Management Accounting Set 23 MCQs

Q1 | Profit-Volume ratio is also known as

Contribution ratio

Contribution/Sales ratio

Marginal Income percentage

All of the above

Q2 | Which of the following statements are true?

P/V Ratio can never be used to measure break-even point

Higher the P/V ratio less will be the profit and vice versa

Concept of P/V ratio is also used to determine profit at a given volume of sales

All of the above

Q3 | The P/V ratio can be improved by

Decreasing the selling price per unit

Increasing variable cost

Changing the sales mix

None of the above

Q4 | P/V ratio can be calculated on the basis of variable cost ratio as

1 - Variable Cost Ratio

1 + Variable Cost Ratio

1/Variable Cost Ratio

None of the above

Q5 | Sales for desired profit is measured as

(Fixed cost + profit)/ (P/V Ratio)

(Fixed cost + profit) * (P/V Ratio)

(Fixed cost - profit)/ (P/V Ratio)

None of the above

Q6 | Margin of safety is equal to

Actual sales – Sales at Breakeven point

Actual sales + Sales at Breakeven point

Actual sales x Sales at Breakeven point

Actual sales / Sales at Breakeven point

Q7 | Angle of incidence is the angle at which

Total revenue line intersects the total cost line

Total cost line intersects the variable cost line

Variable cost line intersects fixed cost line

Fixed cost line intersects total revenue line

Q8 | Direct material cost + direct labor cost + other variable costs is equal to…

Contribution

Total cost

Marginal cost

Sales

Q9 | The factor which limits the volume of output of different products of an understanding at a particular point of time is known as…

Key factor

BEP

Contribution

None

Q10 | The break even chart helps the management in…

Forecasting costs and profits

Cost control

Long term planning and growth

All of the above

Q11 | In management accounting, an emphasis and focus must be

Past oriented

Future oriented

Bank oriented

Communication oriented

Q12 | In financial accounting, investors, banks, suppliers and government agencies are classified as

External parties

Internal parties

Environmental parties

Transactional parties

Q13 | If the actual output is more than the budgeted output, volume variance is

Favourable

Non-favourable

No impact

None of the above

Q14 | To get to labour efficiency variance, the formula to be applied 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

Q15 | Which of the following is technique of financial statement analysis?

Common?size statement

Comparative statement

Trend analysis

All

Q16 | For calculating trend percentages any year is selected as:

Current year

Previous year

Base year

None of these

Q17 | If total cost of 100 units is Rs 5000 and those of 101 units is Rs. 5030 then increase of Rs. 30 in total cost is

Marginal cost

Prime cost

All Fixed overheads

None of the above

Q18 | Which of the following statements are true?

In absorption costing, cost is divided into three major parts while in marginal costing cost is divided into two main parts.

In absorption costing period is important and in marginal costing product is important.

Both a and b

None of the above

Q19 | In case of other enterprises cash flow arising from interest paid should be classified as cash flow from ________ while dividends and interest received should be stated as cash flow from ____.

Operating activities, financing activities

Financing activities, investing activities

Investing activities, operating activities

None of the above

Q20 | Determine Contribution if Fixed cost is Rs 50,000 and loss is Rs 20,000.

Rs 60,000

Rs 70,000

Rs 30,000

None of the above

Q21 | Which of the below is an Accounting Concept

Materiality

Separate Legal Entity

Consistency

Conservatism

Q22 | The Carl Care Company established the following direct labour cost standards for one unit of product Z:•Standard hours: 1.5 hours•Standard rate: $20 per hour•Standard cost: $30 (1.5 hours @ $20 per hour)During the month of July, 20,000 direct labour hours were worked, and 12,500 units ofproduct Z were manufactured. The total wages related to direct labour in July were$405,000. The direct labour rate variance for July was:

$5,000 unfavourable

$5,000 favourable

$30,000 favourable

$30,000 unfavourable

Q23 | Which of the following is an example of Semi-Variable Costs

Salary

Tax

Telephone Expenses

Office Expenses

Q24 | Long Term Solvency is indicated by:

Current Ratio

Debt / Equity Ratio

Net Profit Ratio

Gross Profit Ratio

Q25 | A department makes a product whose contribution per unit is £1,000, and which takes 20 hours machine time. A component used in this product with a marginal cost of £300 (taking 5 hours of machine time) could be purchased from an external supplier. The department is working at full capacity. What is the maximum price that the company may pay to buy the component from an external supplier?

£550

£500

£575

£600