PSGR KRISHNAMMAL COLLEGE FOR WOMEN

PEELAMEDU, COIMBATORE
DEPARTMENT OF B.Com (Financial Services)
COMPREHENSIVE QUESTION
B.Com (Financial Services)
COST ACCOUNTING (FS14C10)

Unit – I
1. ------------ is a branch of accounting and has been developed due to limitations of financial
accounting.
a) Management Accounting
b) Cost Accounting
c) Working capital Management
d) All the Above.

2. Costing is a technique of ----------

a) Ascertaining cost
b) Process Costing
c) Estimates
d) Decision making

3. The method of costing used in refinery is --------

a) Ascertaining cost
b) Process Costing
c) Batch Costing
d) Contract Costing

4. Cost unit in a college may be

a) Worker
b) Employee
c) Student
d) Staff

5. In ------------ costing, the cost of a group of products is ascertained.

a) Job Costing
b) Historical Costing
c) Marginal Costing
d) Batch Costing

6. ------------------ costing is used in transport undertakings

a) Service costing
b) Historical Costing
c) Marginal Costing
d) Batch Costing

7. Cost Accounting provides data for managerial

a) Ascertaining cost
b) Process Costing
c) Estimates
d) Decision making

8. Cost Accounting is a separate ----------- of accounting

a) Financial
b) Management
c) Branch
d) None of the Above

9. Cost Accounting serves the information needs of

a) Department
b) Branch
c) Management
d) All the above

10. Cost Accounting is based on ---------- figures

a) Estimated
b) Costs
c) Service
d) Process

11. An item of cost that is direct for one business may be ------ for another business
a) Decreases
b) Increases
c) Indirect
d) Expense

12. The total of all direct expenses is known as

a) Prime cost
b) Variable cost
c) Historical cost
d) Fixed cost

13. ------- costs are partly fixed and partly variable in relation to output
a) Semi variable
b) Variable
c) Fixed
d) Prime

14. Work cost is a total of

a) Direct material
b) Direct labour
c) Chargeable expenses and works expenses
d) All the above

15. An opportunity cost does not involve

a) Cash outlays
b) Cash increases
c) Cash decreases
d) None of the Above
16. Variable cost change --------- with change in output
a) Increases
b) Decreases
c) Proportionately
d) Equally

17. Fixed cost per unit ------ with increase in output

a) Increases
b) Decreases
c) Proportionately
d) Equally

18. Depreciation is ---------- expenditure

a) Semi variable
b) Variable
c) Fixed
d) Prime

19. Out of pocket costs involve payment to -------

a) Insiders
b) Outsiders
c) Workers
d) Employees

20. Added value is the change in -------

a) Original value
b) Production value
c) Selling value
d) Market value

Unit – II

21. Material control covers

a) Purchase of material
b) Storing of material
c) Issue of material
d) All the above

22. Material control aims at achieving effective

a) Material management
b) Stores management
c) Both a and b
d) None of the above

23. Stock verification sheets are maintained to record the results of

a) Quantity verification
b) Quality verification
c) Physical verification
d) All the above
24. The quantity of material to be ordered at one time is known as
a) Re-order quantity
b) Order quantity
c) Economic order quantity
d) Maximum re-orders period

25. Re-ordering level = Maximum consumption ×

a) Re-order period
b) Order period
c) Minimum re-order period
d) Maximum re-order period

26. -------------- represents that quantity of material which is normally ordered when a
particular material reaches ordering level.
a) Re-order quantity
b) Order quantity
c) Economic order quantity
d) Maximum re-orders period

27. There are two aspects, namely ----------- of material control

a) Accounting aspect and operational aspect
b) Financial aspect
c) Operational aspect
d) Both b and c

28. Two levels of material control exist --------

a) Quantity control
b) Financial control
c) Quantity control and financial control
d) None of the above

29. Stock Adjustment account is debited with

a) Shortage of stock
b) Surplus of stock
c) Inventory
d) None of the above

30. The principle types of inventories are

a) Raw material
b) Goods- in –Progress
c) Finished Goods
d) All the above

31. Stores ledger is maintained in the

a) Cost accounting department
b) Financial accounting department
c) Management accounting department
d) Financial management
32. Bin card is a record of ----------- only
a) Qualities
b) Quantities
c) Both a and b
d) None of the above

33. Bin card is maintained by

a) Financier
b) Accountant
c) Manager
d) Storekeeper

34. Material abstract is also known as

a) Cost sheet
b) Material issue analysis sheet
c) Both a & b
d) None of the above

35. First in first out method of valuing material issues is suitable in times of
a) Material requisition
b) Falling prices
c) Rising prices
d) Both b & c

36. Last in First out method is suitable in times of

a) Material requisition
b) Falling prices
c) Rising prices
d) Both b & c

37. Average cost method of valuing material issues is suitable when

a) Material requisition
b) Falling prices
c) Materials are subject to natural wastage
d) Price fluctuate considerably

38. A bill of material serves the purpose of

a) Material requisition
b) Materials are subject to natural wastage
c) Quotations have to be sent
d) None of the above

39. A bill of material is prepared in case of a --------- job

a) Standardised job
b) Non-Standardised job
c) Fluctuate job
d) All the above

40. Market price method is considered to be the best method when

a) Quotations have to be sent
b) Materials are subject to natural wastage
c) Material requisition
d) Material fluctuate gradually

Unit – III

41. Labour cost is a -------- major element of cost

a) First
b) Second
c) Third
d) Fourth

42. Job evaluation is a method of evaluating the job in terms of its

a) Money value
b) Currency value
d) Market value
d) None of the above

43. Idle time card are prepared to known the reasons of

a) Normal working time
b) Abnormal working time
c) Idle time
d) All the above

44. Wages sheet is prepared by the

a) Personnel department
b) Payroll department
c) Cost accounting department
d) Financial department

45. Labour turnover is calculated by

a) Number of workers / average no of workers
b) Number of workers replaced / average no of workers
c) Number of additions /average no of workers
d) None of the above

46. In time wages system wages are paid according to the

a) Day worked
b) Time worked
c) Hours worked
d) None of the above

47. Under piece rate system of wage system, payment is made according to the
a) Quantity of work done
b) Quality of work done
c) No of pieces made
d) No of hours worked

48. In Taylor’s differential piece rate system -------- piece rates are set for each job
a) One
b) Two
c) Three
d) Four

49. Which of the following methods of wage payment is most suitable where the speed of
production is beyond the control of worker?
a) Time rate system
b) Piece rate system
c) Halsey premium system
d) Rowan premium system

50. Which of the following methods of wage payment does not guarantee wages on time
basis?
a) Time rate system
b) Piece rate system
c) Halsey premium system
d) Rowan premium system

51. The ____________ in labour makes difficult the control of labour cost whereas material,
being inanimate in nature, could be subjected to a rigid control.
a)Basic Wages
b)Human Element
c)Old Age Pension
d)Profit Bonus

52.There are two types of methods of time keeping i.e., _____

a)Manual and Mechanical Methods
b)Technical and Manual Methods
c)Human and Mechanical Methods
d)Mechanical and Manual Methods

53.Labour turnover according to replacement method is ____________

a)Number of workers replaced during the year X 100
Average number of workers during the period
b) Number of workers left during the year X 100
Average number of workers during the period
c) Number of workers replaced during the year X 100
Total number of workers during the period
d) Number of workers left during the year X 100
Total number of workers during the period
54.Spoilage is ____
a) Material that has some value
b)Sold as seconds
c) Sold for disposal value
d)Quality Goods
55.Personnel Department is responsible for _____
a)Recruitment
b)Training
c)Placement
d)All the Above

56. ______ causes labour turnover

a)Retirement due to old age
b)Salary Increment
c)Growth of the company
d)Incentives given

57.Workers may be discharged due to insubordination or inefficiency due to _____

a)Personal Cause
b)Unavoidable cause
c)Avoidable cause
d)None of the above

58.Cost of providing good working conditions is a ____

a)Preventive cost
b)Replacement cost
c)Both a) and b)
d)None of the above

59.___________ is the department that works in close harmony with all the other
departments?
a)Engineering Department
b)Personnel Department
c)Motion Study Department
d)Cost Departments

60.Time-keeping deals with ______

a)Payroll preparation
b)Meeting statutory requirements
c)Ensuring Discipline in attendance
d)All the above

Unit – IV

61. The method of costing applied in biscuit industries is ---------------- costing

a) Job
b) Process
c) Work
d) All the above

62. Where raw material is to pass certain stages before it is converted into finished goods, the
method of costing used is -------
a) Job
b) Process
c) Work
d) Labour

63. When actual loss is more than the estimated loss, the difference between the two is
considered to be --------------
a) Normal loss
b) Low loss
c) Abnormal loss
d) None of the above

64. When actual loss is -------- than the estimated loss the difference between loss is
considered as abnormal gain
a) Less
b) Greater
c) Equal to
d) Both a & c

65. When 1000 units are 60% complete in a process it is equivalent to --------- complete units
a) 400
b) 600
c) 60
d) 40

66. Equivalent units represent the production of a process in terms of ----- units
a) Uncompleted
b) Completed
c) Higher
d) Lower

67. ---------- process loss should be transferred to costing profit and loss account
a) Normal
b) Low
c) Abnormal
d) None of the above

68. The cost of ------ process loss is absorbed in the cost of production of good units
a) Normal
b) Low
c) Abnormal
d) None of the above

69. Where actual loss in a process is less than the anticipated loss, the difference between the
two is considered to be
a) Abnormal gain
b) Market price
c) Actual price
d) None of the above

70. The two main methods of calculating equivalent production are

a) LIFO, FIFO
b) FIFO, average price method
c) Normal, abnormal method
c) Normal, LIFO
d) None of the above

71. The cost incurred upto the point of separation are called --------- costs
a) Fixed
b) Variable
c) Common
d) None of the above

72. The --------------- product is usually produced in greater quantities than the by-products
a) Main
b) Sub-main
c) Joint
d) All the above

73. Joint costs are allocated according to ------------- value of individual products under the
marker value method
a) Production
b) Marketing
c) Sale
d) Bothe a & b

74.Under the ------------ method of accounting of by-products, the sale value of the by-
products is credited to P&L A/C
a) Other income
b) Trading
c) Loss
d) Profit

75. The need of reconciliation arises in ------------ accounting system.

a) Non-integral
b) Integral
c) Differential
d) All the above

76. Under-absorption of production overheads is ------ ---- while reconciling costing profits
with financial profits.
a) Deducted
b) Added
c) Join
d) None of the above

77. Over- absorption of production overheads is ------ ---- while reconciling costing profits
with financial profits.
a) Deducted
b) Added
c) Join
d) None of the above

78. Under-valuation of closing stock in cost accounts is --------- while reconciling costing
profits with financial profits.
a) Deducted
b) Added
c) Join
d) None of the above

79. Under- valuation of opening stock in cost accounts is --------- while reconciling costing
profits with financial profits.
a) Deducted
b) Added
c) Join
d) None of the above

80. Capital losses shown in financial accounts are ----------- while reconciling costing profits
with financial profits.
a) Deducted
b) Added
c) Join
d) None of the above

Unit V

81. Which of the following statements is/are correct?

1. A materials requisition note is used to record the issue of direct material to a specific job.
2. A typical job cost will contain actual costs for material, labour and production overheads,
and non –production overheads are often added as a percentage of total production cost
3. The job costing method can be applied in costing batches
(a) (1) only (b) (1) and (2) only (c) (1) and (3) only (d) (2) and (3) only
Ans:. A

82. A job is budgeted to require 3,300 productive hours after incurring 25% idle time. If the
total labour cost budgeted for the job is Rs36,300. What is the labour cost per hour( to the
nearest cent)?
(a) Rs 8.25 (b) Rs 8.80 (c) Rs 11.00 (d) Rs 14.67
Ans:b

83.A company calculates the prices of jobs by adding overheads to the prime cost and adding
30% to total costs as a profit margin. Job number Y256 was sold for Rs1690 and incurred
overheads of Rs 694. What was the prime cost of the job?
(a) Rs 489
(b) Rs 606
(c) Rs 996
(d) Rs 1300
Ans: b

84.State which of the following are the characteristics of service costing.

1. High levels of indirect costs as a proportion of total costs
2. Use of composite cost units
3. Use of equivalent units
(a) (1) only
(b) (1) and (2) only
(c) (2) only
(d) (2) and (3) only
Ans: d

85.Which of the following organisations should not be advised to use service costing?
(a) Distribution service
(b) Hospital
(c) Maintenance division of a manufacturing company
(d) A light engineering company
Ans:b

86.Calculate the most appropriate unit cost for a distribution division of a multinational
company using
the following information.
Miles travelled 636,500
Tonnes carried 2,479
Number of drivers 20
Hours worked by drivers 35,520
Tonnes miles carried 375,200
Cost incurred 562,800
(a) Rs .88
(b) Rs 1.50
(c) Rs 15.84
(d) Rs28, 140
Ans:b

87.The following information is available for the W hotel for the latest thirty day period.
Number of rooms available per night 40
Percentage occupancy achieved 65%
Room servicing cost incurred Rs. 3900
The room servicing cost per occupied room-night last period, to the nearest Rs, was:
(a) Rs 3.25
(b) Rs 5.00
(c) Rs 97.50
(d) Rs 150.00
Ans:. B

88. A company makes a single product and incurs fixed costs of Rs. 30,000 per annum.
Variable cost
per unit is Rs. 5 and each unit sells for Rs. 15. Annual sales demand is 7,000 units. The
breakeven point
is:
(a) 2,000 units
(b) 3,000 units
(c) 4,000 units
(d) 6,000 units
Ans:a

89.A company manufactures a single product for which cost and selling price data are as
follows:
Selling price per unit - Rs. 12
Variable cost per unit - Rs. 8
Fixed cost for a period - Rs. 98,000
Budgeted sales for a period - 30,000 units
The margin of safety, expressed as a percentage of budgeted sales,is:
(a) 20%
b) 25%
(c) 73%
(d) 125%
Ans:a

90.A transport company is running five buses between two towns, which are 50 kms apart.
Seatingcapacity of each bus is 50 passengers. Actually passengers carried by each bus were
75% of seatingcapacity. All buses ran on all days of the month. Each bus made one round trip
per day. Passenger kms are:
(a) 2,81,250
(b) 1,87,500
(c) 5,62,500
(d) None of the above
Ans:c
91.Contract costing is a basic method of
a) Historical costing (c) Process costing (b) Specific order costing (d) Standard costing
Ans:b

92.Contract costing usually applicable in

(a) Constructional Works (b) Textile Mills (c) Cement Industries (d) Chemical Industries
Ans:a

93.In contract costing, determination of work in progress include:

(a) Work Certified (b) Work Uncertified (c) Retention Money (d) Both a and b
Ans:d
94.Work Certified is valued at
(a) Cost price (b) Market price (c) Cost or market price whichever is less (d) Estimate price
Ans: a

95.The degree of completion of work is determined by comparing the work certified with
(a) Contract price (b) Work in progress (c) Cash received on contract (d) Retention money
Ans:a
96.In contract costing credit is taken only for a part of the profit on
(a) Completed contract (b) In complete contract (c) Cost-plus contract (d) Work Certified
Ans:b

97.Escalation Clause in a contract to prefect the interest of

a) Contractor (b) Contractee (c) Surveyor (d) Contractee's Architect
Ans:b

98.In contract costing payment of cash to the contractor is made on the basis of
(a)Uncertified work (b) Certified work (c) Work in progress (d) Estimated value
Ans:b

99.Materials returned under material return note credited to

(a)Contract account (b) Work in progress account (c) Plant and machinery account (d) Profit
and loss
Ans:a
100.Cash received on contract is credited to
a) Contract Account (b) Plant Account (c) Work in Progress Account (d) Contractee's
Account
Ans:d

Answers

Unit-I Unit-II Unit-III Unit-IV Unit-V

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