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This set of Management Accounting Multiple Choice Questions & Answers (MCQs) focuses on Management Accounting Set 24

Q1 | A document which provides for the detailed cost centre and cost unit is _______.
  • Tender
  • Cost Sheet
  • Invoice
  • Profit Statement
Q2 | An indirect setup labor costs, costs of setup and equipment maintenance and costs of indirect material can be categorized as
  • Variable batch costs
  • Fixed batch costs
  • Variable setup costs
  • Fixed setup costs
Q3 | To establish an effective system of standard costing it is essential that1) The technical process of operation should be prone to planning2) The cost of the products should be given3) The process or operating costs of products should be provided4) The standard costing should be consistent with the technical procedure of the production of the specific entity
  • A, B and C
  • A, C and D
  • B, C and D
  • D, C and A
Q4 | An officer responsible for financial operations of organization is considered as
  • Chief financial officer
  • Chief manager
  • Chief line function
  • Chief staff function
Q5 | Which of the following are the assumptions of marginal costing?1) All the elements of cost can be divided into fixed and variable components.2) Total fixed cost remains constant at all levels of output.3) Total variable costs vary in proportion to the volume of output.4) Per unit selling price remain unchanged at all levels of operating activity.
  • A and B
  • B and C
  • A and D
  • A, B, C and D
Q6 | Factory overhead is Rs 3,00,000 and direct material cost is Rs 5,00,000 What is the overhead rate under direct material cost method?
  • 25%
  • 30%
  • 60%
  • 75%
Q7 | The cost per unit of a product manufactured in a factory amounts to Rs 160 (75% variable) when the production is 10,000 units. When production increases by 25%, the cost of production will be Rs per unit.
  • Rs 145
  • Rs 150
  • Rs 152
  • Rs 140
Q8 | In master budgeting, the cost drivers for manufacturing overhead costs are
  • Direct manufacturing labour-hours
  • Setup labour-hours
  • Budgeted labour-hours
  • Both 1 and 2
Q9 | Which of the following is incorrect about the statement of cash flows?
  • It provides information about the cash receipt and cash payments of an enterprise.
  • It reconciles ending cash balance with the balance as per bank statement.
  • It provides information about the operating, investing and financing activities.
  • It explains the deviation of cash from Earnings.
Q10 | If break-even number of units are 120 units and the fixed cost is $62000, then the contribution margin per unit will be
  • $74,400
  • $7,440,000
  • $516.67
  • $51,667
Q11 | Cash flow example from an operating activity is
  • Purchase of Own Debenture
  • Sale of Fixed Assets
  • Interest Paid on Term-deposits by a Bank
  • Issue of Equity Share Capital
Q12 | During the month of December actual direct labour cost amounted to $39,550, the standard direct labour rate was $10 per hour and the direct labour rate variance amounted to $450 favourable. The actual direct labour hours worked were:
  • 3,955 hours
  • 4,000 hours
  • 3,910 hours
  • 4,500 hours
Q13 | Batch Costing is useful in determining:
  • Maximum Quantity of output
  • Minimum Quantity of output
  • Economic Batch Quantity
  • Profit of Batches
Q14 | Overhead Cost is the total of
  • All Direct Cost
  • All Indirect Cost
  • All Specific Cost
  • All Indirect and Direct Cost
Q15 | Regal Industries is replacing a grinder purchased 5 years ago for $15,000 with a new one costing $25,000 cash. The original grinder is being depreciated on a straight-line basis over 15 years to a zero-salvage value. Regal will sell this old equipment to a third party for $6,000 cash. The new equipment will be depreciated on a straight-line basis over 10 years to a zero-salvage value. Assuming a 40% marginal tax rate, Regal’s net cash investment at the time of purchase if the old grinder is sold and the new one purchased is
  • $19,000
  • $15,000
  • $17,400
  • $25,000
Q16 | The Moore Corporation is considering the acquisition of a new machine. The machine can be purchased for $90000; it will cost $6000 to transport to Moore’s plant and $9,000 to install. It is estimated that the machine will last 10 years, and it is expected to have an estimated salvage value of $5,000. Over its 10-year life, the machine is expected to produce 2,000 units per year, each with a selling price of $500 and combined material and labour costs of $450 per unit. Federal tax regulations permit machines of this type to be depreciated using the straight-line method over 5 years with no estimated salvage value. Moore has a marginal tax rate of 40%. What is the net cash flow for the tenth year of the project that Moore Corporation should use in a capital budgeting analysis?
  • $100,000
  • $91,000
  • $68,400
  • $63,000
Q17 | An annual report is issued by company to its :
  • Directors
  • Auditors
  • Shareholders
  • Management
Q18 | Which of the following statement is correct ?
  • Assets = Liabilities + Shareholders funds
  • Assets = Total funds
  • Assets = Funds of outsiders
  • None of the above
Q19 | The process of budgeting includes
  • Preparation of budget
  • Budget Control
  • Budget co-ordination
  • All of the above
Q20 | The labour engaged in the making of a product is known as _______
  • Direct labour
  • Indirect labour
  • Temporary labour
  • None of the above
Q21 | Cash from Operations is equal to:
  • Net Profit plus increase in outstanding Expenses
  • Net Profit plus increase in Debtors
  • Net Profit plus increase in Stock
  • Net Profit
Q22 | Margin of safety can be increased by
  • Decrease in setting price
  • Decline in volume of production
  • Reduction in fixed or the variable costs or both
  • None of the above
Q23 | When profit-volume ratio is 40 % and sales value Rs.10,000, the variable costs will be :
  • Rs. 4,000
  • Rs. 6,000
  • Rs. 10,000
  • None of these
Q24 | Determine B.E.P in units and amount if Units produced if Rs 10,000, Fixed cost is Rs 40,000, Selling price is Rs 50 per unit and Variable cost us Rs 30 per unit.
  • Rs 40 per unit, Rs 2,00,000
  • Rs 50 per unit, Rs 10,00,000
  • Rs 20 per unit, Rs 1,00,000
  • None of the above
Q25 | When margin of safety is 20% and P/V ratio is 60%, the profit will be :
  • 30%
  • 33.33%
  • 12%
  • None of these