Management Accounting Set 22 MCQs

Q1 | Sales margin variance due to sales quantities is measured as

Standard profit - Revised standard profit

Revised standard profit - Budgeted profit

Standard profit + Revised standard profit

Revised standard profit + Budgeted profit

Q2 | .Which of the following statements are true about labor idle time?

Labour idle time variance is not caused by non-availability of raw material

Labour idle time variance is measured as : Abnormal idle hours * Actual hourly rate

Labour idle time variance is always unfavorable or adverse

All of the above

Q3 | The formula used for calculation of labor rate variance is

Total standard labour cost of actual output - Total actual cost of actual output

(Standard rate per hour - Actual rate per hour) * Actual Hours

(Standard time - Actual time) * Standard rate per hour

Abnormal idle hours * Standard hourly rate

Q4 | Idle time variance arises when

Only one grade of labour is used

Time is lost due to abnormal reasons

Both a and b

None of the above

Q5 | Material price, mix, usage and revised quantity variances are measured on _______ basis, whereas material yield variance is measured on _______ basis.

Output, Input

Output, Output

Input, Output

None of the above

Q6 | Marginal cost is computed as

Prime cost + All Variable overheads

Direct material + Direct labour + Direct Expenses + All variable overheads

Total costs – All fixed overheads

All of the above

Q7 | Marginal costing is also known as Direct costing

Variable costing

Both a and b

None of the above

none

Q8 | Which of the following statements are true?(a) Marginal costing is not an independent system of costing.(b) In marginal costing all elements of cost are divided into fixed and variable components.(c) In marginal costing fixed costs are treated as product cost.(d) Marginal costing is not a technique of cost analysis.

A and B

B and C

A and D

B and D

Q9 | While computation of profit in marginal costing

Total marginal cost is deducted from total sales revenues

Total marginal cost is added to total sales revenues

Fixed cost is added to contribution

None of the above

Q10 | Under High and Low Point method, the output at two different levels is compared with the amount of __________ incurred at these two points.

Total fixed costs

Total costs

Total fixed costs

None of the above

Q11 | Which of the following statements related to Contribution Analysis are ture?

If contribution is zero, there is loss equal to fixed costs

If contribution is negative, loss is less than fixed costs

If contribution is positive and more than fixed cost there will be profit.

All of the above

Q12 | When contribution is negative but less than fixed cost,

There is loss equal to fixed costs

There is loss more than fixed costs

There will be loss less than fixed costs

All of above are false

Q13 | When contribution is positive but equal to fixed cost,

There is loss equal to fixed costs

There is loss more than fixed costs

There will be loss less than fixed costs

There will be neither profit not loss

Q14 | Absorption costing is also known as

Historical costing

Total costing

Both a and b

None of the above

Q15 | In context of net operating profit, which of the following statements are true?

If all costs are variable, the amount of profit obtained in marginal costing and absorption costing will be same.

If the volume of sales and output is equal in a period, profit will be same in absorption costing and marginal costing.

Both a and b

None of the above

Q16 | Under absorption costing, managerial decisions are based on

Profit

Contribution

Profit volume ratio

None of the above

Q17 | Managers utilizes marginal costing for

Make or buy decision

Utilization of additional capacity

Determination of dumping price

All of the above

Q18 | ___________ is not suitable where selling price is determined on the basis of cost-plus method.

Absorption costing

Marginal costing

Both a and b

None of the above

Q19 | Which of the following are characteristics of B.E.P?

There is no loss and no profit to the firm.

Total revenue is equal to total cost.

Contribution is equal to fixed cost.

All of the above.

Q20 | Which of the following are limitations of break-even analysis?

Static concept

Capital employed is taken into account.

Limitation of non-linear behaviour of costs

Limitation of presence of perfect competition

Q21 | Using equation method, Break-even point is calculated as

Sales = Variable expenses + Fixed expenses + Profit

Sales = Variable expenses + Fixed expenses - Profit

Sales = Variable expenses - Fixed expenses + Profit

None of the above

Q22 | Given selling price is Rs 10 per unit, variable cost is Rs 6 per unit and fixed cost is Rs 5,000. What is break-even point?

500 units

1,000 units

1,250 units

None of the above

Q23 | Contribution is also known as

Contribution margin

Net Margin

Both a and b

None of the above

Q24 | Determine Contribution if Sales is Rs 1,50,000 and P/V ratio is 40%.

Rs 60,000

Rs 70,000

Rs 30,000

None of the above

Q25 | Which of the following statements are true?

Contribution doesn’t include fixed cost whereas profit includes fixed cost.

Contribution is not based on the concept of marginal cost.

Contribution above breakeven point becomes profit.

All of the above