Accotung 2 PDF

Objective Questions 1
I. MULTIPLE CHOICE QUESTIONS
Chapter – 1 : Introduction to Cost Accounting

1. Cost accounting is an important system developed for
i) shareholders ii) government
iii) management iv) financial institutions
2. The resources that have been used for attaining a particular objective is
i) revenue ii) cost
iii) profit iv) investment
3. Cost accounting is a reporting system
i) internal ii) external
iii) government iv) financial
4. The costing which determines cost after it has been actually incurred is
i) historical ii) standard
iii) estimated iv) marginal
5. A cost centre is a
i) location for which cost is incurred ii) an organisation
iii) a unit of cost iv) profit centre
6. A segment of a business entity to which both revenue & costs are assigned is a
i) cost centre ii) revenue centre
iii) profit centre iv) production centre
7. A cost centre which is engaged in production activity is called
i) production cost centre ii) process cost centre
iii) impersonal cost centre iv) production unit
8. One of the following is not a costing system
i) marginal costing ii) uniform costing
iii) absorption costing iv) process costing
9. Cost ascertainment involves
i) ascertainment of cost ii) control of cost
iii) estimation of cost iv) fixation of price
10. Product cost means
i) Variable cost ii) Fixed cost
iii) Prime cost iv) Indirect cost
11. Notional cost is also known as
i) Imputed cost ii) Opportunity cost
iii) Out of pocket cost iv) Variable cost
12. Cost which can be identified with the output is called as
i) Product cost ii) Direct cost
iii) Fixed cost iv) Variable cost
13. Cost of designing is
i) Production cost ii) Indirect cost
iii) Direct material iv) Direct charges
14. Interest on capital is
i) Imputed cost ii) Sunk cost
iii) Direct cost iv) Indirect cost
15. Payment to other parties is called as
i) Out of pocket cost ii) Book cost
iii) Future cost iv) Postponable cost
16. Cost which is relevant for decision-making is
i) Relevant cost ii) Past cost
iii) Opportunity cost iv) Imputed cost
2 Cost Accounting (T.Y.B.Com.-Sem.-V)
17. Overheads which are incurred in connection with factory are

i) Factory overheads ii) Office overheads
iii) Selling overheads iv) Prime cost
18. Cost which does not require current cash payment is
i) Book cost ii) Product cost
iii) Cash cost iv) Opportunity cost
19. The cost which remains constant irrespective of output upto capacity limit is
i) Fixed cost ii) Product cost
iii) Variable cost iv) Sunk cost
20. Variable cost is also known as
i) Product cost ii) Period cost
iii) Indirect cost iv) Semi fixed cost
21. The cost which is directly chargeable to the product is
i) Indirect cost ii) Direct cost
iii) Overheads iv) Period cost
22. Primary packing is a
i) Direct Materials ii) Indirect material
iii) Overheads iv) Selling cost
23. Cost of Grease & oil is a
i) Direct cost ii) Indirect material
iii) Packing cost iv) Indirect labour
24. Cost of designing the product is
i) Chargeable expenses iii) Sunk cost
ii) Indirect cost iv) Fixed cost
25. Cost determined in advance on the basis of scientific analysis of circumstances is
i) Estimated cost ii) Standard cost
iii) Pre–determined cost iv) Past cost
26. Conversion cost includes
i) Direct labour
iii) Selling overheads
ii) Direct labour & factory overheads
iv) Administrative overheads
27. The cost which does not involve any cash outlay is
i) Sunk cost ii) Relevant cost
iii) Imputed cost iv) Book cost
28. Raw material directly identifiable with the product is
i) Direct materials ii) Indirect materials
iii) Process materials iv) Production materials
29. Cost which can be identified easily is called as :
i) Indirect cost ii) Direct cost
iii) variable cost iv) fixed cost
30. Wages paid to the workers in machinery department in an engineering industry is
called as :
i) Indirect labour ii) Direct labour
iii) Actual labour iv) production labour
31. Cost of designing and layout is an example of :
i) Direct expenses ii) Direct materials
iii) Indirect cost iv) Production Cost
32. Royalty paid on use of patents is called as :
i) Direct expenses ii) Indirect expenses
iii) Production expenses iv) Distribution expenses
33. Variable cost per unit remains ______.
i) constant ii) flexible
iii) (i) & (ii) iv) none of the above
34. The cost which relates to the inputs like materials, labour and expenses directly
connected with the product is known as :
i) Engineered cost ii) Relevant cost
iii) Product cost iv) Urgent cost
35. Cost which is related to capacity is called :
i) Fixed cost ii) Capacity cost
iii) Plant cost iv) none of the above
36. Cost which is unaffected by the change in output is called as :
i) Fixed cost ii) Variable cost
iii) Period cost iv) None of the above
Chapter – 2 : Material Cost

1. The most important element of cost is
i) material
ii) labour
iii) overheads
2. The function of Purchase Department is
i) purchase of materials
ii) sale of scrap
iii) production of goods
3. Purchase order is a
i) request to the supplier to supply materials
ii) request to the supplier to verify the stock
iii) acknowledgement of goods
4. Goods received note is normally prepared in
i) six copies
ii) five copies
iii) four copies
5. Stock levels are fixed to
i) control inventory
ii) purchase material
iii) control cost of scrap
6. Maximum level indicates
i) maximum inventory to be kept
ii) minimum inventory to be kept
iii) average inventory to be kept
7. EOQ is
i) economical size of order
ii) economical size of production
iii) economical size of production
8. EOQ is also known as
i) economic size of order
ii) economic order to be placed
iii) maximum level of stock to be fixed
9. Minimum inventory level is
i) minimum stock to be maintained
ii) maximum stock to be maintained
iii) average stock to be maintained
10. Material control encompasses :
i) Purchasing ii) Storing
iii) Issue iv) All of the above
11. The essentials of sound material control procedure include :

i) Coordination ii) Internal check
iii) Reporting iv) All of the above
12. The objective of material control is :
i) Adequacy of inventory ii) Use of space
iii) Effective storage iv) All of the above
13. Scientific purchasing begins with :
i) Indenting for materials ii) Ordering
iii) Inspection iv) Selection of the supplier
14. Purchase order is prepared generally in :
i) 4 copies ii) 5 copies
iii) 7 copies iv) 2 copies
15. The function of Receiving Department is to :
i) Open the packages ii) Check the quantity received
iii) Prepare goods received note iv) All of the above
16. Material requisition is signed :
i) production department ii) purchase department
iii) foreman iv) accountant
17. Bill of material is signed by :
i) Production planning department ii) Purchase department
iii) Stores department iv) All of the above
18. Material inspection note is signed by the :
i) Inspector ii) Storeskeeper
iii) Cost accountant iv) All of the above
19. Goods received note is prepared by :
i) purchase department ii) stores department
iii) sales department iv) finance department
20. Material transfer note is prepared when :
i) Material is transferred from one department to another department
ii) Material is returned by the department to stores
iii) Material is returned to the supplier
iv) All of the above
21. Bin card shows :
i) Receipt of stores ii) Issue of stores
iii) Closing Balance of stores iv) All of the above
22. EOQ is :
i) Most economical size of order ii) Most minimum size of order
iii) Quantity to be order iv) All of the above
23. EOQ is decided on the basis of :
i) Carrying cost of inventory ii) Ordering cost of Inventory
iii) Cost of purchases iv) both (i) & (ii)
24. Order should be placed with the supplier when the inventory touches :
i) maximum level ii) Re–order level
iii) minimum level iv) Danger level
25. Minimum Inventory level shows :
i) Maximum inventory ii) Minimum inventory
iii) Both (i) & (ii) iv) None of the above
26. Maximum inventory locks up :
i) More working capital ii) Less working capital
iii) Average working capital iv) None of the above
27. Average inventory is :

i) Opening inventory ii) Closing inventory
iii) Opening inventory + closing inventory iv) None of the above
28. Minimum inventory is to ensure :
i) minimum working capital ii) Safety of production process
iii) maximum profitability iv) None of the above
29. ABC analysis is a technique developed for :
i) Inventory management ii) Inventory control
iii) WIP control iv) Finished stock control
30. EOQ is the _____ size of the order at that point ordering and carrying costs are
minimised.
i) Optimum ii) Maximum
iii) Minimum iv) None of the above
31. In ABC analysis ‘C’ class items require :
i) Loose control ii) Tight control
iii) Moderate control iv) None of the above
32. In ABC analysis ‘A’ class items require :
i) Loose control ii) Tight control
iii) Moderate control iv) None of the above
33. The objective of inventory management is to :
i) Optimise investment in current assets
ii) Optimise investment in inventory
iii) Reduce inventory levels
iv) None of the above
34. Average annual consumption of material is 20,000 kgs at a price of ` 2 per kg. The
holding cost is 16% and ordering cost is ` 50. How much should be EOQ?
i) 2500 kgs ii) 3000 kgs
iii) 2000 kgs iv) 1000 kgs
Chapter – 3 : Material Cost : Documentatiom

1. Purchase requisition is
i) an order for supply of materials.
ii) a requirement of material.
iii) a request to return the material.
2. Purchase order is
i) sent by the purchase officer to supplier.
ii) a request to return the material.
iii) a request to inspect the material.
3. Material Inspection Note is
i) prepared and forwarded to the Stores Department.
ii) signed by the store keeper.
iii) signed by the supplier.
4. Bin Card is
i) a inspection note.
ii) a continous record of stock stored.
iii) a statement of delivery of materials.
5. A store ledger is
i) an evidence of delivery of materials.
ii) a ledger of the supplier.
iii) a ledger which shows movement of each item of materials.
6. Bill of materials
i) is an invoice sent by the supplier.
ii) helps to calculate the cost of materials of a job.
iii) is an inpection record of materials.
7. Material control includes
i) inventory control.
ii) control over labour.
iii) control over overheads.
8. Under periodic inventory control
i) stock is verified at the end of a certain period.
ii) stock is verified continuously.
iii) stock is verified everyday.
9. Under perpetual inventory control
i) stock is verified continuously.
ii) stock is verified periodically.
iii) stock is verified at the end of every quarter.
10. ABC Analysis is
i) analysis of A, B and C type of material.
ii) a technique of selective control.
iii) a technique under which control is always best.
Chapter – 4 : Inventory Accounting

1. Issue of materials during a period of time is priced at the latest purchase cost under
i) FIFO iii) Simple Average
ii) LIFO iv) Weighted Average
2. Stores Department maintains a record in which a separate folio is maintained for
each item
i) Stores Ledger iii) Stock Register
ii) Bin Card iv) Bill of Materials
3. In times of rising prices, the pricing of issues will be at a more recent current market
prices in
i) FIFO iii) LIFO
ii) Weighted Average iv) Simple Average
4. The inventory is valued at the most recent market prices and it is near to the
valuation based on replacement cost in
i) FIFO iii) Weighted Average
ii) LIFO iv) Base Stock Method
5. According to the method of pricing, issues are close to current economic values
i) LIFO iii) Highest In First Out Price
ii) FIFO iv) Weighted Average Price
6. In the method of pricing, cost lag behind the current economic values
i) LIFO iii) Replacement Price
ii) FIFO iv) Weighted Average Price
7. When prices fluctuate widely, the method that will smooth out the effect of
fluctuations is
i) Simple Average iii) FIFO
ii) Weighted Average iv) LIFO
8. In the method, the charge to production is not at actual cost
i) Weighted Average iii) Replacement Price
ii) Standard Price iv) All of these
9. Issue of material during the period is priced at the latest purchase cost under :
i) FIFO ii) LIFO
iii) Average iv) None of the above
10. Issue of material under _____ method is from oldest lots.
i) FIFO ii) LIFO
11. During the period of rising prices, pricing of the issue will be at more recent price
under :
i) LIFO ii) FIFO
12. The inventory is valued at more recent price under :
i) LIFO ii) FIFO
13. Trade discount :
i) Increases cost of material ii) Decreases cost of material
iii) Does not affect cost of material iv) None of the above
14. FIFO method is :
i) Logical ii) Illogical
iii) Recognised by AS2 iv) both a & c
15. Under perpetual Inventory system stock is ascertained :
i) Periodically ii) Continuously
iii) At the end of the year iv) None of the above
Chapter – 5 : Labour Costing

1. Time recording becomes necessary
i) where the overhead recovery rates are based on labour hours.
ii) where the recovery rates are based on machine hours.
iii) where the recovery rates are based on unit of production.
2. Dial Time Recorder has
i) about 160 holes.
ii) about 200 holes.
iii) about 360 holes.
3. Clock Card is placed at
i) the entrance of the office.
ii) the entrance of the factory.
iii) the entrance of the stores.
4. Time Booking is essential for
i) record purpose.
ii) costing purpose.
iii) controlling purpose.
5. Idle Time Card shows
i) time allowed.
ii) effective use of time.
iii) idle time.
6. Piece workers are paid wages on
i) piece rate basis.
ii) time rate basis.
iii) time saved basis.
7. Casual workers are employed when
i) workers are absent.
ii) accident takes place.
iii) there machine breakdown
8. The objective of Time keeping is of :

i) Preparation of payroll
ii) Compliance with statutory requirments
iii) Fixation of wage rates
iv) All of the above
9. The objective of Time Booking is to :
i) Ascertain labour cost ii) Evaluate labour performance
iii) Control labour iv) (i) & (ii)
10. The methods of Time Booking include :
i) Daily Time sheet ii) Attendance Register
iii) Time clock iv) none of the above
11. The card which shows time spent by a worker on every order or job is :
i) Job card ii) Job Ticker
iii) Salary slip iv) Both (i) & (ii)
12. The card which records idle time is :
i) Idle Time Card ii) Job card
iii) Job sheet iv) I card
13. The workers who are entitled to wages on the basis of their output are called as :
i) Piece workers ii) Out workers
iii) Casual workers iv) Badli workers
14. Casual workers work in place of :
i) Absentees ii) Retrenched workers
iii) Sincere workers iv) None of the above
15. The workers who work outside the factory premises are called as :
i) Outworkers ii) Job workers
iii) Casual workers iv) None of the above
16. Payroll accounting is concerned with :
i) Computation of wages ii) Appointment of workers
iii) Termination of workers iv) All of the above
17. Payroll shows :
i) Gross wages ii) Deductions
iii) Net wages iv) All of the above
18. Deductions allowed as per payment of wages Act include :
i) House rent ii) Income tax
iii) P.F. Deductions iv) All of the above
19. Wages sheet shows :
i) Gross wages ii) Deductions
iii) Net wages iv) All of the above
20. Payslip is prepared for :
i) Individual worker ii) All the workers
iii) Departmental workers iv) Temporary workers
Chapter – 6 : Labour Turnover

1. Labour turnover is
i) Turnover of goods ii) Turnover of labour
iii) Stock Turnover iv) Debtor's Turnover
2. Labour Turnover is caused by
i) Low wages ii) Bad working conditions
iii) Unscientific selection iv) All of the above
3. Labour Turnover is calculated by

i) Separation method ii) Replacement method
iii) Flux method iv) All of the above
4. In a firm, there were 750 employees on 1st April. During the month 120 employees
were left and 250 employees were appointed. No. of the employees on 30th April were
i) 1,000 ii) 880
iii) 550 iv) 630
5. Labour Turnover leads to :
i) High cost ii) Low cost
iii) Low productivity iv) (i) & (iii)
6. Cost of labour turnover may be :
i) Preventive cost ii) Replacement cost
iii) Both (i) & (ii) iv) none of the above
7. Medical services cost is :
i) Replacement cost ii) Preventive cost
8. Cost of welfare services is a :
i) Preventive cost ii) Replacement cost
9. Pension scheme can :
i) Increase labour turnover ii) Decrease labour turnover
iii) Maintain labour turnover iv) All of the above
10. Replacement cost is associated with :
i) Replacement of labour ii) Appointment of labour
iii) Termination of labour iv) All of the above
11. Cost of accident is :
i) Replacement cost ii) Preventive cost
iii) Sunk cost iv) All of the above
12. Labour Turnover may be caused due to :
i) Low wages ii) Lack of proper HR Policies
iii) Lack of Training iv) All of the above
13. Unavoidable causes of labour Turnover may be :
i) Death ii) Retirement
iii) Marriages iv) All of the above
14. Labour Turnover can be reduced by :
i) Exit interview ii) Better facilities
iii) Better pay iv) All of the above
Chapter – 7 : Remuneration Systems

1. The method of remuneration to give stability of labour cost of the employers is
i) straight piece work ii) premium bonus
iii) measured day work
2. The following is the most relevant use of the clock card
i) to measure employee efficiency
ii) to facilitate payment for the time spent on the work premises
iii) to calculate bonus payment
3. Under Halsey Premium Plan, ____ % of time saved is shared by employer
i) 110 ii) 115 iii) 50
4. A worker has a time rate of ` 15 per hour. He makes 720 units of a component
(standard time 5 minutes per unit) in a week of 48 hours. His total wages including
Rowan Bonus for the week is
i) ` 792 ii) ` 820 iii) ` 840 iv) ` 864
5. The standard time required per unit of a product is 20 minutes. In a day of

8 working hours, a worker gives an output of 30 units. If he gets a time rate of ` 20
per hour, his total earnings under Halsey Plan was
i) ` 200 ii) ` 192 iii) ` 180 iv) ` 160
6. Out of the following which wage system is not treated as an Individual incentive wage
system?
i) Bedeaux plan ii) Taylor's different piece rate plan
iii) Merrick's multiple rate system iv) Co–partnership
7. Aasharam completes a work in 8 hours instead of 10 hours. Labour rate per hour is
` 5. What he will earn as per Rowan plan?
i) ` 40 ii) ` 48 iii) ` 50 iv) ` 45
8. "(Actual hours worked ` Rate per hour) + (Time saved ` 50% rate per hour)". Out of
the following in which system the amount of wages is calculated?
i) Halsey plan ii) Rowan plan
iii) Piece Rate System iv) Taylor's plan
9. The difference between hours paid and hours worked is called :
i) Idle time ii) Standard time
iii) Normal time iv) Time saved
10. The flux rate method of labour turnover considers :
i) Employees left ii) Employees joined
iii) Employees joined & left iv) Employees replaced
11. Overtime is paid to workers for extra time worked than _____ working hours
specified.
i) Extra ii) Additional
iii) Normal iv) Idle
12. A worker who does not work in the factory premises but works at his home is called
is :
i) outworker ii) contract
iii) temporary iv) casual
13. The method which does not differentiate between efficient and inefficient worker is :
i) Time rate method ii) Piece rate method
iii) Halsey Plan iv) None of the above
14. The method which differentiate between efficient and inefficient workers is :
i) Time rate ii) Piece rate
iii) Rowan plan iv) None of the above
15. The method acceptable to labour union is :
iii) Rowan plan iv) Halsey plan
16. The method required to improve productivity is :
iii) Rowan plan iv) Halsey plan
17. Under Taylor’s Differential Piece Rate Plan, the different rates fixed are :
i) 2 ii) 3 iii) 4 iv) 5
18. Under Taylor’s Differential Piece Rate plan efficient workers are paid :
i) 100% of normal rate ii) 120% of normal rate
iii) 150% of normal rate iv) None of the above
19. Taylor’s Differential piece rate plan penalises :
i) Efficient workers ii) Inefficient workers
iii) Average workers iv) None of the above
20. Efficiency of workers is measured on the basis of :
i) Time taken ii) Standard time
iii) Time allowed iv) None of the allowed
Chapter – 8 : Idle Time

1. Idle time is
i) Paid by the employer ii) Time wasted by the workers
iii) Not paid by the employer iv) All of the above
2. Idle time may be caused due to
i) Power failure ii) Machine breakdown
iii) Waiting for work iv) (i) & (ii)
3. Industrial cause of idle time is
i) Strike ii) Lockouts
iii) Population movement iv) All of the above
4. Wages in normal idle time should be charged to
i) Office overheads ii) Factory overheads
iii) Selling overheads iv) Distribution overheads
5. Overtime
i) Causes excess labour cost ii) Increases productivity
iii) Increases labour turnover iv) all of the above
6. Tea and lunch break is :
i) Normal Idle time ii) Abnormal Idle Time
iii) Overtime iv) none of the above
7. Time spent to overcome fatigue is :
i) Normal Idle Time ii) Abnormal Idle Time
8. Machine setting time is :
9. Travelling time from one job to another job is :
10. Machine breakdown is :
iii) Overtime iv) All of the above
11. Waiting for tools is :
i) Abnormal Idle time ii) Normal Idle time
iii) Overtime iv) All of the above
12. Strikes and lockout is :
i) Normal Idle time ii) Abnormal Idle Time
13. Power failure is :
i) Abnormal Idle Time ii) Normal Idle Time
iii) Overtime iv) None of the above
14. Overtime premium at Normal Rate is treated as :
i) Direct labour ii) Indirect labour
iii) Factory overheads iv) none of the above
15. Overtime premium paid due to negligence of a worker is charged to the concerned :
i) Worker ii) Department
iii) Overheads iv) All of the above
16. Overtime premium due to abnormal causes is charged to :
i) Financial P & L A/c ii) Costing P & L A/c
iii) Balance sheet iv) All of the above
17. Overtime increases :

i) Depreciation of P & M ii) Productivity
iii) Efficiency of the organisation iv) None of the above
Chapter – 9 : Overheads
1. Indirect costs cannot be identified with a particular cost centre are shared between
cost centre using
i) a method of apportionment
ii) a method of allocation
iii) a recovery rate
2. The method of apportionment suitable for allocating rent of building between cost
centres
i) number of employees ii) machine hours
iii) KWH iv) floor area
3. The allotment of whole items of cost to cost unit is called
i) cost allocation ii) cost apportionment
iii) cost classification iv) overhead absorption
4. Administrative overheads are recovered as a percentage of
i) direct materials
ii) prime cost
iii) works cost
5. Selling and distribution overheads are absorbed on the basis of
i) rate per unit ii) percentage on works cost
iii) percentage on selling price iv) any of these
6. Depreciation on machine is apportioned on the basis of
i) machine cost ii) machine hours
iii) labour hours iv) labour cost
7. Power is allocated on the basis of
i) H.P. of machines ii) cost of machines
iii) machine hours of machine iv) labour hours
8. Employee welfare expenses are allocated on the basis of
i) number of employees ii) labour hours
iii) machine hours iv) prime cost
9. Electricity charges are allocted on the basis of
i) number of light points ii) cost of machines
iii) labour hours iv) factory cost
10. Charging overheads to invidual unit is known as :
i) allocation ii) apportionment
iii) absorption iv) collection
11. Direct expenses are also known as :
i) Chargeable expenses ii) Prime cost
iii) Variable cost iv) Period cost
12. The process of arranging items into groups accoridng to their degree of similarity is
called :
i) Classification ii) Analysis
iii) Identification iv) Ascertainment
13. The cost directly attributable to a department is called as :
i) Allotment ii) Allocation
iii) Recovery iv) Charging
14. The process of re–distribution of overheads of support department to production
departmnet is called as :
i) Secondary distribution ii) primary distribution
iii) Repeat distribution iv) none of the above
15. Total of indirect material, indirect labour and indirect expenses is called as :
i) indirect overheads ii) Overheads cost
iii) works overheads iv) Chargeable cost
16. The process of charging the traceable overheads to cost centres is called as :
i) Overheads allocation ii) Overheads charging
iii) Overheads allotment iv) None of the above
17. Research cost should be treated as :
i) Production overheads ii) Period cost
iii) Variable cost iv) None of the above
18. Storekeeping expenses are allocated on the basis :
i) No. of material requisitions ii) Area
iii) Direct labour hours iv) None of the above
19. Salary of works manager is a :
iii) Selling overheads iv) All of the above
20. Insurance is a :
i) Fixed overheads ii) Variable overheads
iii) Semi–variable overheads iv) None of the above
21. Assigning code numbers to a group of overheads is called as :
i) Classification ii) Codification
iii) Analysis iv) None of the above
Chapter – 10 : Computation of Overhead Rates

1. The process by which cost items are charged direct to a cost unit is called
i) absorption ii) apportionment
iii) allocation iv) allotment
2. A common absorption rate used through out the following for all jobs and units of
output irrespective of the department in which they were produced is called
i) machine hour rate ii) department absorption rate
iii) overall absorption rate iv) blanket absorption rate
3. When allocating service department costs to production departments, the method
that does not consider different cost behaviour pattern is the
i) step method ii) reciprocal method
iii) simple rate method iv) dual rate method
4. Machine hour rate is followed when
i) most of the work is done by machine
ii) most of the work is done by labour
iii) one operator uses several machines
5. Labour hour rate is followed when most of the work is done by
i) labour
ii) machines
iii) different groups of machines
6. When overheads recovered in costing are less than actual overheads incurred it is
called :
i) underabsorption ii) over absorption
iii) recovery iv) none of the above
7. When overheads recovered in costing are more than actual overheads incurred it is
called :
i) underabsorption ii) over absorption
iii) application iv) all of the above
8. Factory overheads are recovered as a :

i) % of Direct wages ii) % of cost of production
iii) % of sales iv) None of the above
9. Office overheads are recovered as a % of :
i) Direct materials ii) Direct wages
iii) Factory cost iv) None of the above
10. Labour hour rate is calculated by the equation :
Labour overheads Overheads
i) ii)
Labour hours Labour hours
Direct Materials
iii) iv) None of the above
Direct Labour hours
11. Machine hour rate is calculated by the equation :
Overheads Direct Materials
i) ii)
Machine hours Machine hours
Direct labour
iii) iv) None of the above
Machine hours
12. Insurance is apportioned on machines on the basis of :
i) Insured value of each machine ii) Invoice price of each machine
iii) Area iv) Cost of machine
13. Machine expenses are :
i) Depreciation on machine ii) Rent of premises
iii) Salary of supervisors iv) All of the above
14. Machine expenses are :
i) Depreciation of Building ii) Repairs & maintenance
iii) Power iv) both (ii) & (iii)
Chapter – 11 : Cost Classification

1. Notional cost is known as :
i) Imputed cost ii) Variable cost
iii) Opportunity cost iv) Out of pocket cost
2. Unavoidable cost is called as :
i) Urgent cost ii) Inexcable cost
iii) Implicit cost iv) Explicit cost
3. Interest on capital on :
i) Imputed cost ii) Sunk cost
iii) overheads cost iv) avoidable cost
4. Cost incurred in closing down a department is called as :
i) Abandonment cost ii) Sunk cost
iii) shutdown cost iv) urgent cost
5. The cost involve payment to other parties is called as :
i) out of pocket cost ii) book cost
iii) sunk cost iv) urgent cost
6. Cost which must be incurred to continue the operations is called :
i) urgent cost ii) opportunity cost
iii) Implicit cost iv) Traceable cost
7. Dock charges is a :
i) Direct cost ii) Indirect cost
iii) Urgent cost iv) Production cost
8. Drawing office salaries is a :
i) Factory overheads ii) Office overheads
iii) Selling overheads iv) Distribution overheads
9. Prime cost is equal :

i) Direct cost ii) Direct cost + Factory overheads
ii) Factory cost iv) Cost of production
10. Cost of rectification is a :
i) Factory overheads ii) office overheads
iii) selling overheads iv) direct cost
11. Stock of WIP is adjusted to :
iii) Selling overheads iv) Direct materials
12. In costing closing stock is valued at :
i) Cost of production ii) Factory cost
iii) Market price iv) Realisable value
Chapter – 12 : Reconciliation of Cost and Financial Accounts

1. Premium on issue of shares is
i) Shown in costing profit and loss A/c iii) Ignored
ii) Shown in financial profit and loss A/c iv) None of the above
2. Notional rent is taken in
i) Cost A/c ii) Financial A/c
iii) Balance sheet iv) Ignored
3. Excess of overheads in costing as compared to profit and loss A/c is
i) Over absorption of overheads iii) Both (i) & (ii)
ii) Under absorption of overheads iv) None of the above
4. Interest on investment increases
i) Financial profit ii) Costing profit
iii) Assets iv) None of the above
5. Loss on sale of capital asset is
i) Added to financial profit
ii) Added to costing profit
iii) Ignored from cost A/c
iv) None of the above to get costing profit
6. Over valuation of closing stock in Cost Accounts
i) Increases costing profit iii) Decreases costing profit
ii) Increases financial profit iv) Decreases financial profit
7. Interest on Bank Deposits is
i) Credited in costing P & L A/c iii) Debited in costing P & L A/c
ii) Credited in financial P & L A/c iv) Debited in Financial P & L A/c
8. Dividend paid on share capital is
i) Debited to costing P & L A/c iii) Credited to costing P & L A/c
ii) Debited to financial P & L A/c iv) Credited to financial P & L A/c
9. Over absorption of overheads in costing
i) Decreases costing profit iii) Increases costing profit
ii) Increases financial profit iv) Both (i) & (ii)
10. Under valuation of opening stock in costing
i) Increases costing profit iii) Decreases costing profit
ii) Decreases financial profit iv) Both (i) & (ii)
11. Donations paid is
i) Debited to costing P & L A/c iii) Ignored in costing
ii) Debited to financial P & L A/c iv) (ii) & (iii)
II. State with reasons whether following is True of False :

1. Financial accounts provide information for determination of income.
2. Financial accounting provides information for fixation of prices.
3. Cost information is useless for price fixation.
4. Cost accounting is an essential tool of management.
5. The function of cost accounting is cost control.
6. The objective of cost accounting is to facilitate cost estimation.
7. A cost centre may be a person.
8. ‘Per tonne’ is a cost unit in steel industry.
9. Financial accounting reveals inefficiencies of workers.
10. Direct cost cannot be allocated to the cost unit.
11. Indirect cost can be allocated to the cost unit.
12. Marginal cost is variable cost.
13. Overheads are direct cost.
14. Direct material is an indirect cost.
15. Conversion cost is equal to direct wages and factory overheads.
16. Interest on capital is an imputed cost.
17. Fixed cost changes according to the level of activity.
18. Lubricants are direct materials.
19. Packing charges are distribution cost.
20. Trial run cost is called as pre-production cost.
21. Replacement cost is the cost of replacing an asset.
22. Relevant cost helps the manager in taking a right decision.
23. Depreciation is a book cost.
24. Maintenance of building is a postponable cost.
25. Cost of a product is decided as per cost attach concept.
26. Interest on capital is a non-cost item.
27. Cost sheet shows total cost and cost per unit.
28. Prime cost includes factory overheads.
29. Cost of production includes selling overheads.
30. Carriage on material increases cost of materials.
31. Waste having realisable value is called as scrap.
32. Fixed cost remains constant irrespective of output.
33. Variable cost is also called as product cost.
Chapter – 2 : Material Costing

1. Purchase order is an order to Stores Department to issue materials.
2. EOQ is that quantity which is most economical to order.
3. EOQ is also called as re-order quantity.
4. Investment in inventory should be optimised by maintaining low stock levels.
5. Direct materials is the materials which can be directly related to the cost centre.
6. The stock in hand may exceed the maximum stock level.
7. Stock levels are fixed up for inventory control.
8. In no case, material should go below minimum level.
9. The objective of scientific purchasing is to procure materials of good quality.
10. Purchase requisition requests the supplier to supply materials.

11. Invitation to tender is signed by the Purchase Officer.
12. Purchase Order is a request to the supplier to send information about materials.
13. Delivery challan is an evidence of delivery of materials.
14. Material Inspection Note is forwarded to the Stores Department.
15. Bin Card gives information about position of each item.
16. Stores Ledger shows movement of materials showing quantity and value.
17. Material Abstract is the analysis of material issued against the material
requisitons.
18. Under Perpetual Inventory System, store balance is ascertained after every
receipt and issue of material.
Chapter – 3 : Material Cost – Documentation

1. Purchase order is prepared by marketing manager.
2. Purchase order is prepared in 5 copies.
3. The function of Receiving Department is to open the packages.
4. Material Requisition is signed by foreman.
5. Bill of material is signed by Stores Department.
6. Material Inspection Note is signed by sales manager.
7. Goods Received Note is prepared by Finance Department.
8. BIN Card shows receipt, issue and balance record of materials.
9. Material Transfer Note shows Transfer of material from one Department to
another Department.
10. EOQ is most economical size of order.
11. Carrying cost is incurred to hold inventory in the stores.
12. Ordering cost is incurred to purchase materials.
13. Order should be placed with the supplier when Inventory touches maximum
level.
14. ABC analysis is Activity Based costing.

1. FIFO Method of pricing of materials results in higher profits.
2. Valuation of closing stock is the same under FIFO and LIFO Method.
3. Bin Card is the same as stores ledger.
4. LIFO and Market Price Method are not same.
5. If a company wants to maximise net income, it would select FIFO Method.
6. LIFO Method of pricing issues is useful during the period of inflation.
7. Weighted Average Method of pricing issues involves adding different prices and
dividing by the number of such prices.
8. Under FIFO Method, materials purchased first are deemed to be issued last.
9. Under LIFO Method, materials purchased last are deemed to be issued first.

1. The objective of Time Keeping is fixation of wages.
2. The objective of Time Booking is ascertainment of labour cost.
3. Attendance Register is a method of Time Booking.
4. Salary slip shows time spent by a worker on every job.
5. Job card records idle time.
6. Idle time is the time during which workers remain ideal.
7. Casual workers in place of Retrenched workers.
8. The workers who work outside the factory premises are called outworkers.
9. Payroll Accounting is concerned with calculation of wages.
10. Payroll shows Gross wages.
11. Payslip is prepared for a group of workers.
12. Idle facility and idle time are the same.
13. Overtime premium is always treated as factory overheads.
14. Abnormal idle time wages is included in cost of production.
15. Idle time is the difference between time clocked and time booked.

1. Labour Turnover is the movement of people out of the organisation.
2. Labour Turnover is the accession of people during a certain period.
3. Lower rate of labour turnover indicates healthy sign of H.R. Department.
4. Cost of welfare services is a preventive cost of labour turn over.
5. Pension scheme can increase rate of labour turnover.
6. Labour Turnover may be caused due to low wages.
7. Labour Turnover can be reduced by Better Pay.
Chapter – 7 : Remuneration System

1. Idle time is costly.
2. A worker who does not work in the factory premises is called as casual worker.
3. Taylor’s Differential piece rate plan does not punish the inefficient worker.
4. Time rate method is acceptable to labour union.
5. Piece Rate Plan improves productivity.
6. 4 different rates are fixed under Taylor’s Differential Piece Rate Plan.
7. Efficiency of workers is measured on the basis of Time Taken for performance of
a job.
8. Difference between Std. time and time taken shows efficiency of the workers.
9. If actual time taken is less than standard time, it is called Time saved.
10. Piece Rate Plan differentiate between efficient and inefficient workers.
11. Time Rate Plan motivates the efficient workers.
12. Piece Rate Plan motivates the efficient workers.
13. In Halsey Plan Bonus is paid to the workers on the basis of Time saved.

1. Tea & lunch break is normal idle time.
2. Machine setting time is abnormal idle time.
3. Machine Breakdown is Abnormal idle time.
4. Waiting for tools is normal idle time.
5. Strike and lock out time is abnormal idle time.
6. Overtime premium at normal rate is treated as direct labour.
7. Overtime premium due to abnormal causes is charged to Financial P & L A/c.
8. Overtime increases depreciation of Plant & Machinery.
1. Cost of packing is production overheads.
2. Bad Debts is factory overheads.
3. Interest on capital is included in cost of production.
4. Depreciation should be excluded from cost accounts.
5. Scrap can be realised.
6. Waste can be realised.

7. Power cost is allocated over the departments on the basis of H.P. of machines.
8. Overheads include indirect material indirect labour and indirect expenses.
9. Lighting charges are allocated on the basis of No. of light paints.
10. Employee welfare expenses are allocated on the basis of light points.
11. Rent is allocated on the basis of Area.
12. Insurance of Assets is allocated on the basis of Asset values.
13. Supervisor’s salary is allocated on the basis of time spent.
14. Cost of stores is allocated on the basis of Direct Materials.
15. Indirect wages are allocated on the basis of Direct wages.

1. Underabsorption refers to charging less overheads in costing than financial
accounting.
2. Overabsorption refers to charging more overheads in costing than in financial
accounting.
3. Factory overheads are recorded as a % of cost.
4. Factory overheads are recoved as a % of Direct wages.
5. Office overheads are recovered as a % of Direct materials.
6. Machine hour rate is overheads ÷ Machine hours.
7. Machine expenses are repairs of building.
8. Overabsorption of overheads brings down costing profit.
9. Overabsorption of overheads increases costing profit.
10. In labour intensive industries machine hour rate is not suitable.
11. Overabsorption or underabsorption may be due to defective method of
absorption.
12. Rent is a standing charge.
13. Heating & lighting is a machine expense.
14. Power is a machine expense.
15. Obsolescene occurs due to technological advancement.

1. Interest on Capital is imputed cost.
2. Inexcable cost is avoidable cost.
3. Cost incurred in closing down a department is called as sunk cost.
4. Cost which must be incurred to continue the operations is called as urgent cost.
5. Direct material is included in prime cost.
6. Factory rent is included in administrative overheads.
7. Prime cost is Direct cost.
8. Prime cost is Indirect cost.
9. Factory cost includes Prime cost plus offfice overheads.
10. Cost of production includes factory cost plus office overheads.
11. Total cost includes cost of production plus selling overheads.
12. Inventory valuation is done at cost of production.
13. Inventory valuation is done at market value.
14. Cost of production includes prime cost plus selling overheads.
15. Sale of scrap is added to cost of materials.
16. Sale of scrap of material is deducted from factory overheads.
17. Carriage inward should be added to purchases.
18. Carriage outwards should be considered selling overheads.
19. Cost of rectification of defectives is a part of factory overheads.

1. Underabsorption of overheads decreases costing profit.
2. Loss on sale of furniture is shown in financial accounting.
3. Interest received on Bank Deposit is purely financial in nature.
4. Transfer to General Reserve is an item of cost accounts.
5. Underabsorption of overheads increases costing profit.
6. Under integrated system of accounting both cost accounts and financial accounts
are maintained in the same set of books.
7. Under Non–integrated system of accounting, both cost accounts and financial
accounts are maintained separately.
8. Abnormal loss is considered in costing.
9. Profit on sale of investment is not considered in cost accounts.
10. Retrenchment compensation is considered in costing.
11. Fines and penalties reducing financial profit.
12. Notional cost decreases costing profit.
13. Dividend received increases financial profit.
14. Overvaluation of opening stock in costing decreases costing profit.
15. Overvaluation of opening stock in Financial Accounting reduces Financial profit.
16. Under valuation of closing stock in costing reduces costing profit.
17. Under valuation of closing stock in costing increases costing profit.
18. Difference in Depreciation in costing and financial accounting distinguishes
costing profit from financing profit.
III. Fill in the Blanks :

1. Cost Accounting system is developed for _________.
2. Cost Accounting is an _________ reporting system.
3. A location for which cost is incurred is a _________.
4. Product cost is _________ cost.
5. Cost which can be identified with the output is called as _________.
6. Interest on capital is _________ cost.
7. Overheads incurred in connection with factory is called _________ overheads.
8. The cost which remains constant irrespective of output is called _________ cost.
9. Direct labour and factory overheads is called _________ cost.
10. Cost of designing is _________ expenses.
11. Variable cost per unit remains _________.
12. Fixed cost per unit _________.
13. Cost relating to capacity is called _________ cost.
14. Cost which is unaffected by change in output is called as _________.
15. Cost _________ is broader in scope and comprises costing, cost accounting cost
control and cost audit.
16. _________ is that portion of cost which is consumed.
17. _________ is that part of cost which is consumed but did not result in Revenue.
18. Asset is an _________ _________.
19. Cost _________ is verification of cost accounts.
20. _________ have no access to cost records.
21. A tonne of coal is a cost _________.
22. In case of paper the cost unit is _________.

23. In case of power the cost unit is _________.
24. In case of gas the cost unit is _________.
25. In case of interior decoration the cost unit is _________ _________.
26. The objective of _________ _________ is to maximise ROI.
27. Anything for which a separate measurement of cost is required is _________
_________.
28. The example of cost object as product is _________.
29. placement of an order is a cost object when it is _________.
30. Timber in furniture is a _________ raw material.
31. Milk and cream is a _________ raw material in ice cream.
32. Tin packing of ghee is a _________ packing material.
33. Carpenter in a furniture unit is a _________ labour.
34. Halwai in confectionary unit is a _________ labour.
35. Labour in pay roll depp. is an _________ labour.
36. Exciseduty based on output is _________ expenses.
37. Lubricating oil is a _________ overhead.
38. Cost of cloth in a shirt is _________ material.
39. Normal cost is treated as a _________.
40. _________ cost indicates what the cost should have been.
41. Relevant cost is _________ for decision making.
42. The cost incurred by past decision is _________ cost.
43. Fixed cost which continues to be incurred even when plant is temporarily
shutdown is called as _________ cost.
44. The cost which involves cash outlay is _________ _________ _________ cost.
45. The cost of next best alternative is _________ _________.
46. The cost which does not involve any cash outlay is _________ cost.
47. Increase or decrease in total cost due to charge in activity level is _________
_________.
48. Current purchase price of an identical asset is called as _________ _________.
49. The cost which cannot be avoided is called as _________ cost.
50. The cost which can be avoided by managerical decisions is called as _________
cost.
51. Loss on sale of fixed asset is _________ _________ item.

1. The most important element of cost is _________.
2. Request to the supplier to supply material is an _________.
3. _________ _________ are fixed to control inventory.
4. _________ _________ indicates maximum stock to be maintained.
5. Economical size of order is called as _________.
6. _________ _________ _________ shows minimum stock to be maintained.
7. Scientific purchasing begins with _________.
8. Goods received note is prepared by _________ _________.
9. _________ _________ shows stock position at the bin.
10. _________ _________ _________ is decided on the basis of ordering cost and
carrying cost.
11. _________ _________ _________ locks of maximum working capital.
12. _________ analysis shows classification of inventory into three categories.
13. _________ class items requires loose control.

14. _________ class items are costliest.
15. _________ class items requires more attention.
16. _________ class items require moderate control.

1. Purchase Requisition is a _________ of material.
2. _________ _________ shows stock position of Bin.
3. _________ _________ _________ shows movement of each item of material.
4. Material control includes control over _________.
5. Under _________ _________ _________ stock is verified at the end of a certain
period.
6. Under _________ _________ _________ stock is verified continuously.
7. _________ _________ _________ is a technique of selective control.
8. _________ _________ _________helpful for calculation of cost of material of a job.

1. Issue of material priced at latest purchase price under _________ method.
2. Under rising prices pricing of material issued at latest price under _________
method.
3. Fluctuation in prices are averaged out under _________ _________ method.
4. Inventory valuation is done at latest price under _________ method.
5. _________ method is recognised under AS 2.
6. _________ method is followed when lots of materials are not identifiable.
7. _________ _________ methods are followed when lots of materials are identifiable.
8. Inventary is valued at more recent prices under _________ method.
9. _________ _________ decrease cost of materials.
10. Taxes and duties _________ cost of material.
11. _________ method is logical.
12. Under _________ method cost of goods sold represents cost of earlier purchases.
13. Under _________ method cost of goods sold represents cost of recent purchases.
14. Under rising prices higher income is reported under _________ method.
15. Under rising prices lower income is reported under _________ method.
16. _________ method is advantageously used in process industries.

1. Dial Time recorder has _________ holes.
2. _________ card is placed at the entrance of the factory.
3. Time _________ is essential for costing purpose.
4. _________ _________ _________ shows effective use of time.
5. Piece workers are paid wages on _________ _________ basis.
6. Casual workers are appointed in place of _________.
7. Time _________ is necessary for pay roll.
8. Time _________ is done to ascertain labour cost.
9. _________ _________ sheet is the method of time booking.
10. The card which shows time spent by a worker is called _________ card.
11. Workers who work outside the factory premises are called as _________ works.
12. _________ _________ accounting is conncerned with computation of wages.

13. _________ roll shows details of wages paid.
14. _________ sheet shows gross wages.
15. _________ _________ is prepared for individual worker.
16. _________ labour cannot be readily identified.
17. _________ _________ is a system of recording arrival and departure time of each
worker.
18. Muster roll is kept at the _________ of the factory.
19. _________ _________ facilitates the reconciliation of gate time with work time.
20. Usually _________ workers are paid daily basis.
21. _________ _________ is a periodic statement of wages.
22. Net wages are gross wages less _________.
23. Analysis of wages paid to each worker is called _________ abstract.

1. _________ _________ is turnover of workers.
2. Law wages cause _________ _________.
3. Flux method is used to calculate _________.
4. Labour turnover leads to high _________.
5. Cost of labour turnover may be _________ or replacement.
6. Medical services cost is _________ cost.
7. Cost of welfare services is _________ cost.
8. pension scheme can _________ labour turnover.
9. Replacement cost is associated with _________ of labour.
10. Cost of accident is _________ cost.
11. Unavoidable cause of labour turnover may be _________ _________ _________ of
employee.
12. Exit interview can _________ labour turnover.

1. Under _________ _________ system wages are paid at a fixed rate.
2. Under _________ _________ system output of worker is not relevant.
3. Under _________ _________ system wages are guaranteed for time taken.
4. _________ _________ system reduces rough handling of machines.
5. _________ _________ system does not provide incentive to efficient workers.
6. _________ _________ system brings down output.
7. _________ _________ system is suitable when quality of work is more important.
8. Under piecerate system wages are paid at a _________ _________ per _________.
9. Under _________ _________ system time spent on job is not considered.
10. _________ _________ _________ system provides incentives to efficient workers.
11. _________ _________ system reduces tendency of workers to go slow.
12. _________ _________ system is suitable where task can be readily measured.
13. _________ _________ system is suitable when quality of work is important.
14. Under _________ _________ bonus is paid to the workers on the basis of time
saved.
15. Under _________ _________ bonus is paid to the workers in proportion to time
saved and time allowed.
16. Under _________ _________ _________ _________ plan two rates are fixed.
17. Under _________ _________ _________ _________ plan three piece rates are fixed.
18. _________ _________ _________ _________ plan does not penalise the workers who
produces below standard output.

1. _________ time is paid by the employer.
2. Idle time is caused by _________ _________.
3. Normal Idle Time wages are charged to _________ overheads.
4. _________ time causes excess labour cost.
5. Tea & Lunch break is _________ idle time.
6. Time spent to overcome fatigue is _________.
7. Machine setting time is _________ idle time.
8. Traveling time from one job to another job is _________ idle time.
9. Machine breakdown is _________ idle rate.
10. Working for tools is _________ idle time.
11. Power failure is _________ idle time.
12. Overtime premium increases _________ of plant & machinery.
1. Indirect cost is known as _________.
2. Cost incurred to secure orders is _________.
3. Material which cannot be charged directly _________.
4. Rent of building is _________ overheads.
5. Cost which can be controlled is _________ cost.
6. Cost of abnormal idle time is _________ overheads.
7. Depreciation on machinery is charged under _________ overheads.
8. Royalty on production is a _________charge.
9. Costing department expenses are considered as _________ overheads.
10. Stationery in production dept is _________ material.
11. Salary of office clerk is _________ labour.
12. Rent is _________ expense.
13. Overheads are classified on the basis of behaviour as _________ _________
_________.
14. Overheads are classified on the basis of function as _________ _________ _________.
15. Cost of catelogues is _________ _________.
16. Rent of premises is _________ overheads.
17. Telephone charges is _________ _________ overheads.
18. Actual benefit received by the department is _________ of apportionment of
overheads.
19. Compensation to workers is apportioned on the basis of _________.
20. Store keeping expenses are apportioned on the basis of _________ material.

1. The process of charging cost to a cost unit is _________.
2. Labour hour rate is followed in _________ intensive industry.
3. Machine hour rate is followed in _________ intensive industry.
4. Recovery of overheads in costing less than actual is _________ of overheads.
5. Recovery of overheads in costing more than actual is _________ of overheads.
6. Factory overheads are recovered as a % of _________ wages.
7. Office overheads are recovered as a % of _________ _________ cost.
8. Labour hour rate = _________.
9. Machine hour rate = _________.
10. Depreciation of machine is _________ expense.

11. Repairs and maintenance is _________ expense.
12. Production overhead rate is suitable when output is _________.
13. % of direct material cost is suitable when material prices do not _________ much.
14. % of Direct wages is suitable when direct _________ is major factor of production.
15. Direct labour hour rate is suitable when labour is _________ factor of produciton.
16. Machine hour rate is suitable when machine is a _________ factor of production.
17. Rent is a _________ charge.
18. Insurance is a _________ charge.
19. Power is a _________ expense.
20. Lubricating oil is a _________ expense.
21. Machine hour rate takes into account _________ _________.

1. _________ cost is imputed cost.
2. Interest on capital is _________.
3. Drawing office salaries _________ overheads.
4. Prime cost is _________ cost.
5. Overheads are _________ cost.
6. Factory Cost is = Prime Cost + _________.
7. Cost of Production is = Factory Cost + _________.
8. Cost of Sales = Cost of Production + _________.
9. Sales = Total _________ + Profit.
10. In costing stock valuation is done at _________ of _________.
11. Cost of rectification is _________ overheads.
12. Stock of WIP is adjusted to _________ overheads.
13. Sale of scrap of material is deducted from cost of _________.
14. Sale of factory scrap is deducted from _________ overheads.
15. Profit on sale of asset is a _________ _________ item.
16. Prelim-Expenses written off is a _________ _________ item.

1. _________ facilitates internal control.
2. Dividend received is shown in _________ accounts only.
3. Overheads recovered in costing is more than actual it is called _________.
4. Less overheads recovered in costing is called _________.
5. Donations paid reduces _________ profit.
6. Interest on capital reduces _________ profit.
7. Underabsorption of overheads in costing increases _________ profit.
8. Premium on issue of shares is shown in _________ P & L A/c.
9. Notional Rent is taken in _________ P & L A/c.
10. Interest on investment increases _________ profit.
11. Over valuation of closing stock in costing increases _________ profit.
12. Under valuation of closing stock in costing decreases _________ profit.
13. Over absorption of overheads in costing decreases _________ profit.
14. Under absorption of overheads in costing increases _________ profit.
15. Dividend paid on shares is debited to _________ P & L A/c.
16. Donation paid is debited to _________ P & L A/c.
17. Under valuation of opening stock in finance increases _________ profit.
18. Overvaluation of opening stock in finance _________ costing profit.
IV. Match the Followings :

1.
Column ‘A’ Column ‘B’
a) Cost Accounting Includes i) Useful for Inside
b) Costing Information ii) Cost Object
c) T.V. iii) Per 100 bricks
d) Bricks iv) Per Hour
e) Computer Service v) Costing, Cost Accounting
vi) Direct Labour
2.
a) Wages of Carpenter i) Direct Labour
b) Wages of Tailor in Tailoring ii) Indirect Labour
c) Wages of Workers in Time Keeping iii) Indirect Labour
d) Wages of Workers in Packing Dept. iv) Primary Packing
e) Tin for Ghee v) Direct Wages
vi) Secondary Packing
3.
a) Cloth in Garments i) Basic Material
b) Paper in Books ii) Primary Packing Material
c) Bag for Cement iii) Primary Packing Material
d) Plastic Packing for Milk iv) Primary Packing Material
e) Bottle for Waste v) Direct Labour
vi) Basic Material
4.
a) Wages to stich a shirt i) Normal Cost
b) Cost which is normally incurred ii) Charged to costing P & L
c) Abnormal Cost iii) Pre-determined Cost
d) Estimated Cost iv) Past Cost
e) Sunk Cost v) Imputed Cost
vi) Production Cost

a) Bin Card i) Request to Supply Material
b) Purchase Order ii) Cheapest
c) A Class Items iii) Shows Maximum Stock
d) C Class Items iv) Minimum Stock
e) Maximum Level v) Costliest

f) Minimum Level vi) Stock Position at Bin
G) Average Level Opening Stock + Closing Stock
vii)
2
h) Most Economical Order Size viii) EOQ

a) Purchase Requisition i) Movement of Stock
b) Bin Card ii) Stock Verification Periodically
c) Stores Ledger iii) Stock Verification Done
Continously
d) Periodic Inventory iv) Stock Taking
e) Perpetual Inventory v) Stock Position at Bin
vi) Requirement

a) Issue of Material at Latest Price i) FIFO
b) Inventory at Latest Price ii) FIFO /WA
c) Recognised by AS 2 iii) Average Price Finding
d) W. A. iv) Most Logical
e) FIFO v) When lots are identifiable
f) LIFO vi) LIFO
g) WA vii) When lots are not identifiable
h) FIFO viii) Higher income reported under
rising prices
ix) Perpetual Inventory
x) Base Stock Method

a) Dial Time, Recorder i) Effective Use of Time
b) Clock Card ii) In Place of Absentees
c) Idle Time Card iii) For Pay Roll
d) Casual Workers iv) Computation of Wages
e) Time Keeping v) Individual Workers
f) Daily Time Sheet vi) Reconciliation of Time
g) Pay Roll Accounting vii) Gross Wages Less Deduction
h) Pay Slip viii) Analysis of Wages Paid
i) Muster Roll ix) At the Gate of Factory
j) Job Card x) Workers Working Outside
k) Net Wages xi) Method of Time Book
l) Wage Abstract xii) Paid at Piece Rate

m) Out Workers xiii) At the entrance of factory
n) Piece Workers xiv) 160 Holes
xv) Time Rate
xvi) Idle Time

a) Labour Turnover i) Cause Labour Turnover
b) Low Wages ii) Preventive Cost / Replacement
Cost
c) Cost of Labour Turnover iii) Preventive Cost
d) Medical Services iv) Replacement Cost
e) Accident v) Reduce Labour Turnover
f) Welfare Services vi) Increase Labour Turnover
g) Death vii) Unavoidable Cause of Labour
Turnover
viii) Turnover of Workers
ix) Pension Scheme

a) Time Rate Plan i) No Incentive to Efficiency
b) Time Rate Plan ii) Develops Go Slow tendency
c) Time Rate Plan iii) Provides Incentives to Efficiency
d) Piece Rate Plan iv) No guarantee of Wages
e) Piece Rate Plan v) Two Piece Rates
f) Taylor’s Differential Piece Rate Plan vi) Guaranteed Timer
g) Halsey Plan vii) Bonus for Time Saved
h) Rowan Plan viii) Bonus Proportionated
i) Merick Differencial Plan ix) Three Rates Fixed
j) 120% of Ordinary Piece Rate x) Merick’s Piece Rate
k) 83% of Normal Piece Rate xi) Taylor’s Piece Rate Plan
xii) Emerson’s Plan
xiii) Equal Treatment

a) Idle Time i) Charged to Factory Over heads
b) Normal Idle Time Wages ii) Causes Excess Labour Cost
c) Overtime iii) Normal
d) Tea & Lunch Break iv) Normal
e) Machine Setting Time v) Abnormal
f) Machine Break Down vi) Abnormal

g) Power Failure vii) Depreciation
h) Overtime Premium viii) Accident
ix) Overtime
x) Lower Cost
xi) Paid by the Employer
1.
a) Rent i) H.P. of Machines
b) Lighting ii) Capital Value
c) Power iii) Light Points
d) Depreciation iv) Floor Area
e) Advertising v) Percentage of Sales
vi) Employees
2.
a) Rent i) No. of light points
b) Lighting and Heating ii) Time spent on machine
c) Supervision iii) Cost of each machine
d) Insurance iv) Actual depreciation
e) Depreciation v) Requisition Slip
vi) Floor area occupied by each
machine
3.
a) Stationary i) Indirect Material
b) Office Salary ii) Indirect Labour
c) Rent iii) Indirect Material
d) Cost of Catelogues iv) Semi-Variable Overheads
e) Telephone Charges v) On the Basis of Wages
F) Compensation to Workers vi) Factory Cost
g) Repeated Distribution Method vii) Fixed Cost
viii) Method of Reapportionment of
Same Dept. cost

a) Absorption i) Labour Intensive Industry
b) Labour Hour Rate ii) Machine Intensive Industry
c) Machine Hour Rate iii) Recovery of Less Overhead
d) Under Absorption of Overheads iv) Recovery of More Overheads in
Costing
e) Overabsorption of Overheads v) Machine Expense Process of
f) Depreciation of Machine vi) Charging Overheads to Cost Unit
g) Rent vii) Standing Charge
viii) Machine Expenditure
ix) Insurance

1.
1. Interest on Loan i) Direct Cost
2. Prime Cost ii) Factory Cost plus Office
Overheads
3. Cost of Production iii) Prime Cost plus Factory
Overheads
4. Factory Cost iv) Sales less Total Cost
5. Profit v) Cost plus Profit
vi) Non-Cost Item
2.
a) Overheads are i) Factory Overheads
b) Drawing Office Salaries ii) At Cost of Production
c) Stock Valuation iii) Factory Overheads
d) Cost of Rectification iv) Adjusted to Factory Overheads
e) Stock of WIP v) Deducted from Cost of Materials
f) Sale of Scrap of Materials vi) Non Cost Item
g) Prelim. Exp. w/off vii) Cash Cost
h) Sales viii) Indirect Cost
i) Direct Cost ix) Total Cost + Profit
x) Direct material + Direct labour +
Direct Expenses

1. Reconciliation i) included in cost A/cs
2. Profit on sale of asset ii) credited to financial Profit and
Loss A/c
3. Interest on capital iii) Debited to cost A/c
4. Notional expenses iv) Debited to financial Profit and
Loss A/c
5. Dividend on share capital v) Credited to cost A/c
vi) Shown in financial A/cs
vii) under non-integral system of
accounting
V. Short Answer Questions :

1. What is Cost?
2. What is a Unit of Cost?
3. What is Cost Centre?
4. What is Profit Centre?
5. What is Investment Centre?
6. What is Revenue Centre?
7. What is apportunity Cost?
8. What is out of Pocket Cost?
9. What is Committed Cost?
10. What is a Notional Cost?
11. What is Shutdown Cost?

1. What is EOQ?
2. What is Ordering Cost?
3. What is holding Cost?
4. What is ABC Analysis?
5. What is Bin Card?
6. What is Material Requision?
7. What is Average Stock?
8. What is Maximum Level?
9. What is Re-order level?

1. What is Stores Ledger?
2. What is Bin Card?
3. What is Material Control?
4. What is Periodic Inventory Control?
5. What is perpetual Inventory Control?
6. What is ABC Analysis?

1. What is Stores Ledger?
2. What is FIFO Method?
3. What is LIFO Method?
4. Which Method reported is most logical for inventory valuation?
5. Why higher income is reported under rising prices in FIFO method?
6. Why lower income is reported under rising prices in LIFO method?
7. Which methods are recognised by AS 2 for inventory valuation?
8. Which method is suitable for inventory valuation?
9. Under which circumstance WA method is applicable.

1. What is Dial Time Recorder?
2. What is Clock Card?
3. Why is Time Keeping necessary?
4. Why is Time Booking done?
5. Who is a casual worker?
6. Who is an Outworker?
7. Who is Piece Worker?
8. Why is Muster Roll Required?
9. Why job card required?
10. What is Pay Roll Accounting?
11. What is a Pay Slip?
12. What are the Contents of Pay Slip?
13. What is Wage Abstract?
14. What is Idle Time Card?

1. What is Labour Turnover?
2. What is flux method of labour turnover?
3. What is preventive cost of labour turnover?
4. What is replacement cost of labour turnover?
5. What is the cause of labour Turnover?
6. What is unavoidable cause of labour Turnover?
7. What is the effect of Labour Turnover?

1. What is Time Rate Plan?
2. What is Piece Rate Plan?
3. What is Halsey’s Plan?
4. What is Rowan’s Plan?
5. What is Taylor’s Differential Piece Rate Plan?
6. What is Merickk’s Piece Rate Plan?
7. In what respect there is a difference between Halsey Plan and Rawan’s Plan?
8. What is the difference between Taylor’s plan and merickk’s piece rate plan?
9. Which plan of remuneration is favoured by trade union?

1. What is Idle Time?
2. What is Normal Idle Time?
3. What is Abnormal Idle Time?
4. What is Overtime Premium?
5. What is the treatment for overtime premium?
6. What is the treatment for idle time?
1. What is Overheads?
2. What is Factory Overheads?
3. What is Factory Cost?
4. What is Office Overheads?

5. What is Selling Overheads?
6. What is Fringe Benefits?

1. What is Recovery of Overheads?
2. What is Under Absorption of Overheads?
3. What is Over Absorption of Overheads?
4. What is Labour Hour Rate?
5. What is Machine Hour Rate?
6. What is Standing Charge?
7. What is Machine Expense?

1. What is Direct Cost?
2. What is Direct Labour?
3. What is chargeable Expenses?
4. What is Prime Cost?
5. What is Factory Cost?
6. What is cost of production?
7. What is cost of sales?
Chapter – 12 : Reconciliation
1. What is Non-inteprated system?
2. What is Cost Reconciliation?
3. Why costing profit differ from financial profit?
4. What is over absorption of overheads?
5. What is under absorption of overheads?
VI. Short Notes :

1. Opportunity Cost
2. Relevant Cost
3. Direct Cost
4. Indirect Cost
5. Committed Cost
6. Shutdown Cost
7. Marginal Cost
8. Out of Pocket Cost
9. Cash Cost

1. Bin Card
2. Scientific Purchasing
3. Re-order Level
4. ABC Analysis
5. EOQ
6. Minimum Stock Level

7. Maximum Stock Level
8. Goods Received Note
9. Material Inspection Note

1. Bin Card
2. Stores Ledger
3. Material Control
4. Periodic Inventory System
5. Perpetual Inventory System
6. Material Requisition

1. LIFO Method
2. FIFO Method
3. Weighted Average Method
4. Suitability of Stock Valuation Method

1. Clock Card
2. Muster Roll Accounting
3. Pay Slip
4. Idle Time Sheet
5. Daily Time Sheet
6. Job Card
7. Casual Workers
8. Out Workers
9. Wage Abstract

1. Labour Turnover
2. Causes of Labour Turnover
3. Effect of Labour Turnover
4. Preventive Cost of Labour Turnover
5. Replacement Cost of Labour Turnover

1. Time rate Plan
2. Piece Rate Plan
3. Halsey Plan
4. Rowan Plan
5. Taylor’s Plan
6. Merickk’s Piece Rate Plan

1. Idle Time
2. Normal Idle Time
3. Abnormal Idle Time

4. Causes of Normal Idle Time
5. Causes of Abnormal Idle Time
6. Treatment of Cost of Normal Idle Time
7. Treatment of Cost of Abnormal Idle Time
8. Treatment of Overtime Premium
1. Manufacturing Overheads
2. Selling Overheads
3. Office Overheads
4. Fixed Overheads
5. Fringe Benefits

1. Overheads
2. Classification of Overheads
3. Factory Overheads
4. Office Overheads
5. Selling & Distribution Overheads
6. Machine hour Rate
7. Labour Hour Rate
8. Absorption of Overheads
9. Under absoption of Overheads
10. Over absorption of Overheads

1. Prime Cost
2. Direct Labour
3. Factory Cost
4. Cost of Production
5. Cost of Sales
6. Valuation of Stock

1. Cost Reconciliation
2. Overabsorption of Overheads
3. Under absorption of Overheads
4. Notional Cost
5. Impact of Overvaluation of closing stock on costing profit
6. Impact of under valuation of closing stock on costing profit.

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Objective Questions 1

I. MULTIPLE CHOICE QUESTIONS

Chapter – 1 : Introduction to Cost Accounting

17. Overheads which are incurred in connection with factory are

Chapter – 2 : Material Cost

11. The essentials of sound material control procedure include :

27. Average inventory is :

Chapter – 3 : Material Cost : Documentatiom

Chapter – 4 : Inventory Accounting

Chapter – 5 : Labour Costing

8. The objective of Time keeping is of :

Chapter – 6 : Labour Turnover

3. Labour Turnover is calculated by

Chapter – 7 : Remuneration Systems

5. The standard time required per unit of a product is 20 minutes. In a day of

Chapter – 8 : Idle Time

17. Overtime increases :

Chapter – 10 : Computation of Overhead Rates

8. Factory overheads are recovered as a :

Chapter – 11 : Cost Classification

9. Prime cost is equal :

Chapter – 12 : Reconciliation of Cost and Financial Accounts

II. State with reasons whether following is True of False :

Chapter – 1 : Introduction to Cost Accounting

Chapter – 2 : Material Costing

10. Purchase requisition requests the supplier to supply materials.

Chapter – 3 : Material Cost – Documentation

Chapter – 4 : Inventory Accounting

Chapter – 5 : Labour Costing

Chapter – 6 : Labour Turnover

Chapter – 7 : Remuneration System

Chapter – 8 : Idle Time

6. Waste can be realised.

Chapter – 10 : Computation of Overhead Rates

Chapter – 11 : Cost Classification

19. Cost of rectification of defectives is a part of factory overheads.

Chapter – 12 : Reconciliation of Cost and Financial Accounts

III. Fill in the Blanks :

Chapter – 1 : Introduction to Cost Accounting

22. In case of paper the cost unit is _________.

Chapter – 2 : Material Cost

13. _________ class items requires loose control.

Chapter – 3 : Material Cost : Documentatiom

Chapter – 4 : Inventory Accounting

Chapter – 5 : Labour Costing

12. _________ _________ accounting is conncerned with computation of wages.

Chapter – 6 : Labour Turnover

Chapter – 7 : Remuneration Systems

Chapter – 8 : Idle Time

Chapter – 10 : Computation of Overhead Rates

10. Depreciation of machine is _________ expense.

Chapter – 11 : Cost Classification

Chapter – 12 : Reconciliation of Cost and Financial Accounts

IV. Match the Followings :

Chapter – 1 : Introduction to Cost Accounting

Chapter – 2 : Material Cost

e) Maximum Level v) Costliest

Chapter – 3 : Material Cost : Documentatiom

Chapter – 4 : Inventory Accounting

Chapter – 5 : Labour Costing

l) Wage Abstract xii) Paid at Piece Rate

Chapter – 6 : Labour Turnover

Chapter – 7 : Remuneration Systems

12. _ _ accounting is conncerned with computation of wages.