PGDM 2012-2014 ONLINE QUIZ

DIVISIONS A, B & C; DOMES 1, 2 & 3

COURSE NAME: MANAGEMENT ACCOUNTING

THE QUESTION BANK COMPRISES 30 QUESTIONS.

CHOOSE 3 QUESTIONS OUT OF SET A

& 12 QUESTIONS OUT OF SET B

TOTAL 15 QUESTIONS

EACH CORRECT ANSWER 2 MARKS; NO NEGATIVE MARKING

MAXIMUM MARKS: 30

SET A:

1. Kanika Textiles is a saree manufacturer in Kolkata. The following data is

available for the quarter ended June 2012: Opening Stock of base fabric: 20,000
metres @ Rs.60 per metre; Purchase of base fabric: 50,000 metres @ 70 Rs. per
metre; Closing Stock of base fabric :10000 metres @ 70 per metre. Therefore,
the value of base fabric consumed in manufacturing sarees for the quarter is:
a. Rs.40,00,000 b. Rs. 7,00,000 c. Rs.12,00,000 d.35,00,000

2. Tata Consultancy Services incurs high training costs on its new recruits by
sending them to their full fledged training centre at Tiruvananthapuram, Kerala.
Such costs can be classified as :
a. Engineered cost b. Policy or Discretionary cost c. Abnormal cost d.
Statutory cost

3. _______________ cost is expenditure made in the past that will not change and
is irrelevant to analyzing future course of action.
a. Opportunity b. Incremental c. Sunk d. Notional

4. Pick the odd one out, of the following elements of cost for Tata Motors Ltd.
a. Body Shell b. Tyres c. Car engine d. consumables used in the factory

5. Air India gives free passage to its employees for travel. The cost of free passage
to employees if the tickets could otherwise be sold is in the nature of
_______________.
 a. Fixed cost b. Replacement cost c. Opportunity cost d. Out-of-Pocket
Cost

6. Which method of costing would be used for an automobile repairing business?

a. Process costing b. Unit costing c. Job costing d. Joint costing

7. Overvaluation of Closing Stock for an accounting period would lead to

_________________ of operating income for the period.
a. understatement b. overstatement c. correct reporting d. constant
reporting

8. The costing records of Ayushman Manufacturing Company present the following

data for the month of August 2012: Prime cost: Rs.15,00,000; Factory
Overheads: Rs.4,50,000; Selling and Administration overheads: Rs.3,00,000.
The company had no opening/closing stock of WIP inventory, no opening /
closing FG inventory. Therefore, the Total Cost of Goods Sold for August 2012
will be:
a. 19,50,000 b.15,00,000 c. 22,50,000 d. None of these.

9. Lavanya Apparels, a high end fashion boutique, has announced a sale of

garments during Ganesh Chaturthi. The variable costs would be Rs.45,000. The
MRP would be Rs. 90,000. The cost of local newspaper advertisement for the
sale would be Rs. 18,000. What is the maximum average discount the company
can afford to give if it wants to make “zero profit/zero loss”?
a.70% b.30% c.50% d. 40%

10. Varun Biotech Ltd. specialises in manufacturing formulations for analgesics.

They hold the patent for this product. The selling price is Rs.100 per strip. The
variable costs are Rs.60 per strip. The fixed costs per month are Rs.4,80,000.
The break even point in terms of number of strips per month is:
a.8,000 b.4,800 c.12,000 d. 480

11. Laxmikant Engineering Ltd. is in the process of quoting for a tender. The
estimated costs for this project are given to you. Materials Rs.20,000, Direct
Labour Rs.9,000, Direct expenses Rs.5,000. Overheads are absorbed @ 100%
of Direct Labour. If they charge a margin of 20% on Total Estimated Cost, What
would the company quote as the tender price?
a.Rs.51,600 b.Rs.43,000 c.Rs.40800 d. Rs.48960
12. Rajesh Book Centre is a dealer of textbooks for Engineering Courses. Typically
they have about 130 titles and enjoy an average of 40% contribution margin on
the selling price. The fixed costs per month are Rs.40,000. What should be the
monthly sales in Rupees to break even?
a.Rs.16,000 b.Rs.1,00,000 c.Rs.40,000 d. Rs 10,000

13. Parag Chemicals has given you details of their last Process for the month of
August 2012. Input 10,000 kgs at Rs 70 per kg; Normal Loss 10% of Input, which
was sold at Rs 10 per kg. Actual Output transferred to Finished Goods Stock
8000 kgs. The other Costs of the process Rs.1,20,000. What is the Normal cost
of the process for August 2012?
a. Rs.90 per kg b. Rs.101.25 per kg c.Rs.102.5 per kg d.Rs.91.11 per kg

14. The operating leverage of Natural Icecreams Pvt. Ltd is 2. The company expects
sales growth of 50% in the next financial year. The growth in operating income
will be :
a. 50% b.100% c.25% d.75%

15. Ajanta Clocks and Watches Pvt. Ltd. presents the following cost structure for the
financial year 2011-12. Contribution margin Rs.12,50,000; Fixed Costs:
Rs.7,50,000. What was their operating leverage?
a.2.5 b.3.33 c.1.00 d.1.67

16. Which method of costing would be appropriate for a multi-product

pharmaceutical manufacturing company?
a. Job costing b. Process/Batch costing c. Unit costing

17. If we plot volume on X-axis and operating income on Y-axis, the point of
intersection of the operating income line with the X-axis indicates:
a. Profit volume Ratio b. Break even point c. Margin of Safety d.
Operating Leverage
18. If we plot volume on X-axis and operating income on Y-axis, the intersection of
the operating income line with the Y-axis indicates:
a. Fixed costs b. Break even point c. Margin of Safety d. Operating
Leverage

19. A restaurant manager finds on a particular day that as more and more
customers are being served, the restaurant was losing money. The reason for
this economic phenomenon is _______:
a. There was an error in allocating fixed overheads to the items on the menu.
b. The customers were consuming items with negative contribution
margin
c. The customers were availing credit terms offered by the Restaurant.
d. Variable costs were lower than the fixed costs

20. ______ costs may also be called inventoriable costs.

a. Period costs b. Product costs c. Common costs d. Marketing
costs

21. The Prime Cost of Atul Engineering Pvt. Ltd for the month of August 2012 was
Rs.4,00,000 of which Material Cost was Rs.3,00,000. The difference of
Rs.100,000 represents:
a. Depreciation b. Supervisor’s salary c. Direct Labour d. Factory Rent

22. For ICICI Home Finance, Fees paid to property appraisal company for each
mortgage loan is a Direct and a Variable cost with respect to the cost object,
“Number of mortgage loans”. Is this statement :
a. True b. False

23. For BMW cars, Annual Lease Costs at Chennai plant is an example of Indirect
Variable Cost :
a. True b. False

24. Maruti Suzuki’s Manesar plant was closed on account of labour unrest. The cost
incurred for restarting operations will be classified as ______ and _________
costs.
 a. Normal, Product b. Abnormal, Period c. Direct, Product d. Normal,
Period

25. With respect to methods of costing, identify the odd man out of the following:
a. A Chartered Accountancy firm b. A custom furniture manufacturer c. An
oil refinery d. A software company making custom-made software

26. The CEO’s Salary is an example of :

a. Direct, Variable cost b. Indirect, Fixed Cost c. Indirect, Variable cost
d.Direct, Fixed cost

27. Operating Income is the _____ of Margin of Safety and Profit Volume Ratio.
a. product b. sum c. square d. square-root

28. The BEP of a company is Rs 5,00,000 and Margin of Safety is 37.5%. What is
the total Sales of the Company?
a.Rs 8,00,000 b.Rs 3,00,000 c.Rs 2,00,000 d.Rs 7,50,000

29. Mr. Behl runs a private coaching class for IIT entrance examinations. The
notebooks and stationery he issues to each student will be classified as
________________ for computing the costs per student.

a. fixed costs b. variable costs c. sunk costs d. avoidable costs

30. When Sales increase from Rs 20,000 to Rs 40,000 and Operating Income increases
from Rs 1,000 to Rs 11,000; the P/V Ratio of the Company is

a. 100% b. 50% c. 200% d. 5%