MCQ.

Question Bank

Unit No.1 Management Information System (MIS) and Reporting to Management

1) The information of MIS comes from the ----- source.

a) Internal b) External c) Superficial d) Internal and External

2) MIS is normally found in ------ sector.

a) Service b) Education c) Manufacturing d) Marketing

3) AI stands for -------.

A) Artificial Internet b) Artificial Intelligence
c) Analytical Intelligence d) Actual Intelligence

4) Which of the following is not an advantage of MIS?

a) Improved Decision-Making b) Increasing Efficiency
c) Performance Evaluation d) Better Data Management

5) Internal information for MIS may come from any one of the following department.
a) Customers Care Department b) HR Department
c) Marketing Department d) Production Department

6) To improve the performance of a business process, which of the following is most

relevant?
a) Input b) Processing c) Control & Feedback d) Output

7) MIS reports are essential for improving organizational efficiency and effectiveness.
True.

8) MIS reports help ensure data accuracy and integrity.

True.

9) MIS reports can include data on customer behavior, preferences and feedback.
True.

10) The person who ensure that systems are developed on time within budget and with
acceptable quality is a ------- manager.
Ans. Project

11) The backbone of any organization is Information.

 Unit No.2 Marginal Costing

A. Choose the correct alternative.

1) Contribution = ---------.
a) Sales – Cost of Sales b) Sales – Cost of Production
c) Sales – Variable Cost d) Sales – Fixed Cost
2) Which cost is also known as Variable Cost?
a) Marginal Cost b) Fixed Cost
c) Total Cost d) Semi-Variable Cost
3) Fixed Cost is also referred to as ------ in the marginal costing technique.
a) Total Cost b) Product Cost
c) Period Cost d) Variable Cost
4) Variable Cost is also referred to as ------ in the marginal costing technique.
a) Total Cost b) Product Cost
c) Period Cost d) Variable Cost
5) B.E.P. stands for -------.
a) Bank Entry Pass b) Break Entity Point
c) Break Even Point d) Break Entity Profit
6) The P/V Ratio will be equal to --------.
a) The Profit by the Sales Ratio b) The Profit by the Contribution Ratio
c) The Profit by the Sales Ratio d) The Contribution by the Sales Ratio
7) Which cost is more useful for decision – making?
a) Marginal Cost b) Fixed Cost
c) Total Cost d) Opportunity Cost
8) Marginal Costing is the most useful technique for the ------.
a) Management b) Creditors
c) Shareholders d) Government
9) Which of the following is a Variable Cost?
a) Direct Material b) Direct Labour
c) Direct Expenses d) All of the above
10) Which of the following is not a Fixed Cost?
a) Salary b) Electricity Bill
c) Rent d) Insurance
B. Fill in the blanks.
1) P/V Ratio = Contribution * 100
Sales
2) Marginal Cost help the organisations in decision – making.
3) Marginal Costing is also known as Variable Costing.
4) Period Cost are also known as Fixed Cost.
5) Product Cost are also known as Variable Cost.
6) Fixed Cost total will remain constant for all level of activity.
7) Marginal Costing is a technique of cost control.
C. True or False.
1) The term ‘contribution’ refers to the excess of selling price over the variable cost per unit.
Ans. True.
2) The term ‘contribution’ refers to the difference between the selling price and total cost.
Ans. False.
3) Marginal Costing can be used to make decisions about pricing and production.
Ans. True.
4) Fixed Cost of per unit of production remain constant.
Ans. True.
5) Margin of Safety is the difference between Actual Sales and Break Even Sales.
Ans. True.
6) Marginal Costing is a method of costing.
Ans. False.
7) B.E.P. is the point of no profit no loss.
Ans. True.
8) Period Cost are also known as Variable Cost.
Ans. False.
9) Product Cost are also known as Fixed Cost.
 Ans. False.

Unit No.3 Budgetary Control

A. Choose the correct alternative.
1) ------ estimates cost at several levels of activity.
a) Fixed Budget b) Sales Budget
c) Cash Budget d) Flexible Budget
2) Which of the following is usually a long term budget?
a) Flexible Budget b) Capital Expenditure Budget
c) Fixed Budget d) Cash Budget
3) The entire process of preparing the budget is known as -----------.
a) Financing b) Investing
c) Budgeting d) Costing
4) A Flexible Budget takes into account --------
a) Fixed Cost only b) Variable Cost only
c) Semi-variable Cost only d) Fixed, Variable and Semi-Variable Cost
5) Budget Period depends on --------.
a) Type of Budget b) Management Policy
c) Government Policy d) Taxation Policy
6) The object of budgetary control is --------.
a) Planning purpose only b) Organising
c) Past Experience d) Taxation Policy
7) Sales Budget shows --------.
a) Estimate of future sales b) Estimate of future production
c) Estimate of Inventory d) Estimates of Labour
8) The budget which helps to plan and control of cash is -------.
a) Production Budget b) Cash Budget
c) Sales Budget d) Flexible Budget
9) Production Budget is expressed in --------.
a) Quantity only b) Cost only
c) Quantity and Cost d) Price only
10) The budget which is dynamic is -------.
a) Fixed Budget b) Flexible Budget
c) Cash Budget d) Sales Budget
11) The budget which covers all the functional budget is ------.
a) Master Budget b) Sales Budget
c) Production Budget d) Cost Budget
12) Production Cost Budget shows ----------.
a) Budgeted Cost of Production b) Budgeted Cost of Sales
c) Budgeted Purchases d) Budgeted Capacity
13) Budgetary Control is costly for --------- organization.
a) Small b) Large
c) Corporate d) Industry
14) Cash Budget shows budgeted ----------.
a) Receipts and Payments b) Profit & Loss
c) Income & Expenditure d) Under Absorption and Over Absorption
B. Fill in the blanks.
1) Budget is a blue print of projected plan of action of a business for a definite period of time.
2) Fixed Budget does not change with the change in the level of activity.
3) Production Budget is based upon availability of raw material and Labour.
4) Overall Budget is also known as Master Budget.
5) Cash Budget is tool of short term financial planning.
6) The entire process of preparing the budget is known as Budgeting.
7) Budget period depends on Management Policy.
C. State True or False.
 Unit No.4 Standard Costing and Variance Analysis
A. Choose the correct alternative.
1) Which of the following parties are responsible for material price variances?
a) Production supervisors b) Purchasing managers
c) Production schedules d) None of the above

2) The basic standard within the Standard Costing process is established for __________.
a) A long period b) The current period
c) The short period d) An indefinite period

3) Which of the following is not a part of the cost accounting concept?

a) Product costing b) Profit sharing
c) Controlling d) Planning

4) Standard costing is a technique of -----------.

a) Planning business activities b) Cost Control
c) Staffing d) Motivating

5) Standard Costing is a yardstick for -------.

a) Measuring Efficiency b) Controlling Prices
c) Reducing losses of business d) Planning business activities

6) The difference between actual cost and standard cost is known as --------.
a) Profit b) Loss c) Standard Cost d) Variance

7) Standard costing is suitable for industries which are -------.

a) Producing standard products b) Producing goods of repetitive nature
c) Sugar, Textiles, Fertilizers, Steel Industries d) All of the above

8) In which industry standard costing system is more widely applied?

a) Manufacturing Industry b) Service Industry
c) Steel Industry d) Cotton Industry

9) Excess of actual cost over standard cost is known as -----.

a) Abnormal effectiveness b) Unfavourable variance
c) Favourable variances d) Normal effectiveness

10) From cost control point of view the standard most commonly used is -------.
a) Expected standard b) Theoretical standard
 c) Normal standard d) Basic Standard
11) What is the correct test of Material Cost Variance?
a) MCV = MPV + MMV b) MCV = MMV + MUV
c) MCV = MPV + MUV d) MCV = MMV + MYV

12) Product A requires 10 kg of material at the rate of Rs. 5 per kg. The actual consumption
of material for the manufacturing of product A comes to 12 kg of material at the rate of
Rs. 6 per kg. Direct Material Cost Variance.
a) Rs.22 (Favourable) b) Rs.22 (Unfavourable)
c) Rs.12 (Favourable) d) Rs.12 (Unfavourable)

b. State True or False.

1) Standard Costing is an integral part of the costing process within an organisation.
Ans. True.

2) Standard Costing is a technique of implementing cost control within the organisation.

Ans. True.

3) Standard costing technique is unsuitable for service industries.

Ans. True.

4) Idle time variance is always unfavourable.

Ans. True.

5) Standard cost is a predetermined cost.

Ans. True.

6) The purpose of standard costing is to control cost and promote efficiency.

Ans. True.

7) The difference between actual cost and standard cost is known as variance.
Ans. True.

8) The technique of standard costing may not be applicable in case of small industries.
Ans. True.

9) Material Cost Variance and Labour Cost Variance are always equal.
Ans. False.

10) Standard costing technique is not ideal for small concerns because it is costly.
Ans. True.

11) Favourable labour efficiency variance indicates better productivity.

Ans. True.
12) Standard costing is more widely applied in manufacturing industries.
Ans. True.
C. Fill in the blanks.

1) Cost variance is the difference between the standard cost and the actual cost.

2) Standard cost is a predetermined cost.

3) The difference between actual cost and standard cost is known as variance.

4) Favourable variances arises when actual costs are less than standard cost.

5) Idle Time Variance (ITV) = Idle Hours * Standard Rate.

6) Variance analysis helps the management in controlling performance.

7) Cost control is also known as cost management.