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This set of Cost Management Multiple Choice Questions & Answers (MCQs) focuses on Cost Management Set 3
Q1 | During July actual labour costs amounted to 19,800, the standard rate of pay was 4.50 per hourand the labour rate variance amounted to 225 adverse. The actual hours worked were:
- 4,400
- 1,012
- 4,350
- 3,450
Q2 | An adverse material usage variance together with a favourable materials price variance could suggest that:
- We are paying the same for our materials but we are using more than expected
- We are paying higher prices for our materials than expected
- We are paying less for our materials than expected but we are using more materials
- We are using less material than expected but in total we are paying more than we should
Q3 | An adverse labour efficiency variance together with a favourable labour rate variance may mean that:
- The business is paying a higher hourly rate than the standard
- Less labour hours are needed to make the same amount of output
- Less skilled staff are being used in production
- More products are being made per hour
Q4 | The formula for calculating the variable overhead total variance is:
- (Standard hours less actual hours) x variable overhead absorption rate
- Actual variable overhead less (actual hours x actual hours worked x variable overhead absorption rate)
- Actual variable overhead expenditure less budgeted variable overhead expenditure
- Actual variable overhead less (standard hours x actual production x variable overhead absorption rate)
Q5 | The formula for calculating the fixed overhead volume variance is:
- Budgeted fixed expenditure less (actual hours x actual production x fixed overhead absorption rate)
- Budgeted fixed expenditure less (actual hours x fixed overhead absorption rate)
- Actual fixed overhead less (standard hours x actual production x fixed overhead absorption rate)
- Budgeted fixed expenditure less (standard hours x actual production x fixed overhead expenditure variance)
Q6 | -------- are the factor which have direct cause and effect relationship with cost
- Cost object
- Cost pool
- Cost driver
- Cost centre
Q7 | ------------ is also known as ‘Transaction Costing’.
- Target costing
- Kaizen costing
- Throughput costing
- Activity based costing
Q8 | ----------- is maximum permissible cost in a competitive business environment.
- Activity cost
- Target cost
- Kaizen cost
- None of these
Q9 | Promoters of Activity based Costing was /were----------
- Kaplan and Cooper
- Galloway
- Goldratt
- Ouchy
Q10 | In innovative cost management terminologies ‘BPR’ stands for?
- Business Process Reconstruction
- Business Production Reschedule
- Business Process Re-engineering
- None of these
Q11 | A cost centre is:
- The part of the business where all costs are paid to suppliers
- A production department where all production costs are aggregated
- An area for which costs are accumulated
- An area of the business accountable for both costs and revenues
Q12 | An investment centre is a responsibility centre where the manager has control of:
- Costs
- Costs, profits and product quality
- Costs, profits and assets
- Costs and profits
Q13 | Responsibility accounting aims to:
- Ensure that costs become the responsibility of a specific manager
- Ensure that a manager is punished if things go wrong
- Reduce the costs that a department incurs
- Allocate costs to all areas of a business
Q14 | Prime cost can be defined as:
- The total costs of manufacturing a product
- The total direct costs of manufacturing a product
- The total costs of operating the production department where the product is made
- The cost of the first stage of the manufacture of a product
Q15 | Which of the following best describes a fixed cost?
- Has a direct relationship with output
- Increases proportionately with output
- Represents a fixed proportion of total costs
- Remains constant irrespective of the level of activity
Q16 | Direct labour costs will include:
- Direct labour costs plus any bonuses and overtime premiums
- Direct labour costs plus any bonuses
- Total direct labour hours at the normal hourly rate of pay
- All labour costs attributable to a product
Q17 | The company which applied first ‘Just in Time’ in its manufacturing is---------
- GE Electricals
- Motorola
- Toyota
- Suzuki
Q18 | ----------- is developed on the concept ‘inventory is evil’.
- Quality circle
- JIT
- Kaizen
- All of these
Q19 | JIT was first developed by:
- Taiichi Ohno
- Ouchy
- Kaplan
- None of these
Q20 | “Kanban’ system is similar to ---------- philosophy
- Kaizen
- Cost driver
- Just in Time
- None of these
Q21 | Which of the following is / are the method of establishing ‘target cost’?
- Addition method
- Subtraction method
- Integration method
- All of these
Q22 | Accumulated cost of an activity called------------ in Activity based costing.
- Cost driver
- Cost object
- Cost centre
- Cost Pool
Q23 | ------------ is regarded as ‘Price-led costing’.
- Activity based costing
- Target costing
- Kaizen costing
- Back flush costing
Q24 | Upstream cost, Down stream cost etc., are the concepts in---------------.
- Target costing
- Kaizen costing
- Life cycle costing
- Activity based costing
Q25 | When output in relation to the input is expressed mathematically it is called as----------
- Outcome index
- Efficiency index
- Productivity index
- All the above.