financial records of a company showed a net profit of `6,70,000 for the period
ended 31st March, 2015. On further examination of cost and financial records, the
following facts were discovered :
`
Works overheads under-recovered in cost 16,240
Office overheads over-recorded in cost 4,000
Interest on investments not included in cost 16,000
The profit as per cost records is —
(A) `6,66,250
(B) `6,66,240
(C) `6,67,270
(D) `6,68,250
6. Wage rate : `1.50 per hour
Time allowed for job : 20 hours
Time taken : 15 hours
The total earnings of the worker under Halsey plan is —
(A) `26.25
(B) `26.55
(C) `27.25
(D) `27.55
7. The basis of apportionment of overheads which takes into account the profitability
of various departments is called —
(A) FIFO basis
(B) LIFO basis
(C) Ability to pay basis
(D) Activity basis.
8. The functions of a cost auditor involve —
(A) Examining the inventory records
(B) Capacity utilisation
(C) Proper utilisation of labour
9. ____________ are necessary for the study of trends and direction of movements
in the financial position and operating results of a concern.
(A) Trend ratios
(B) Cash flow statements
(C) Common size statements
(D) Comparative statements.
10. When stores are issued for maintenance, the accounting entry is to ______
production overheads and _______ stores ledger control account.
(A) Debit; credit
(B) Credit; debit
(C) Deduct; add
(D) Divide; multiply.
11. _______ account does not record the balance of stores ledger control account.
(A) Manufacturing
(B) Trading
(C) Profit and loss
(D) Work-in-progress.
12. Under-valuation of closing stock in cost accounts is ______ and under-valuation
of opening stock in cost accounts is _____ while reconciling costing profits with
financial profits.
(A) Deducted, added
(B) Added, deducted
(C) Multiplied, divided
(D) Divided, multiplied.
13. If a contract is almost complete, the amount of profit generally transferred to profit
and loss account is equal to —
(A) Estimated profit × Work certified/Contract price
(B) Cash received/Work certified
(C) Notional profit × Estimated profit/Work certified
(D) Notional profit × Contract price/Work certified.
14. The following information is extracted from the job ledger in respect of Job No.
404 :
Material : `3,400
Wages : 80 hours @ `2.50 per hour
Variable overheads
incurred for all jobs : `5,000 for 4,000 labour hours
If the job is billed for `4,200 the profit will be —
(A) `600
(B) `500
(C) `700
(D) `650
15. Current ratio is 2.5 and liquid ratio is 1.5. Working capital is `75,000. Value of the
stock held will be —
(A) `60,000
(B) `1,00,000
(C) `50,000.
(D) None of the above .
16. The most important criterion for distinguishing between scrap, by-product and
joint product is ___________ of the products.
(A) Related purchase value
(B) Relative sales value
(C) Production cost
(D) Total cost.
17. The two main methods of calculating equivalent production are —
(A) FIFO method and average cost method
(B) LIFO method and standard cost method
(C) LIFO method and market price method
(D) FIFO method and market price method.
18. Management accounting is basically concerned with —
(A) The problem of choice
(B) Causative relationship
(C) Recording of transaction
(D) Both (A) and (B) above.
19. Cost accounting is —
(A) Nothing more than a detailed analysis of expenditure
(B) An instrument of management control
(C) Useful only in such organisation which has profit as the aim
(D) Not needed if prices are beyond the control of the firm.
20. Z Ltd. recorded sales of `60 lakh in 2014 as compared to `45 lakh in 2013. Profit
for 2014 was `5 lakh higher than that in 2013. If the annual fixed costs amount to
`12 lakh, the profit on projected sales of `90 lakh will be —
(A) `15 lakh
(B) `14 lakh
(C) `12 lakh
(D) `18 lakh.
21. Conversion cost is the summation of —
(A) Direct material and direct wages
(B) Direct wages and office overheads
(C) Direct wages, direct charges and works overheads
22. A cost centre which is engaged in production activity by conversion of raw material
into finished product is called —
(A) Production cost centre
(B) Impersonal cost centre
(C) Process cost centre
(D) Production unit.
23. The following particulars relate to production department of a factory :
Material used : `20,000
Overheads : `7,500
On an order carried out in the department, material consumed was `4,000 and
direct wages paid amounted to `2,000.
The amount of overheads chargeable tothis order on the basis of prime cost
would be —
(A) `1,500
(B) `1,510
(C) `1,700
(D) `1,710
24. You are given the following information :
(i) Total number of workers working in a department : 500
(ii) Working days in a year : 300
(iii) Number of hours worked in a day : 8
(iv) Total departmental overheads : `68,400
(v) Idle time @ 5% of days hours to be deducted from total number of days
hours.
Direct labour hour rate will be —
(A) 7 paise per labour hour
(B) 6 paise per labour hour
(C) 8 paise per labour hour
(D) 9 paise per labour hour.
25. Determine a firm’s total assets turnover, if its net profits margin is 8%, total
assets are `8,00,000 and the return on investment is 14% —
(A) 2.05
(B) 4.00
(C) 1.75
(D) 2.00
26. Which method of absorption of factory overheads would you suggest in a concern
which produces only one uniform item of product —
(A) Percentage of direct wage basis
(B) Direct labour hour rate
(C) Machine-hour rate
(D) Rate per unit output.
27. Statement-I :
Departmentalisation of items of costs is known as primary distribution.
Statement-II :
Redistribution of service department’s costs is known as secondary distribution.
(A) Statement-I is true but Statement-II is false
(B) Both statements are true
(C) Statement-I is false but Statement-II is true
(D) Both statements are false.
28. Shine Furniture House uses sunmica tops for table making, the following
information is available :
Standard quantity of sunmica per table : 4 sq. ft.
Standard price per sq. ft. of sunmica : `5
Actual number of tables manufactured : 1,000
Sunmica actually used : 4,300 sq. ft.
Actual price of sunmica per sq. ft. : `7
Material cost variance is —
(A) `10,100 (A)
(B) `10,500 (A)
(C) `11,000 (A)
(D) `11,500 (A).
29. Statement-I :
The contribution concept is based on the theory that the fixed expenses of a
business is not a joint cost.
Statement-II :
Fixed expenses can be equitably apportioned to different segments of business.
(C) Statement-I is correct, but statement-II is incorrect
(D) Statement-I is incorrect, but statement-II is correct.
30. A worker completes a job in certain number of hours. The standard time allowed
for the job is 10 hours and the hourly rate of wages is `1. The worker earns a
bonus of `2 at 50% rate under Halsey plan. His total wages under the Rowan
Premium plan is —
(A) `8.30
(B) `8.20
(C) `8.50
(D) `8.40
31. The following information is given about Zac Ltd. dealing in musical instruments :
P/V ratio 50%
Margin of safety 40%
If the sales volume is `50,00,000 the net profit will be —
(A) `15,00,000
(B) `10,00,000
(C) `20,00,000
(D) `5,00,000
32. Assertion (A) :
In management accounting, firm decisions on pricing policy can be taken.
Reason (R) :
As marginal cost per unit is constant from period to period within a short span of
time.
Select the correct answer from the option given below —
33. FIFO method of valuing material issues is suitable in times of —
(A) Rising prices
(B) Falling prices
(C) Price fluctuation
(D) Boom period.
34. About 50 units are required every day for a machine. Fixed cost of `50 is incurred
for placing an order. The inventory carrying cost per unit amounts to `0.02 per
day. The lead period is 32 days. Economic Order Quantity is —
(A) 200 Units
(B) 300 Units
(C) 500 Units
(D) 100 Units.
35. Which one of the following industry adopts batch costing in determining the
total cost —
(A) Biscuit making
(B) Oil refinery
(C) Cycle manufacturing
(D) Cement industry.
36. The basic difference between a static budget and a flexible budget is —
(A) A static budget is based on one specific level of production and a flexible
budget can be prepared for any production level within a relevant range
(B) A static budget is for an entire production, but a flexible budget is applicable
only to a single department
(C) Flexible budget allows management latitude in meeting goals, whereas a
static budget is based on a fixed standard
(D) A flexible budget considers only variable costs, but a static budget considers
all costs.
37. Manoj Ltd. manufactures three products P, Q and R. The unit selling price of
these products are `100, `160 and `75 respectively. The corresponding unit
variable costs are `50, `80 and `30. The proportions (quantity-wise) in which
these products are manufactured and sold are 20%, 30% and 50% respectively.
Total fixed costs are `14,80,000. Overall break-even quantity is —
(A) 26,195 Units
(B) 27,195 Units
(C) 27,165 Units
(D) 28,165 Units.
38. Net income of a company after payment of preference dividend was `63 lakh. The
number of equity shares was 1,40,000. The P/E ratio of the company was 8.50
times. Earnings per share and market value per share would be —
(A) `45 and `382.50 respectively
(B) `45 and `308.20 respectively
(C) `33.16 and `281.86 respectively
(D) `45 and `5.29 respectively.
39. The original standard rate of pay in a factory was `5 per hour. Due to settlement
with trade unions, this rate of pay per hour was increased by 20%. During a
particular period, 5,000 actual hours were worked whereas work done was
equivalent to 4,500 hours. The actual labour cost was `35,000. Labour rate
variance is —
(A) `10,000 (A)
(B) `5,000 (A)
(C) `5,000 (F)
(D) `10,000 (F).
40. When allocating service department costs to production departments, which one
of the following is not a method of re-distribution —
(A) Floor area based distribution
(B) Direct distribution
(C) Repeated distribution
(D) Trial and error method of distribution.
41. Assertion (A) :
Overheads are recovered in costing based on predetermined rates.
Reason (R) :
This solves the problem of treatment of under recovery or over recovery of overheads.
(A) Both A and R are true
(B) Both A and R are false
42. Profits in a company can be increased by :
(1) Decreasing the selling price per unit
(2) Increasing the selling price per unit
(3) Decreasing the volume of sales
(4) Increasing the volume of sales
(5) Decreasing the fixed or variable expenses
(6) Increasing the fixed or variable expenses
(7) Giving more weightage for products having higher P/V ratio
(8) Giving less weightage for products having higher P/V ratio
(A) (1), (3), (5) and (7)
(B) (2), (4), (6) and (8)
(C) (2), (4), (5) and (7)
(D) (1), (3), (6) and (8).
43. A business unit is known to be a profit centre —
(A) If its operations or departments are not directly involved in revenue generating
activities, but instead focus on elements of cost control
(B) If its management is evaluated not only on revenues and expenses, but
also on asset investment
(C) If its management is compensated based on the level of profitability
(D) If its management is held accountable for both revenues and expenses and
has the authority to make decision regarding its products, markets and
source of supply.
44. Assertion (A) :

The business earns a surplus of sale revenue over variable costs, which is called
contribution.
Reason (R) :
Once fixed costs are fully recovered such excess contribution is termed as profit.
45. Which of the following are the possible causes of material price variance :
(1) Change in market price
(2) Use of poor quality material
(3) Inefficient buying
(4) Untimely buying
(5) Paying overtime for urgent work
(6) Use of substitute material of different prices
(A) (1), (3), (4) and (6)
(B) (2), (3), (5) and (6)
(C) (3), (4), (5) and (6)
(D) (1), (3), (5) and (6).
46. If the closing stock figures are more in cost books as compared to those in
financial books for reconciliation, the difference due to stock valuation is —
(A) Deducted from costing profit
(B) Added to costing profit
(C) Ignored
47. A manufacturer produces 2,00,000 units of a product at a cost of `3.25 per unit.
Later on, he produces 2,75,000 units at a cost of `3.20 per unit, when its fixed
overheads have increased by 10%. Marginal cost per unit and original fixed
overheads will be —
(A) `2 and `45,000 respectively
(B) `4 and `47,000 respectively
(C) `3 and `50,000 respectively
(D) `5 and `45,000 respectively.
48. The following data is obtained from the records of Mayur Ltd. :
First Year Second Year
(`) (`)
Sales 80,000 90,000
Profit 10,000 14,000
Break-even-point in rupees is —
(A) `45,000
(B) `52,000
(C) `55,000
(D) `55,500
List-I List-II
P. Material cost 1. SP (RSQ - AQ)
variance
Q. Material price 2. SP (SQ - AQ)
variance
R. Material usage 3. AQ (SP - AP)
variance
S. Material mix 4. SC - AC
variance
P Q R S
(A) 4 3 2 1
(B) 2 1 4 3
(C) 4 1 2 3
(D) 3 4 2 1
50. Calculate fixed overheads volume variance from the following data :
Standard Actual
Output (in units) 8,000 10,000
Working hours 5,000 4,800
Fixed overheads `40,000 `60,000
Correct answer option is —
(A) `9,000 (F)
(B) `10,000 (F)
(C) `11,000 (F)
(D) `8,000 (F).
51. In ratio analysis, ‘proforma analysis’ implies —
(A) Making a list of all the present ratios of the firm
(B) Comparison of liquidity ratios with other kind of ratios of the firm
(C) Comparison of the ratios of the firm relating to the performance of the firm
(D) Comparison of the firm’s past and current ratios with future ratios to ascertain
the relative strengths and weaknesses in the past and future.
52. Assertion (A) :
Profit volume ratio is considered to be the best indicator of the profitability of the
business.
Reason (R) :
If profit volume ratio is improved, it will result in better profits.
List-I List-II
(Variances) (Causes)
P. Overheads efficiency 1. Power failure
variance
Q. Overheads volume 2. Appointing low
variance grade employees
R. Labour idle time 3. Poor working
variance conditions
S. Labour efficiency 4. Working days
variance being more or
less than budgets
P Q R S
(A) 4 3 2 1
(B) 3 4 1 2
(C) 3 1 4 2
(D) 2 1 4 3
List-I List-II
P. Cash flow statements 1. Inflow of funds
Q. Inflow of cash 2. Short-term financial planning
R. Investment (maturity 3. Financing activity
period 3 months)
S. Payment of dividend 4. Cash equivalent

P Q R S
(A) 2 1 4 3
(B) 2 4 1 3
(C) 4 3 1 2
(D) 3 4 1 2
List-I List-II
P. Labour cost variance 1. Actual hours paid ×
(Standard rate – Actual rate)
Q. Labour rate variance 2. Standard cost – Actual cost
R. Efficiency variance 3. Idle hours × Standard rate per hour
S. Idle time variance 4. Standard rate × (Standard hours – Actual
hours worked)
P Q R S
(A) 4 3 2 1
(B) 2 3 4 1
(C) 4 1 2 3
(D) 2 1 4 3
56. Which of the following are advantages of marginal costing :
(1) Pricing decision
(2) True profit
(3) Difficulty to classify
(4) Ignores time value
(5) Break-even analysis
(6) Contribution is not final
(7) Control over expenditure
(A) (1), (2), (5) and (7)
(B) (1), (3), (5) and (7)
(C) (3), (4), (6) and (7)
(D) (1), (2), (6) and (7).
57. If sales revenue at 60% capacity is `4,50,000, sales revenue at 70% capacity on
a fall in selling price by 5% would be —
(A) `4,98,750
(B) `7,50,000
(C) `5,25,000
(D) `7,12,000
List-I List-II
P. Prepaid expenses 1. Solvency ratio
Q. Sales ratio 2. Net profit margin × Investment ratio
R. Return on investment 3. Turnover ratio
S. 100 minus Proprietary ratio 4. Current asset
P Q R S
(A) 4 3 1 2
(B) 4 3 2 1
(C) 2 1 4 3
(D) 2 4 1 3
59. Assertion (A) :
Material cost variance is the difference between the standard cost of material
allowed for actual output and actual cost of material used.
Reason (R) :
A favourable variance would result if actual cost is less than standard cost.
60. In Saphire Ltd. 1,000 units of raw material were introduced in Process-A. The
actual output and normal loss of respective processes are as follows :
Process Output Normal loss on
(units) input units
A 900 10%
B 680 20%
C 540 25%
Abnormal effectiveness in Process-C is —
(A) 40 Units
(B) 50 Units
(C) 45 Units
(D) 30 Units.

List-I List-II
P. Classification of costs into 1. Contribution
fixed and variable costs
Q. Difference between sales 2. P/V ratio
and variable costs
R. Both fixed and variable 3. Marginal costing
costs are charged to product
S. Relative profitability 4. Absorption
Select the correct answer from the following options —
P Q R S
(A) 4 3 1 2
(B) 3 4 1 2
(C) 3 1 4 2
(D) 4 3 2 1
62. Statement-I :
Segregation of expenses as fixed and variable helps the management to exercise
control over expenditure.
Statement-II :
The management can compare the actual variable expenses with the budgeted
variable expenses and take corrective action through variance analysis.
Select the correct answer from the following —
(D) Statement-I is incorrect, but Statement-II is correct.
63. Statement-I :
In funds flow analysis, current assets and current liabilities are shown separately
in a statement of changes in working capital.
Statement-II :
In cash flow analysis, increases and decreases of all current accounts are adjusted
in the calculation of cash flow from operating activities.
64. Statement-I :
Margin of safety represents the difference between sales at break-even point and
total sales.
Statement-II :
Margin of safety can be expressed as a percentage of total sales or in value or in
terms of quantity.
List-I List-II
P. Increase in funds 1. Application of funds
Q. Goods purchased on credit 2. Drain in working capital
R. Commission outstanding 3. Source of funds
S. Net loss 4. No flow of funds
P Q R S
(A) 4 3 2 1
(B) 4 3 1 2
(C) 3 4 1 2
(D) 3 4 2 1
List-I List-II
P. Excess of actual sales over 1. Contribution
break-even sale volume
Q. Sum of fixed cost and profit 2. Cost-volume profit analysis
R. Break-even analysis 3. No profit, no loss
S. Break-even point 4. Margin of safety
P Q R S
(A) 4 1 2 3
(B) 4 3 2 1
(C) 4 3 1 2
(D) 3 1 4 2
67. Statement-I :
The activities or operations of every cost centre should be homogeneous so as to
ensure uniform basis of charging expenses within the centre.
Statement-II :
The activities or operation of each cost centre must be well defined and clearly
identifiable.
List-I List-II
P. Performance budgeting 1. Fixed budget
Q. Zero base budgeting oriented 2. Production
R. Summary of all functional budgets 3. Jimmy Carter
S. Remain unchanged irrespective of 4. Master budget
level of activity actually attained
P Q R S
(A) 3 4 1 2
(B) 3 4 2 1
(C) 2 4 1 3
(D) 2 3 4 1
69. Which of the following pairs is correctly matched —
(A) Administrative expenses + Selling and distribution expenses = Operating
expenses
(B) (Gross profit ÷ Net sales) × 100 = Net profit ratio
70. Statement-I :
If any fixed asset remains idle due to abnormal or unusual events, it should be
included in capital employed.
Statement-II :
Idle machines and tools required for normal operation of plant would not be included
in capital employed.

List-I List-II
P. Cost accounting 1. Change in working capital
Q. Funds flow statement 2. Deals with the cost of production, selling
and distribution
R. Cash flow statement 3. Is an important technique of financial
analysis
S. Ratio analysis 4. Cash and cash equivalents
P Q R S
(A) 4 3 2 1
(B) 2 1 4 3
(C) 4 3 1 2
(D) 3 4 2 1
72. Allotment of the entire costs to a cost centre or unit is known as —
(A) Cost apportionment
(B) Cost allocation
(C) Cost absorption
(D) Machine hour rate.
73. Assertion (A) :
Cash flow statement enhances the comparability of report.
Reason (R) :
Cash flow statement eliminates the effect of using different treatments for same
transactions.
List-I List-II
P. Absorption costing 1. Is a logical extension of marginal costing
Q. Fixed expenses 2. Relationship of change in cost and
change in profit
R. Marginal costing 3. Contribution = ____ + Profit
S. Break-even analysis 4. Uses classification of costs according to

their functions
P Q R S
(A) 4 3 2 1
(B) 2 1 4 3
(C) 3 2 4 1
(D) 4 3 1 2
75. Assertion (A) :
Accounting ratios reveal the financial position of a concern.
Reason (R) :
Accounting ratios are not useful in assessing the operational efficiency.
76. Return on investment depends on two ratios —
(A) Net profit ratio and capital turnover ratio
(B) Gross profit ratio and net profit ratio
(C) Capital employed ratio and assets turnover ratio
(D) Earnings per share and net profit ratio.
77. Assertion (A) :
Funds are not related to working capital.
Reason (R) :
Flow of funds takes place whenever there is change in the funds.
78. Arrange the following categories of cash inflows and cash outflows in the correct
order of cash flow statements :
(1) Cash flows from investing activities
(2) Cash flows from financing activities
(3) Cash flows from operating activities.

(A) (3), (1), (2)
(B) (1), (3), (2)
(C) (3), (2), (1)
(D) (2), (1), (3).
79. Which of the following pairs is not correctly matched —
(A) Dividend per equity share / Earnings per share = Payout ratio
(B) [Operating profit / Capital employed] × 100 = Return on capital employed
(C) [(Cost of goods sold + operating expenses) / net sales] × 100 = Operating
profit ratio
List-I List-II
P. Cost control purposes 1. _____ is a predetermined cost
Q. Standard cost 2. Responsibility accounting fixes
responsibility for _____
R. Integrates 3. Cost accounting guides future ______
S. Production policies 4. Budgeting system _____ key managerial
functions
P Q R S
(A) 4 3 2 1
(B) 2 1 4 3
(C) 2 3 4 1
(D) 3 2 4 1
81. Statement-I :
According to AS-3, provision for taxation should always be treated as a non-
operating charge on profits.
Statement-II :
Dividend on shares is an appropriation of profits and not a trading charge.
List-I List-II
P. Operating profit 1. Capital employed = ____ + preference share capital
Q. Liquid liabilities 2. ____ = Gross profit – Operating expenses

R. Capital employed 3. Quick assets = Quick ratio × ____
S. Equity share capital 4. Fixed assets ratio = fixed assets ÷ ____
P Q R S
(A) 2 3 4 1
(B) 3 4 1 2
(C) 4 3 2 1
(D) 2 1 4 3
83. Assertion (A) :
Cost accounting hides the relative efficiencies of different workers.
Reason (R) :
Cost accounting does not disclose profitable and non-profitable activities.
84. A company sells its product at `15 per unit. In a period, it produces and sells
8,000 units and incurs a loss of `5 per unit. If the sales volume were to be raised
to 20,000 units, it could earn a profit of `4 per unit. Break-even point (in units) will
be —
(A) 24,000 Units
(B) 12,000 Units
(C) 16,000 Units
(D) 30,000 Units.
85. Which of the following pairs is correctly matched —
(A) Profitability ratios – Expenses ratios
(B) Activity ratios – Total assets turnover ratio
86. Statement-I :
At the time of replacement of plant, according to marginal cost technique, the
proposal which yields lowest contribution is to be selected.
Statement-II :
According to total cost technique, the proposal which involves the highest costs
is to be selected.

(1) Marginal costing and absorption costing are the same
(2) For decision making, absorption costing is more suitable than marginal
costing
(3) Cost-volume-profit relationship also denotes break-even point
(4) Marginal costing is based on the distinction between fixed and variable
costs.
Correct answer option is —
(A) (1) and (2)
(B) (2) and (3)
(C) (3) and (4)
(D) (2) and (4).
88. Return on investment is also known as —
(A) Du-pont chart
(B) Activity ratio
(C) P/V ratio
(D) Market test ratio.
89. Assertion (A) :
Higher the gross profit ratio, the better it is.
Reason (R) :
A low gross profit ratio indicates unfavourable trend in the form of reduction in
selling prices.
90. Equity share capital : `30 lakh (30,000 shares of `100 each); 9% preference
shares: `10 lakh; profit before tax: `24.46 lakh and tax rate 30%. Earnings per
share will be —
(A) `54.07
(B) `81.53
(C) `78.53
(D) `57.07
91. Financial statement of X Ltd. shows the following data —

`
Opening stock 1,50,000
Total purchases (including cash purchases of `1,75,000) 10,50,000
Closing stock 1,20,000
Stock turnover ratio is —
(A) 6.70 times
(B) 8 times
(C) 7.2 times
(D) 9 times.
92. The sales and profit during the two periods were as follows :
Sales (`) Profit (`)
Period-I 20,00,000 2,00,000
Period-II 30,00,000 4,00,000
Sales required to earn a profit of `5,00,000 is —
(A) `30 lakh
(B) `40 lakh
(C) `35 lakh
(D) `28 lakh.
93. The key area(s) of activity based costing is/are —
(A) Product cost differentiation
(B) Identification of non-value added cost
(C) Distribution between fixed and variable cost
(D) Both (A) and (B) above.
List-I List-II
P. Marginal cost 1. ____ = Contribution ÷ Sales
Q. P/V ratio 2. Contribution = Selling price – ______
R. Profit 3. ______ = Sales × (1 – P/V ratio)
S. Variable cost 4. Margin of safety = ______ ÷ P/V Ratio
P Q R S
(A) 4 3 2 1
(B) 3 1 4 2
(C) 2 1 4 3
(D) 2 3 4 1
95. In contract costing, the whole of the amount shown under architect’s certificate is
not paid immediately, but a part thereof is paid after the contract is completed.
Such amount is known as —
(A) Retention money
(B) Advance money
(C) Contract amount
(D) Work-in-progress.
96. Actual fixed overhead : `22,400
Budgeted fixed overheads : `20,000
Actual hours worked : 28,000
Budgeted hours : 40,000
Fixed overhead expenditure variance is —
(A) `2,800 (A)
(B) `2,400 (A)
(C) `2,400 (F)
(D) `2,800 (F).
97. X Ltd. has forecast its sales for the next three months as follows :
May : 12,000 units
June : 20,000 units
July : 25,000 units
Opening stock as on 1st April is expected to be 5,000 units. Closing stock
should equal 20% of the coming month’s sales needs. How many units should
be produced in June —
(A) 20,000 Units
(B) 11,000 Units
(C) 21,000 Units
(D) 25,000 Units.
98. Standard rate of wages `0.90 per hour; standard output 20 units per hour; actual
wages paid `76 for 80 hours (idle time 10 hours). Output produced 1,640 units.
Direct labour rate variance is —
(A) `4.00 (A)
(B) `4.00 (F)
(C) `4.20 (F)
(D) `4.20 (A).
99. Cost-volume-profit (CVP) analysis is based on several assumptions. Which one
of the following is not relevant for such an analysis —
(A) Inventory quantity changes in the year
(B) Sales mix of the products is constant
(C) Material price and labour rates do not change

(D) Behaviour of both sales and variable cost is linear throughout the year.
100. The fixed expenses are `4,000 and break-even point is `10,000. New break-even
point, if selling price is reduced by 20% is —
(A) `14,000
(B) `15,000
(C) `16,000
(D) `17,000
***
ANSWER KEY

1 B 35 A 69 A
2 B 36 A 70 B
3 C 37 A 71 B
4 A 38 A 72 B
5 B 39 B 73 A
6 A 40 A 74 A
7 C 41 C 75 C
8 D 42 C 76 A
9 D 43 D
77 D
10 A 44 B
78 A
11 C 45 A
79 C
12 B 46 A
80 B
13 A 47 C
81 A
14 B 48 C
15 C 49 A 82 A
16 B 50 B 83 *
17 A 51 D 84 B
18 D 52 A 85 C
19 B 53 B 86 B
20 D 54 A 87 C
21 C 55 D 88 A
22 A 56 A 89 A
23 A 57 A 90 A
24 B 58 B 91 B
25 C 59 A 92 C
26 D 60 D 93 D
27 B 61 C
94 Either B or C or both
28 A 62 A
95 A
29 B 63 A
96 B
30 D 64 A
97 C
31 B 65 D
98 A
32 A 66 A
33 B 67 A 99 A
34 C 68 D 100 C
Q. 83: The correct answer is "Both A and R are false".

Q. 94: Both the options (B & C) are correct.
EXECUTIVE PROGRAMME EXAMINATION
JUNE 2015

1. The establishment of budgets, standard costs and actual costs of operations,

processes, activities or products and the analysis of variances, profitability or
the social use of funds is known as —
(A) Costing
(B) Cost Accounting
(C) Cost Accountancy
(D) Financial Accounting.
2. Under which of the following inventory control techniques, two piles or bundles
are maintained for each item of stock —
(A) Min-max plan
(B) Order cycling system
(C) Two-bin system
(D) ABC analysis.
3. Costs which are constant for a given level of output and then increase by a fixed
amount at a higher level of output are called —
(A) Step costs
(B) Differential costs
(C) Committed costs
(D) Opportunity costs.
4. A store ledger is a record of receipts, issues and closing balances of material
by entering —
(A) Quantity only
(B) Quantity and value
(C) Value only
(D) Quality only.
5. Interest on internally generated funds is an example of —
(A) Differential cost
(B) Joint cost
(C) Common cost

(D) Imputed cost.
6. 'Contract costing' is used in which of the following —
(A) Ship building
(B) Textile industry
(C) Paper manufacturing
(D) Nursing homes.
7. Amaze Ltd. manufactures ring binders which are embossed with customer’s
own logo. A customer has ordered a batch of 500 binders. The following information
gives the cost for a typical batch of 100 binders :
Direct material `50
Direct labour `20
Machine set-up `5
Design and art work `15
Prime cost `90
Direct employees are paid on piece work basis. Amaze Ltd. absorbs production
overheads @ 10% of direct wages. 5% is added to the total production cost of
each batch to allow for selling and distribution expenses. Profit margin is 20% of
sales value. Selling price of 500 binders will be —
(A) `605
(B) `120.75
(C) `603.75
(D) `386.
8. Which of the following formula is used to calculate wage payment under Barth’s
scheme —
(A) Hourly rate x standard time x actual time

(B) Standard time x
(C) Actual time x standard time x hourly rate
(D) Actual time x standard output x hourly rate

9. When the sales increase from `45,000 to `60,000, the profit increases by `5,000.
P/V Ratio would be —
(A) 20%
(B) 30%
(C) 33.33%
(D) 66.67%.
10. The following data relates to two activity levels of production :
Level I Level II
No. of units : 4,000 5,500
Overheads (` ) : 2,80,000 3,50,000
Variable cost per unit would be —
(A) `46.67
(B) `133.33
(C) `70
(D) `64.
11. A product whose direct material costs and direct labour costs are `200 and
`100 would consume 3 hours, 4 hours and 5 hours in department A, B and C
respectively. Overheads absorption rate is – A : `4.5 per hour, B : `5 per hour
and C : `10.5 per hour. The total cost of the product is —
(A) `486
(B) `386
(C) `214
(D) `500.
12. Given below are the costing records of a factory :
Cost of machine `1,00,000
Scrap value `5,000
Freight and installation charges `5,000
Repairs and maintenance
cost `1,000 per month
Wages of operator `5,000 per month
Estimated life 10 years
Factory operates 2,000 hours per year.
Power : 10 units per hour @ 50 paise per unit.
The machine hour rate will be —
(A) `27 per hour
(B) `10.5 per hour
(C) `56 per hour
(D) `46 per hour.
13. Cost unit applicable to bicycle industry is —

(A) Per part of bicycle
(B) Per bicycle
(C) Per thousand bicycles
(D) Per day.
14. In contract costing, if the amount of work certified is 1/2 or more but not near to
completion, profit to be transferred to the statement of profit and loss can be
calculated using the formula —
1 cash received
(A) x notional profit ×
2 work certified
1 cash received
(B) × notional profit ×
3 work certified
2 cash received
(B) × notional profit ×
3 work certified
work certified
(D) Estimated profit ×
cash received
15. Which of the following is not an objective of time-booking —

(A) Apportionment of overheads against jobs
(B) Preparation of payrolls
(C) Ascertaining idle time for the purpose of control
(D) Calculation of labour cost of jobs done.
16. A worker is allowed 2 hours to produce 5 units of a product. Wages are paid to
the worker @ 20 per hour. In a 48 hours week, the worker produced 150 units.
The earnings of the worker as per Rowan plan will be —
(A) `1,940
(B) `1,450
(C) `1,553
(D) `1,152.
17. Sunk costs are —
(A) Opportunity costs
(B) Costs to be incurred in future
(C) Not relevant for decision making
(D) Controllable costs.
18. Bill of material acts as an authorisation to the stores department in procuring the
material and all the materials listed on the bill are sent to the —
(A) Sales department
(B) Production department
(C) Accounts department
(D) Stores department.
19. Which of the following method is based on the assumption that costliest materials
are issued first and inventory is valued at the lowest possible price —
(A) FIFO method
(B) LIFO method
(C) Highest-in-first-out method
(D) Weighted average method.
20. The rate of change of labour force in an organisation during a specified period is
called —
(A) Labour efficiency
(B) Labour turnover
(C) Labour productivity
(D) Labour planning.
21. Margin of safety can be calculated using the formula —
(A) Total sales – Break-even sales
(B) Fixed cost ÷ P/V ratio
(C) P/V ratio ÷ Profit
(D) Fixed cost ÷ Contribution.
22. Fixed cost is a cost —
(A) Which remains fixed for each unit of output
(B) Which remains fixed in total during a given period despite changes in output
(C) Which is partly fixed and partly variable in relation to the output
(D) Which changes in total in proportion to the changes in output.
23. For a product-X, following information is available :
Maximum consumption per week : 300 units
Normal consumption per week : 200 units
Re-order period : 2 to 4 weeks
The re-order level will be —
(A) 400 units
(B) 1,200 units
(C) 600 units

(D) 800 units.
24. A company requires 1,500 units of an item per month. The cost of each unit is
`30. The cost of placing an order is `200 and the material carrying charges
work out to be 20% of the average material. The economic order quantity (EOQ)
is —
(A) 1,095 units
(B) 316 units
(C) 490 units
(D) 33 units.
25. A company manufactures several components in batches. The following data
relates to one component :
Annual demand : 32,000 units
Set-up cost per batch : `120
Annual rate of interest : 12%
Cost of production per unit : `16
The economic batch quantity is —
(A) 4,000 units
(B) 3,000 units
(C) 2,000 units
(D) 2,500 units.
26. A product is sold at `150 per unit and its variable cost is `70 per unit. The fixed
expenses of the business are `8,000 per year. Break-even point (in units) is —
(A) 200 units
(B) 50 units
(C) 115 units
(D) 100 units.
27. Following information is available regarding a product–X :
1st January, 2015 :
Opening balance : 50 units @ `4
Receipts :
5th January, 2015 : 100 units @ `5
12th January, 2015 : 200 units @ `5.50
Issues :
2nd January, 2015 : 30 units
18th January, 2015 : 170 units
The value of closing stock according to FIFO method is —
(A) `660
(B) `770
(C) `825
(D) `1,100.
28. The budgeted fixed overheads for a budgeted production of 10,000 units is
`20,000. For a certain period the actual production was 11,000 units and actual
expenditure `24,000. The volume variance is —
(A) `2,000(F)
(B) `4,000(A)
(C) `2,000(A)
(D) `4,000(F).
29. A document which sets out the responsibility of the persons engaged in
the routine of and the procedures, forms and records required for budgetary
control is called —
(A) Budget centre
(B) Budget report
(C) Budget controller
(D) Budget manual.
30. A budget that gives a summary of all the functional budgets and budgeted
statement of profit and loss is called —
(A) Flexible budget
(B) Master budget
(C) Performance budget
(D) Zero base budget.
31. A company estimates its quarter wise sales (in units) for the next year as under:
Quarter I II III IV
Sales (units) 30,000 37,500 41,250 45,000
The opening stock of finished goods is 10,000 units and the company expects
to maintain the closing stock of finished goods at 16,250 units at the end of the
year. The production pattern in each quarter is based on 80% of the sales of the
current quarter and 20% of the sales of the next quarter. The production for
quarter IV will be —
(A) 36,000 units
(B) 42,000 units
(C) 48,250 units
(D) 38,250 units.
32. Two workmen ‘X’ and ‘Y’ produce the same product using the same material. ‘X’
is paid bonus according to Halsey plan, while ‘Y’ is paid bonus according to
Rowan plan.The time allowed to manufacture the product is 100 hours. ‘X’
takes 60 hours and ‘Y’ takes 80 hours to complete the product. The normal
hourly rate of wages of workman ‘X’ is `24 per hour. The total earnings of both the
workmen are same. The normal hourly rate of wages of workman ‘Y’ will be —
(A) `25 per hour
(B) `30 per hour
(C) `20 per hour
(D) `22.5 per hour.
33. Budget which remains unchanged regardless of the actual level of activity is
known as —
(A) Fixed budget
(B) Functional budget
(C) Flexible budget
(D) Cash budget.
34. Estimated wages for January is `4,000 and for February `4,400. If the delay in
payment of wages is 1/2 month, the amount of wages to be considered in cash
budget for the month of February will be —
(A) `4,000
(B) `4,400
(C) `4,600
(D) `4,200.
35. Which of the following formula is used to calculate efficiency ratio —
(A) x 100
(B) x 100
(C) x 100
(D) × 100.
36. Crown Ltd. has forecast its sales for the next three months as follows :
April : 12,000 units, May : 15,000 units, June : 17,000 units. Opening stock as
on 1st April is expected to be 3,500 units. Closing stock should be equal to
20% of the coming month’s sales needs. The number of units required to be
produced in May is —
(A) 14,600 units
(B) 11,500 units
(C) 15,400 units
(D) 13,600 units.
37. Profit-Volume ratio can be improved by —
(A) Increasing selling price per unit
(B) Reducing the direct and variable costs
Actual
Standard hours forhours
actual production
(C) Switching the production to products showing higher profit-volume ratio
Budgeted
Standard hours hoursproduction
for actual
38. Which of the following is the social purpose of cost audit —
(A) Detection and correction of abnormal losses
(B) Detection of errors and frauds
(C) Determination of inventory valuation
(D) Pinpointing areas of inefficiency and mismanagement for the benefit of
shareholders and consumers.
39. The net profit of a company is `2,00,000, preference dividend `25,000 and
taxes paid `15,000. Number of equity shares is 1,00,000. The earnings per
share (EPS) is —
(A) `1.5
(B) `1.6
(C) `2
(D) `1.75.
40. The current ratio of Brave Ltd. is 2 : 1,while quick ratio is 1.8 : 1. If the current
liabilities are `40,000, the value of stock will be —
(A) `12,000
(B) `6,500
(C) `8,000
(D) `10,000.
41. In an organisation, working capital is `1,00,000 and current ratio 3 : 1. The
value of current assets is —
(A) `1,50,000
(B) `1,00,000
(C) `50,000
(D) `15,000.
42. In contract costing, which of the following provides safeguard against any
fluctuation in the prices of material, labour, etc.
(A) Pricing clause
(B) Exclusion clause
(C) Arbitration clause
(D) Escalation clause.
43. Following information is available for ABC Constructions Ltd. :
Material issued to contract ` 11,800
Wages ` 23,200
Plant installed ` 4,600
Plant at site at the end ` 3,800
Work un-certified ` 1,200
Notional loss on contract ` 1,960
Work certified will be —
(A) `31,480
(B) `31,840
(C) `37,480
(D) `31,760.
44. An outcome of a production process considered as relatively less important

as compared to the main product is called —
(A) By-product
(B) Co-product
(C) Joint product

(d) Core product.
45. A transport company is running 4 buses between two cities, which are 60 Kms.
apart. Seating capacity of each bus is 45 passengers. Actual passengers
carried by each bus is 80% of seating capacity. All buses run on all days of the
month. Each bus makes one round trip per day. Assuming 30 days in a month,
the passenger Kms. are —
(A) 5,62,500
(B) 5,18,400
(C) 6,40,000
(D) 2,59,200.
46. Working capital ratio is also known as —
(A) Quick ratio
(B) Debt-equity ratio
(C) Current ratio
(D) Liquid ratio.
47. Credit sales of Jump Ltd. for the year is `12,00,000 and debtors at the end of
year `2,40,000. Assuming 360 days in a year, average collection period will
be—
(A) 60 Days
(B) 72 Days
(C) 180 Days
(D) 80 Days.
48. For the financial year ended 31st March 2015, the figures extracted from the
balance sheet of Excel Ltd. are as under :
Opening stock `29,000
Closing stock `31,000
Purchases `2,42,000.
The stock turnover ratio will be —
(A) 12 Times
(B) 15 Times
(C) 9 Times
(D) 8 Times.
49. Which of the following is a method used in analysing financial statements —

(A) Variance analysis
(B) Trend analysis
(C) Break-even analysis
(D) Budget analysis.
50. In case of a financial enterprise, interest received on debentures held as
investment is —
(A) Financing activity
(C) Operating activity
51. Which of the following is not a method of segregating semi-variable costs into
fixed and variable costs —
(A) Least squares method
(B) High and low points method
(C) Standard cost method
(D) Comparison by level of activity method.
52. As per Accounting Standard - 3, cash equivalents include —
(A) Treasury bills
(B) Commercial papers
(C) Money market funds
53. Cash payments to and on behalf of employees is an example of cash flow
from —
54. The capacity variance is `52,000 (F), calender variance is `24,064 (A). The
volume variance will be —
(A) `27,936 (F)
(B) `76,064 (A)
(C) `27,936 (A)

(D) `76,064 (F).
55. Net profit before working capital changes of Super Ltd. is `4,35,000. Changes in
working capital during the year are as follows :
Particulars `
Decrease in stock 2,58,000
Decrease in bills payable 8,400
Increase in bills receivable 38,800
Increase in prepaid expenses 2,500
Increase in outstanding expenses 7,800
Cash generated from operation for Super Ltd. will be —
(A) `2,18,900
(B) `7,45,500
(C) `6,51,100
(D) `2,34,500.
56. Which section of the Companies Act, 2013 deals with audit of cost accounting
records —
(A) Section 158
(B) Section 148
(C) Section 168
(D) Section 139.
57. Selling price of a product is `550 per unit, variable cost `50 per unit and fixed
cost 10,000. The number of units required to be sold to earn a profit of `10,000
will be —
(A) 400
(B) 40
(C) 36
(D) 220.
58. Make or buy decisions are made by comparing ________ cost with outside
purchasing price.
(A) Fixed
(B) Variable
(C) Sunk
(D) Joint.
59. Selling price of a product - X is `50 per unit, variable cost `20 per unit and 2
Kgs. of raw material is needed to produce a unit of product - X. The contribution
per Kg. of raw material will be —
(A) `30
(B) `15
(C) `60
(D) `50.
60. Material usage variance can be calculated using the formula —
(A) (Standard quantity for actual output – Actual quantity) × Actual price
(B) (Standard quantity for actual output – Actual quantity) × Standard price
(C) (Standard price – Actual price) × Actual quantity
(D) (Standard price – Actual price) × Standard quantity.
61. Which of the following does not result into inflow of funds in case of fund flow
statement —
(A) Issue of equity share capital
(B) Premium received on issue of shares/debentures
(C) Sale of investments
(D) Cash received from debtors.
62. When is the following entry passed in non-integrated system —
Costing Profit and Loss A/c……….Dr.
To Overheads Suspense A/c
(A) Under absorption of overheads which is not yet adjusted
(B) Over absorption of overheads
(C) Overheads incurred and accrued
(D) Allocation of indirect labour.

63. In an organisation, provision for taxation as on 31st December, 2013 was `16,000
and on 31st December, 2014 `18,000. Provision for taxation of `19,000 was
made during the year 2014. The tax paid during the year is —
(A) `17,000
(B) `19,000
(C) `2,000
(D) `16,000.
64. Which of the following statement is not true —
(A) Fund flow statement is also known as statement of sources and application
of funds
(B) Fund is equal to current assets minus current liabilities
(C) There is an inverse relationship between current assets and working capital
(D) Fund flow statement is prepared on accrual basis.
65. In a break-even chart, which of the following pair of lines make the angle of
incidence —
(A) Sales line and variable cost line
(B) Sales line and total cost line
(C) Sales line and fixed cost line
(D) Fixed cost line and total cost line.
66. In an organisation, current ratio is 2.5, liquid ratio 1.5, prepaid expenses nil and
stock `4,000. The amount of current liabilities is —
(A) `20,000
(B) `40,000
(C) `80,000
(D) `4,000.
67. A chemical is manufactured by combining two standard items Input-X (Standard
price `60/kg) and Input-Y (`45/kg) in the ratio 60%:40%. Ten percent of input
is lost during processing. If during a month 1,200 Kgs. of chemical is produced
incurring a total cost of `69,600, the total material cost variance will be —
(A) `2,000(F)
(B) `2,400(A)
(C) `2,400(F)
(D) `3,000(A).
68. Which of the following is an objective to be achieved through Cost Accounting
Standards —
(A) To assist cost accountants in preparation of uniform cost statements
(B) To provide better guidelines on standard cost accounting practices
(C) To help Indian industry and the Government towards better cost management
69. Following information is available regarding an organisation :

Direct material purchased : `1,50,000
Direct material consumed : `80,000
Direct expenses : `30,000
Manufacturing overheads : `20,000
The prime cost for the organisation is —
(A) `1,60,000
(B) `2,90,000
(C) `2,30,000
(D) `1,80,000.
70. No. of workers on the payroll :
At the beginning of the month : 600
At the end of the month : 700
During the month, 5 workers left, 20 workers were discharged and 75 workers
leaving while the rest were engaged for an expansion scheme. The labour turnover
rate according to replacement method will be —
(A) 1.54%
(B) 6%
(C) 3%
(D) 1.82%.
71. In case of rising prices, FIFO method will provide —
(A) Lowest value of closing stock and profit
(B) Highest value of closing stock and profit
(C) Highest value of closing stock but lowest value of profit
(D) Lowest value of closing stock but highest value of profit.
72. Standard hourly rate is `5 per hour and actual rate `4.50 per hour. The labour
rate variance is 1,500(F). The actual labour hours worked is —
(A) 1,500 Hours
(B) 7,500 Hours
(C) 3,000 Hours

(D) 6,750 Hours.
73. If the sales of a product is `94,080 and the profit margin on cost 12%, the
amount of profit will be —
(A) `7,800
(B) `11,290
(C) `8,580
(D) `10,080.
74. If efficiency of a worker is above 100% then as per Merrick’s differential piece
rate system the worker will get —
(A) Normal piece rate wages
(B) 110% of the normal piece rate wages
(C) 120% of the normal piece rate wages
(D) 150% of the normal piece rate wages.
75. Normal idle time is —
(A) Treated as part of cost of production
(B) Not included as a part of cost of production
(C) Charged to costing profit and loss account
(D) Separately shown in financial statements.
76. Actual production during a month by worker-’X’ is 1,000 units. If standard
production per month per worker is 1,000 units and piece work rate is `5 per
unit, the total monthly remuneration of worker ‘X’ under the Gantt’s Task and
Bonus Scheme will be —
(A) `5,000
(B) `5,500
(C) `6,000
(D) `6,600.
77. Rent, rates and insurance of factory and office are examples of —
(A) Direct expenses
(B) Indirect expenses
(C) Notional expenses
(D) Miscellaneous expenses.
78. The following information pertains to Expert Ltd. :

Particulars 31.12.2013 31.12.2014
(`) (`)
Creditors 86,600 98,400
Outstanding expenses 85,000 1,15,000
Provision for tax 1,50,000 1,60,000
Debtors 2,68,000 2,54,000
Stock 1,40,000 1,75,000
Net profit before working capital changes is `5,56,000. The cash flow from operating
activities will be —
(A) `4,26,800
(B) `5,76,800
(C) `5,35,200
(D) `4,16,800.
79. The following data is available for Akhil Ltd. for the year ended 31st March 2015:
Administrative overheads : `2,50,000
Production overheads : `2,74,200
Factory cost : `3,42,800

Work-in- progress : `74,000
Machine hour : 4,000 hours
The absorption rate for production overheads is —
(A) `68.55
(B) `216.75
(C) `235.25
(D) `198.25
80. In activity based costing, an item for which cost measurement is required is
called —
(A) Cost driver
(B) Cost object
(C) Allocation
(D) Cost pool.
81. Under activity based costing, ‘material ordering’ is considered as —
(A) Unit level activity

(B) Batch level activity
(C) Product level activity
(D) Facility level activity.
82. Which of the following items are purely financial incomes —
(A) Discount on issue of shares
(B) Interest on bank loan
(C) Transfer fees received
(D) Notional interest on capital employed.
83. The budgeted fixed overheads amounted to `75,000. The budgeted and actual
production amounted to 15,000 units and 20,000 units respectively. This means
that there will be an —
(A) Under-absorption of `25,000
(B) Under-absorption of `18,750
(C) Over-absorption of `25,000
(D) Over-absorption of `18,750.
84. In Process-A, 100 units of raw material were introduced at a cost of `1,000.
Manufacturing wages were `500 and general expenses `102. Out of the units
introduced, 10% are normally lost in the course of manufacture and they have
scrap value of `3 each. The output of Process-A was 75 units. The value of
abnormal loss in Process-A is —
(A) `45
. (B) `168
(C) `262
(D) `270.
85. Which of the following is generally used as cost unit in cement industry —
(A) Per tonne
(B) Per kilolitre
(C) Per kilogram
(D) Per gallon.
86. What will be the treatment of overtime premium in cost accounting, if it is due to
circumstances beyond control —
(A) Charged to general overheads
(B) Charged to the job directly
(C) Charged to the concerned department

(D) Charged to costing profit and loss account.
87. The objective of CAS-1 is —
(A) Collection, allocation, apportionment and absorption of overheads
(B) Determination of capacity
(C) Preparation of cost statement
(D) Determination of average/equalised transportation cost.
88. The costing method in which fixed factory overheads are added to inventory is
(A) Activity based costing
(B) Marginal costing
(C) Direct costing
(D) Absorption costing.
89. Which of the following is not an objective of management accounting —
(A) Formulation of plans and policy
(B) Assisting in decision making
(C) Preparation of financial statements
(D) Interpretation of financial documents.
90. An input of 6,000 Kgs. of material is introduced into the process and the
expected loss is 5%. If the actual output from the process is 4,500 Kgs., the
abnormal loss is —
(A) 2,100 Kgs.
(B) 1,500 Kgs.
(C) 1,200 Kgs.
(D) 225 Kgs.
91. A company has annual fixed cost of `1,68,000. In the year 2013-14, sales
amounted to ` 6,00,000 as compared to `4,50,000 in the preceding year
2012-13. The profit in the year 2013-14 was `42,000 more than that in year
2012-13. The break- even sales of the company is —
(A) `6,00,000
(B) `6,20,000
(C) `5,60,000
(D) `4,08,000.
92. In Rise Ltd., cash sales is 25% and credit sales 75%. Sales for November, 2014
is `15,00,000, December, 2014 `14,00,000, January, 2015 `16,00,000, February,
2015 `10,00,000 and March, 2015 `9,00,000. 60% of the credit sales are
collected in the next month after sales, 30% in the second month and 10% in
the third month. No bad debts are anticipated. The cash collected in the month
of March, 2015 from debtors is —
(A) `14,60,000
(B) `14,20,000
(C) `12,20,000
(D) `9,15,000.
93. Volume variance is sub-divided into —
(A) Efficiency variance and capacity variance
(B) Efficiency variance, capacity variance and calendar variance
(C) Expenditure variance and efficiency variance
(D) Expenditure variance, capacity variance and calendar variance.
94. A factor which limits the activities of an undertaking and which is taken into
account while preparing budget is known as —
(A) Budget manual
(B) Budget controller
(C) Budget key factor
(D) Budget centre.
95. Which of the following methods is used to account for the under-absorption and
over- absorption of overheads —
(A) Use of supplementary rates
(B) Carrying forward of overheads
(C) Writing-off to costing profit and loss account
96. According to Chartered Institute of Management Accountants (CIMA), cost
attribution to cost units on the basis of benefits received from indirect activities
e.g. ordering, setting-up, assuring quality is known as —
(A) Absorption costing
(B) Marginal costing
(C) Activity based costing
(D) Job costing.
97. On 31st March, 2015, profit as per financial accounts was `50,000. A comparison
of cost and financial accounts revealed the following :
Works overheads over-absorbed : `8,500
Excess depreciation charged
in cost accounts : `3,000
Interest on investments included
in financial accounts only : `2,500
From the above information, the profit as per cost accounts will be —
(A) `47,000
(B) `36,000
(C) `41,000
(D) `53,000.
98. The standard hourly rate is `5 per hour and actual rate `4.50 per hour. If the
labour rate variance is `1,500(F), the actual labour hours worked is —
(A) 1,500 hours
(B) 7,500 hours
(C) 3,000 hours
(D) 6,750 hours.
99. Net works cost : `3,00,000
Administrative overheads : `1,00,000
Opening stock of finished goods : nil
Closing stock of finished goods : `20,000
Selling overheads : `10,000
From the above information, the cost of sales will be —
(A) `4,30,000
(B) `3,90,000
(C) `3,70,000
(D) `4,10,000.
100. Sunny Ltd. makes product-A which sells at `80 per unit. Total fixed costs are
`28,000 and marginal cost `42 per unit. The sales level (in units) that will
provide a profit of `10,000 is —
(A) 1,200 Units
(B) 1,500 Units
(C) 1,250 Units
(D) 1,000 Units.
***
ANSWER KEY

1 B 35 B 69 A
2 C 36 C 70 A
3 A 37 D 71 B
4 B 38 D 72 C
5 D 39 B 73 D
6 A 40 C 74 C
7 C 41 A 75 A
8 A 42 D
76 C
9 C 43 #
77 B
10 A 44 A
78 A
11 B 45 B
79 A
12 D 46 C
80 B
13 B 47 B
14 C 81 B
48 D
15 B 49 B 82 C
16 D 50 C 83 C
17 C 51 C 84 C
18 B 52 D 85 A
19 C 53 A 86 D
20 B 54 A 87 C
21 A 55 C 88 D
22 B 56 B 89 C
23 B 57 B 90 C
24 A 58 B 91 A
25 C 59 B 92 D
26 D 60 B 93 B
27 C 61 D 94 C
28 A 62 A
95 D
29 D 63 A
96 C
30 B 64 C
97 B
31 C 65 B
98 C
32 C 66 D
99 B
33 A 67 C
34 D 100 D
68 D
# In Q.No. 43, none of the option is correct. However, the correct answer is `32,640.
Note : The inconsistency or ambiguity in the Question(s), if any, is/are taken care of while evaluating the
answer sheets.

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23 EP–CMA–December 2019

COST AND MANAGEMENT ACCOUNTING - SELECT SERIES

1. Fixed cost is a cost ................... .

(A) Which changes in total in proportion to changes in output

(B) Which varies directly with the output

(D) Which remains same for each unit of output

2. Which of the following is not directly considered as a function of management

(A) Financial planning

(B) Decision making

(D) Cost computation

3. Imputed cost is a ..................... .

(A) notional cost

(B) real cost

(C) normal cost

(D) variable cost

4. ........................... represent the resources that have been sacrificed to attain

Overheads are recovered in Cost Accounting based on predetermined rates.

This solves the problem of treatment of under-recovery or over-recovery of

(A) Both A and R are true

(B) Both A and R are false

(C) A is true, but R is false

(D) R is true, but A is false

(A) normal standards

(B) practical standards

(C) ideal standards

(D) current standards

Q.no. Ans Q.no. Ans Q.no. Ans

COST AND MANAGEMENT ACCOUNTING - SELECT SERIES

(D) 40 and 100

23. Which one is not a merit of piece rate system ?

(A) The quality of work is improved

(B) Idle time is automatically controlled

(C) It increases efficiency

(D) The reward is related to effort

What would be the amount of bonus under Emerson's Efficiency Plan ?

Consumable stores : `1,000 per day of 8 hours

Wages of operator : `400 per day

(A) `1075 per hour

(B) `875 per hour

(C) `950 per hour

(D) `1050 per hour

30. Which method of re-distribution of service department costs to production

(A) Simultaneous equation method

(B) Step method

(C) Repeated distribution method

(D) Trial and error method

31. The following data are related to overheads of a particular period :

(`) 30,000 28,000

Direct labour hours 40,000 39,000

(A) Graphical Presentation Method

(B) Maximum Absorption Point

(C) High and Low Point Method

(D) Least Square Method

(A) Production of goods only

(B) Providing services only

(D) Production of such goods or providing such services as may be prescribed

(A) General form

82. 'Cost benefit analysis' falls under :