Note: Yellow font indicate correct answer.

1. Period Cost means :

a) variable cost c) prime cost
b) fixed cost d) indirect cost
2. Raw materials that are directly identifiable as part of the final product are classified as:
a) indirect materials c) production materials
b) direct materials d) process materials
3. Notional cost is also known as:
a) opportunity cost c) imputed cost
b) out of pocket cost d) variable cost
4. Generally an item of expense, when identified with a specific cost unit is treated as :
a) prime cost c) unit cost
b) relevant cost d) direct expense
5. Wages paid to the workers engaged in machining department in an engineering industry is
called :
a) actual labor c) indirect labor
b) direct labor d) production labor
6. The cost of drawings, design and layout is an example of :
a) production cost c) indirect cost
b) direct expense d) direct material
7. The unavoidable costs are also called :
a) inescapable cost c) implicit cost
b) urgent cost d) explicit cost
8. The cost which does not involve actual cash outlay is called :
a) imputed cost c) Indirect cost
b) traceable cost d) expected cost
9. Costs incurred in closing down a department or division is called :
a) shutdown cost c) sunk cost
b) abandonment cost d) urgent cost
10. Costs involve cash outlay or payment to other parties is called :
a) out of pocket costs c) period costs
b) book costs d) urgent costs
11. the hypothetical cost taken into a particular situation to represent the benefit enjoyed by an
entity in respect of which no actual expenditure is incurred is called
a) explicit cost c) hypothetical cost
b) rational cost d) notional cost
12. Cost which should be incurred in the event of a temporary cessation of activities, and which
can be saved if activities are allowed to continue are known as :
a) shutdown cost c) explicit cost
b) imputed cost d) fixed cost
13. Royalties payable on use of patents, copyrights etc. is an example of:
a) direct expenses c) indirect expenses
b) production expenses d) selling expenses
14. Costs which has definite relationship with plant capacity and output of the product as termed
as :
a) fixed cost c) capacity cost
b) plant cost d) engineered cost
15. The basic research cost should be treated as:
a) product cost c) production overhead
b) production cost d) period cost
16. The total direct material ,direct labor and direct expenses is called :
a) production cost c) relevant cost
b) essential cost d)prime cost
17. A cost that tends to be unaffected by changes in level of activity during a given period of time
:
a) fixed cost c) variable cost
b) direct cost d) unit cost
18. To study the cause and effect relationship, one variable is taken as dependent while the other
is taken as independent in :
 a) goodness of fit c) correlation analysis
b) regression analysis d) method of least squares
19. The cost per unit of a product manufactured in a factory amounts to Rs 160 (75% variable)
when production is 10,000 units, when production increases by 255, the cost of production
will be Rs _______ / unit.
a) 145 c) 150
b) 152 d) 140
20. The total production cost of Lalaji Ltd. For making 6000 units is Rs 35,000 and the total
production cost of making 15,000 units is Rs. 67,000. Once the production exceeds 10,000
units, the additional fixed cost of Rs.5, 000 are incurred. What will be full production cost per
unit for making 12,000 units?
a) Rs 5.21 c) Rs. 4.64
b) Rs. 4.83 d) insufficient data

Material Procurement Procedure

21. A comprehensive list of materials, with specifications, material codes and quantity of each
material required for a particular job, process or production units is called:
a) Purchase order c) bills of materials
b) Purchase requisition d) material requisition

22. Issue of materials during a period of time are priced at the latest purchase cost under:
a) FIFO c) single leverage
b) LIFO d) weighted average
23. Materials are issued at predetermined prices in:
a) method c) actual cost method
b) Standard costing method d) market price method
24. An internal instruction on purchase department to purchase goods or service is called:
a) Material requisition c) bin card