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Cost Accounting Quiz – More that 100 Set of Multiple Choice Questions (MCQs) | Management Notes

Cost Accounting Quiz

1) Which of these is not an objective of Cost Accounting?

  1. Ascertainment of Cost
  2. Determination of Selling Price
  3. Cost Control and Cost reduction
  4. Assisting Shareholders in decision making

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The Correct Answer for the given question is Option D)Assisting Shareholders in decision making.

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2)  Uncontrollable costs are the costs which be influenced by the action of a specified member of an undertaking.

  1. cannot
  2. can
  3. may or may not
  4. must

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The Correct Answer for the given question is Option D) there is a clearly identifiable parent.

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3) Describe the cost unit applicable to the Bicycle industry:

  1. EP-CMA
  2. per part of bicycle
  3. per bicycle
  4. per tonne
  5. per day

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The Correct Answer for the given question is Option D) there is a clearly identifiable parent.

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Q.13. Calculate the prime cost from the following information:

Direct material purchased: Rs. 1,00,000

Direct material consumed: Rs. 90,000

Direct labour: Rs. 60,000

Direct expenses: Rs. 20,000

Manufacturing overheads: Rs. 30,000

Rs. 1,80,000

Rs. 2,00,000

Rs. 1,70,000

Rs. 2,10,000

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The Correct Answer for the given question is Option D) there is a clearly identifiable parent.

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Q. 14. Total cost of a product: Rs. 10,000 Profit: 25% on Selling Price Profit is:

Rs. 2,500

Rs. 3,000

Rs. 3,333

Rs. 2,000

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The Correct Answer for the given question is Option D) there is a clearly identifiable parent.

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Q.15. Calculate cost of sales from the following:
Net Works cost: Rs. 2,00,000
Office & Administration Overheads: Rs. 1,00,000
Opening stock of WIP: Rs. 10,000
Closing Stock of WIP: Rs. 20,000
Closing stock of finished goods: Rs. 30,000
There was no opening stock of finished goods.
Selling overheads: Rs. 10,000
(a) Rs. 2,70,000
(b) Rs. 2,80,000
(c) Rs. 3,00,000
(d) Rs. 3,20,000

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The Correct Answer for the given question is Option D) there is a clearly identifiable parent.

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Q.16. Calculate value of closing stock from the following:

Opening stock of finished goods (500 units) : Rs. 2,000

Test Paper 563

Cost of production (10000 units) : Rs. 50,000

Closing stock (1000 units):?

Rs. 4,000

Rs. 4,500

Rs. 5,000

Rs. 6,000

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The Correct Answer for the given question is Option D) there is a clearly identifiable parent.

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Q. 17. Which of these is not a Material control technique:

ABC Analysis

Fixation of raw material levels

Maintaining stores ledger

Control over slow moving and non moving items

Receiving purchase requisition

Exploring the sources of material supply

Preparation and execution of purchase orders

Accounting for material received

Quantitative as well as value wise records of material received, issued and balance;

Quantitative record of material received, issued and balance

Value wise records of material received, issued and balance

a record of labour attendance

Quantitative as well as value wise records of material received, issued and balance;

Quantitative record of material received, issued and balance

Value wise records of material received, issued and balance

a record of labour attendance

Maximum consumption x Maximum re-order period

Minimum consumption x Minimum re-order period

1/2 of (Minimum + Maximum consumption)

Maximum level – Minimum level

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The Correct Answer for the given question is Option D) there is a clearly identifiable parent.

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Q.22. Economic order quantity is that quantity at which cost of holding and carrying inventory is:

(a) Maximum and equal

EP-CMA

Minimum and equal

It can be maximum or minimum depending upon case to case.

Minimum and unequal

Inventory levels are maintained

Inventory is classified into A, B and C category with A being the highest quantity, lowest value.

Inventory is classified into A, B and C Category with A being the lowest quantity, highest value

Either b or c.

FIFO

LIFO

Weighted Average

EOQ

provide lowest value of closing stock and profit

provide highest value of closing stock and profit

provide highest value of closing stock but lowest value of profit

provide highest value of profit but lowest value of closing stock

provide lowest value of closing stock and profit

provide highest value of closing stock and profit

provide highest value of closing stock but lowest value of profit

provide highest value of profit but lowest value of closing stock

5600 units

800 units

1400 units

200 units

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The Correct Answer for the given question is Option D) there is a clearly identifiable parent.

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Q.28. Calculate EOQ (approx.) from the following details:

Annual Consumption: 24000 units

Ordering cost: Rs. 10 per order

Test Paper 565

Purchase price: Rs. 100 per unit

Carrying cost: 5%

310

400

290

300

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The Correct Answer for the given question is Option D) there is a clearly identifiable parent.

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Q.29. Calculate the value of closing stock from the following according to FIFO method:

1st January, 2014: Opening balance: 50 units @ Rs. 4

5th January, 2014: 100 units @ Rs. 5

12th January, 2014: 200 units @ Rs. 4.50

Issues:

2nd January, 2014: 30 units

18th January, 2014: 150 units

Rs. 765

Rs. 805

Rs. 786

Rs. 700

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The Correct Answer for the given question is Option D) there is a clearly identifiable parent.

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Q.30. Calculate the value of closing stock from the following according to LIFO method:

1st January, 2014: Opening balance: 50 units @ Rs. 4

5th January, 2014: 100 units @ Rs. 5

12th January, 2014: 200 units @ Rs. 4.50

Issues:

2nd January, 2014: 30 units

18th January, 2014: 150 units

Rs. 765

Rs. 805

Rs. 786

Rs. 700

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The Correct Answer for the given question is Option D) there is a clearly identifiable parent.

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Q.31. Calculate the value of closing stock from the following according to Weighted Average method:

1st January, 2014: Opening balance: 50 units @ Rs. 4

Receipts:

5th January, 2014: 100 units @ Rs. 5

12th January, 2014: 200 units @ Rs. 4.50

Issues:

EP-CMA

2nd January, 2014: 30 units

18th January, 2014: 150 units

Rs. 765

Rs. 805

Rs. 786

Rs. 700

Charged to the product cost

Charged to the profit & loss account

charged partly to the product and partly profit & loss account

not charged at all.

1000 units

6000 units

3000 units

7000 units

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The Correct Answer for the given question is Option D) there is a clearly identifiable parent.

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Q.34. From the following information, calculate the extra cost of material by following EOQ:

Annual consumption: = 45000 units

Ordering cost per order: = Rs. 10

Carrying cost per unit per annum: = Rs. 10

Purchase price per unit = Rs. 50

Re-order quantity at present = 45000 units

No saving

Rs. 2,00,000

Rs. 2,22,010

Rs. 2,990

Time taken by workers to travel the distance between the main gate of factory and place of their work

Time lost between the finish of one job and starting of next job

Time spent to meet their personal needs like taking lunch, tea etc.

Test Paper 567

(d) Machine break downs

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The Correct Answer for the given question is Option D) there is a clearly identifiable parent.

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Q.36. If overtime is resorted to at the desire of the customer, then the overtime premium:

should be charged to costing profit and loss account;

should not be charged at all

should be charged to the job directly

should be charged to the highest profit making department

Turnover generated by labour

Rate of change in composition of labour force during a specified period

Either of the above

Both of the above

Dissatisfaction with Job

Lack of training facilities

Low wages and allowances

Disability, making a worker unfit for work

Preventive Costs only

Replacement costs only

Both of the above

Machine costs

Q.40. Calculate workers left and discharged from the following:

Labour turnover rates are 20%, 10% and 6% respectively under Flux method, Replacement method and Separation method. No. of workers replaced during the quarter is 80.

112

80

48

64

Q.41. Calculate workers recruited and joined from the following:

Labour turnover rates are 20%, 10% and 6% respectively under Flux method, Replacement method and Separation method. No. of workers replaced during the quarter is 80.

112

80

EP-CMA

48

64

Q.42. Calculate the labour turnover rate according to replacement method from the following:

No. of workers on the payroll:

At the beginning of the month: 500

At the end of the month: 600

During the month, 5 workers left, 20 workers were discharged and 75 workers were recruited. Of these, 10 workers were recruited in the vacancies of those leaving and while the rest were engaged for an expansion scheme.

4.55%

1.82%

6%

3%

Q.43. Calculate the labour turnover rate according to Separation method from the following:

No. of workers on the payroll:

At the beginning of the month: 500

At the end of the month: 600

During the month, 5 workers left, 20 workers were discharged and 75 workers were recruited. Of these, 10 workers were recruited in the vacancies of those leaving and while the rest were engaged for an expansion scheme.

4.55%

1.82%

6%

3%

Q.44. A worker is allowed 60 hours to complete the job on a guaranteed wage of Rs. 10 per hour. Under the Rowan Plan, he gets an hourly wage of Rs. 12 per hour. For the same saving in time, how much he will get under the Halsey Plan?

Rs. 720

Rs. 540

Rs. 600

Rs. 900

Q.45. Overhead refers to:

Direct or Prime Cost

All Indirect costs

only Factory indirect costs

Test Paper 569

(d) Only indirect expenses

Q.46. Allotment of whole item of cost to a cost centre or cost unit is known as:

Cost Apportionment

Cost Allocation

Cost Absorption

Machine hour rate

Q. 47. Which of the following is not a method of cost absorption?

Percentage of direct material cost

Machine hour rate

Labour hour rate

Repeated distribution method

Only Service departments

Only Production departments

Both Production and service departments

None of the production and service departments

Floor Area

Value of Machines

No. of Workers

No. of Machines

Q. 50. Blanket overhead rate is:

One single overhead absorption rate for the whole factory

Rate which is blank or nil rate

rate in which multiple overhead rates are calculated for each production department, service department etc.

Always a machine hour rate

Q.51. AT Co makes a single product and is preparing its material usage budget for next year. Each unit of product requires 2kg of material, and 5,000 units of product are to be produced next year.

Opening inventory of material is budgeted to be 800 kg and AT co budgets to increase material inventory at the end of next year by 20%

The material usage budget for next year is

(a) 8,000 Kg

EP-CMA

((b) 9,840 kg

((c) 10,000 Kg

(d) 10,160 Kg

Q.52. During a period 17, 500 labour hours were worked at a standard cost of Rs 6.50 per hour. The labour efficiency variance was Rs 7,800 favourable.

How many standard hours were produced?

1,200

16,300

17,500

18,700

Q.53. Which of the following is not a reason for an idle time variance?

Wage rate increase

Machine breakdown

Illness or injury to worker

Non- availability of material

Q.54. During September, 300 labour hours were worked for a total cost of Rs 4800. The variable overhead expenditure variance was Rs 600 (A). Overheads are assumed to be related to direct labour hours of active working.

What was the standard cost per labour hour?

Rs 14

Rs 16.50

Rs 17.50

Rs 18

Q.55. Which of the following would explain an adverse variable production overhead efficiency variance?

Employees were of a lower skill level than specified in the standard

Unexpected idle time resulted from a series of machine breakdown

Poor Quality material was difficult to process

(1), (2) and (3)

(1) and (2)

(2) and (3)

(1) and (3)

Q.56. Budgeted sales of X for March are 18000 units. At the end of the production process for X, 10% of production units are scrapped as defective. Opening inventories of X for March are budgeted to be 15000 units and closing inventories will be 11,400 units. All inventories of finished goods must have successfully passed the quality control check. The production budget for X for March, in units is:

Test Paper 571

12,960

14,400

15,840

16,000

Q.57. CG Co manufactures a single product T. Budgeted production output of product T during June is 200 units. Each unit of product T requires 6 labour hours for completion and CG Co anticipates 20 per cent idle time. Labour is paid at a rate of Rs7 per hour. The direct labour cost budget for March is

Rs 6,720

8,400

10,080

10,500

Q.58. A Local Authority is preparing cash Budget for its refuse disposal department. Which of the following items would not be included in the cash budget?

Capital cost of a new collection vehicle

Depreciation of the machinery

Operatives wages

Fuel for the collection Vehicles

Q.59. BDL Ltd. is currently preparing its cash budget for the year to 31 March 2014. An extract from its sales budget for the same year shows the following sales values.

March

April

May

June

Rs

60,000

70,000

55,000

65,000

40% of its sales are expected to be for cash. Of its credit sales, 70% are expected to pay in month after sale and take a 2% discount. 27% are expected to pay in the second month after the sale, and the remaining 3% are expected to be bad debts. The value of sales budget to be shown in the cash budget for May 2013 is

Rs 60,532

Rs 61,120

Rs 66,532

Rs 86,620

Q.60. The actual output of 162,500 units and actual fixed costs of Rs. 87000 were exactly as budgeted.

However, the actual expenditure of Rs 300,000 was Rs. 18,000 over budget.

What was the budget variable cost per unit?

(a) Rs 1.20

EP-CMA

Rs 1.31

Rs1.42

Rs 1.50

Q.61. CA Co manufactures a single product and has drawn up the following flexed budget for the year.

60% 70% 80%

Rs Rs Rs

Direct materials 120,000 140,000 160,000

Direct labour 90,000 105,000 120,000

Production overheads 54,000 58,000 62,000

Other overheads 40,000 40,000 40,000

Total Cost
304,000 343,000 382,000

What would be the total cost in a budget that is prepared at the 77% level of activity?

Rs 330,300

Rs 370,300

Rs 373,300

Rs 377,300

Q.62. A ltd is a manufacturing company that has no production resource limitations for the foreseeable future. The Managing Director has asked the company mangers to coordinate the preparation of their budgets for the next financial year. In what order should the following budgets be prepared?

Sales budget

Cash budget

Production budget

Purchase budget

Finished goods inventory budget

(2), (3), (4), (5), (1)

(1), (5), (3), (4), (2)

(1), (4), (5), (3), (2)

(4), (5), (3), (1), (2)

Q.63. S produces and sells one product, P, for which the data are as follows:

Selling price Rs 28
Variable cost Rs 16
Fixed cost Rs 4

The fixed costs are based on a budgeted production and sales level of 25,000 units for the next period.

Due to market changes both the selling price and the variable cost are expected to increase above the budgeted level in the next period.

Test Paper 573

If the selling price and variable cost per unit increase by 10% and 8% respectively, by how much must sales volume change, compared with the original budgeted level, in order to achieve the original budgeted profit for the period?

10.1% decrease

11.2% decrease

13.3% decrease

16.0% decrease

Q.64. In process costing, a joint product is

a product which is later divided into many parts

a product which is produced simultaneously with other products and is of similar value to at least one of the other products.

A product which is produced simultaneously with other products but which is of a greater value than any of the other products.

a product produced jointly with another organization

Q.65. Process B had no opening inventory. 13,500 units of raw material were transferred in at Rs 4.50 per unit. Additional material at Rs1.25per unit was added in process. Labour and overheads were Rs 6.25 per completed unit and Rs 2.50 per unit incomplete.
If 11,750completed units were transferred out, what was the closing inventory in Process B?

Rs. 6562.50

Rs. 12,250.00

Rs. 14,437.50

Rs. 25,375.00

Q.66. A process costing system for J Co used an input of 3,500Kg of materials at Rs20 per Kg and labour hours of 2,750 at Rs25 per hour. Normal loss is 20% and losses can be sold at a scrap value of Rs5per Kg. Output was 2,950 Kg. What is the value of the output?

Rs 142,485

Rs 146,183

Rs 149,746

Rs 152,986

Q.67. In process costing, if an abnormal loss arises, the process account is generally

Debited with the scrap value of the abnormal loss units

Debited with the full production cost of the abnormal loss units

Credited with the scrap value of the abnormal loss units

Credited with the full production cost of the abnormal loss units

EP-CMA

Q.68. Which of the following statements is/are correct?

A materials requisition note is used to record the issue of direct material to a specific job.

A typical job cost will contain actual costs for material, labour and production overheads, and non – production overheads are often added as a percentage of total production cost

The job costing method can be applied in costing batches

(1) only

(1) and (2) only

(1) and (3) only

(2) and (3) only

Q.69. A job is budgeted to require 3,300 productive hours after incurring 25% idle time. If the total labour cost budgeted for the job is Rs36,300. What is the labour cost per hour( to the nearest cent)?

Rs 8.25

Rs 8.80

Rs 11.00

Rs 14.67

Q.70. A company calculates the prices of jobs by adding overheads to the prime cost and adding 30% to total costs as a profit margin. Job number Y256 was sold for Rs1690 and incurred overheads of Rs 694. What was the prime cost of the job?

Rs 489

Rs 606

Rs 996

Rs 1300

Q.71. State which of the following are the characteristics of service costing.

High levels of indirect costs as a proportion of total costs

Use of composite cost units

Use of equivalent units

(1) only

(1) and (2) only

(2) only

(2) and (3) only

Q.72. Which of the following organisations should not be advised to use service costing?

Distribution service

Hospital

Maintenance division of a manufacturing company

Test Paper 575

(d) A light engineering company

Q.73. Calculate the most appropriate unit cost for a distribution division of a multinational company using the following information.
Miles travelled 636,500

Tonnes carried 2,479

Number of drivers 20

Hours worked by drivers 35,520

Tonnes miles carried 375,200

Cost incurred 562,800

(a) Rs .88
(b) Rs 1.50
(c) Rs 15.84
(d) Rs28, 140

Q.74. The following information is available for the W hotel for the latest thirty day period.

Number of rooms available per night 40
Percentage occupancy achieved 65%
Room servicing cost incurred Rs. 3900

The room servicing cost per occupied room-night last period, to the nearest Rs, was:

Rs 3.25

Rs 5.00

Rs 97.50

Rs 150.00

Q.75. A company makes a single product and incurs fixed costs of Rs. 30,000 per annum. Variable cost per unit is Rs. 5 and each unit sells for Rs. 15. Annual sales demand is 7,000 units. The breakeven point is:

2,000 units

3,000 units

4,000 units

6,000 units

Q.76. A company manufactures a single product for which cost and selling price data are as follows:

Selling price per unit – Rs. 12

Variable cost per unit – Rs. 8

Fixed cost for a period – Rs. 98,000

Budgeted sales for a period – 30,000 units

The margin of safety, expressed as a percentage of budgeted sales,is:

(a) 20%

EP-CMA

25%

73%

125%

Information for Q.77 to Q.79:

Information concerning A Ltd.’s single product is as follows:

Selling price – Rs. 6 per unit

Variable production cost – RS. 1.20 per unit

Variable selling cost – Rs. 0.40 per unit

Fixed production cost – Rs. 4 per unit

Fixed selling cost – Rs. 0.80 per unit.

Budgeted production and sales for the year are 10,000 units.

Q.77. What is the company’s breakeven point:

(a) 8,000 units

b) 8,333 units

10,000 units

10,909 units

Q.78. How many units must be sold if company wants to achieve a profit of Rs. 11,000 for the year?

2,500 units

9,833 units

10,625 units

13,409 units

Q.79. It is now expected that the variable production cost per unit and the selling price per unit will each increase by 10%, and fixed production cost will rise by 25%. What will be the new break even point?

8,788 units

11,600 units

11,885 units

12,397 units

Q.80. A company’s break even point is 6,000 units per annum. The selling price is Rs. 90 per unit and the variable cost is Rs. 40 per unit. What are the company’s annual fixed costs?

Rs. 120

Rs. 2,40,000

Rs. 3,00,000

Rs. 5,40,000

Test Paper 577

Q.81. Capital gearing ratio is ___________.

Market test ratio

Long-term solvency ratio

Liquid ratio

urnover ratio

Q.82. After inviting tenders for supply of raw materials, two quotations are received as follows—

Supplier P Rs. 2.20 per unit, Supplier Q Rs. 2.10 per unit plus Rs. 2,000 fixed charges irrespective of the units ordered. The order quantity for which the purchase price per unit will be the same—

22,000 units

20,000 units

21,000 units

None of the above.

Q.83. In case of joint products, the main objective of accounting of the cost is to apportion the joint costs incurred up to the split off point. For cost apportionment one company has chosen Physical Quantity Method. Three joint products ‘A’, ‘B’ and ‘C’ are produced in the same process. Up to the point of split off the total production of A, B and C is 60,000 kg, out of which ‘A’ produces 30,000 kg and joint costs are Rs. 3,60,000. Joint costs allocated to product A is

Rs. 1,20,000

Rs. 60,000

Rs. 1,80,000

None of the these

Q.84. A transport company is running five buses between two towns, which are 50 kms apart. Seating capacity of each bus is 50 passengers. Actually passengers carried by each bus were 75% of seating capacity. All buses ran on all days of the month. Each bus made one round trip per day.
Passenger kms are:

2,81,250

1,87,500

5,62,500

None of the above

Q.85. 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

EP-CMA

Q.86. In ‘make or buy’ decision, it is profitable to buy from outside only when the supplier’s price is below the firm’s own ______________.

Fixed Cost

Variable Cost

Total Cost

Prime Cost

Q.87. A budget which is prepared in a manner so as to give the budgeted cost for any level of activity is known as:

Master budget

Zero base budget ((c) Functional budget

(d) Flexible budget

Current ratio

Quick ratio ((c) Liquid ratio

(d) Debt-equity ratio

Functional Budget

Master Budget

Long Period Budget

Flexible Budget

Q.90. _____________ is a detailed budget of cash receipts and cash expenditure incorporating both

revenue and capital items.

Cash Budget

Capital Expenditure Budget

Sales Budget

Overhead Budget

Firm

Company

Individual

Society

Test Paper 579

Q.92. For the financial year ended as on March 31, 2013 the figures extracted from the balance sheet of

Xerox Limited as under:

Opening Stock Rs. 29,000; Purchases Rs. 2,42,000; Sales Rs. 3,20,000; Gross Profit 25% of Sales. Stock Turnover Ratio will be :-

8 times

6 times

9 times

10 times

Q.93. If credit sales for the year is Rs. 5,40,000 and Debtors at the end of year is Rs. 90,000 the Average Collection Period will be

30 days

61 days

90 days

120 days

Q.94. The summarized balance sheet of Rakesh udyog Limited shows the balances of previous and current year of provision for taxation Rs. 50,000 and Rs. 65,000. If taxed paid during the current year amounted to Rs. 70,000 then amount charge from Profit and Loss Account will be:

Rs. 55,000

Rs. 85,000

Rs. 45,000

Rs. 1,85,000

Q.95. The summarized balance sheet of Autolight Limited shows the balances of previous and current year of retained earnings Rs. 25,000 and Rs. 35,000. If dividend paid during the current year amounted to Rs.

5,000 then profit earned during the year will be:

Rs. 5,000

Rs. 55,000

Rs. 15,000

Rs. 65,000

Q.96. Following information is available of XYZ Limited for quarter ended June, 2013

Fixed cost

Rs. 5,00,000

Variable cost

Rs. 10 per unit

Selling price

Rs. 15 per unit

Output level

1,50,000 units

What will be amount of profit earned during the quarter using the marginal costing technique?

(a) Rs. 2,50,000

EP-CMA

Rs. 10,00,000

Rs. 5,00,000

Rs. 17,50,000

Q.97. The P/v ratio of a company is 50% and margin of safety is 40%. If present sales is Rs. 30,00,000 then Break Even Point in Rs. will be

Rs. 9,00,000

Rs. 18,00,000

Rs. 5,00,000

None of the above

Q.98. Following information is available of PQR for year ended March, 2013: 4,000 units in process, 3,800 units output, 10% of input is normal wastage, Rs. 2.50 per unit is scrap value and Rs. 46,000 incurred towards total process cost then amount on account of abnormal gain to be transferred to Costing P&L will be:-

Rs. 2,500

Rs. 2,000

Rs. 4,000

Rs. 3,500

Q.99. In element-wise classification of overheads, which one of the following is not included —

Fixed overheads

Indirect labour

Indirect materials

Indirect expenditure.

Q.100. When the sales increase from Rs. 40,000 to Rs. 60,000 and profit increases by Rs. 5,000, the P/V ratio is —

20%

30%

25%

40%.

Smirti

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