1.

Warehouse expense is an example of

A. Production overhead
B. Selling overhead
C. Distribution overhead
D. None of above
2. Depreciation is a example of-
A. Fixed Cost
B. Variable Cost
C. Semi Variable Cost
D. None
3. Which of the following is considered as accounting record?
A. Bin Card
B. Bill of material
C. Store Ledger
D. None of these
4. The most important element of cost is-
A. Material
B. Labour
C. Overheads
D. All of these
5. The most suitable cost system where the products differ in type of material and work
performed is
A. Operating Costing
B. Job costing
C. Process costing
D. All of these.
6. Which of the following best describes a fixed cost?
A. It may change in total where such change is unrelated to changes in production.
B. It may change in total where such change is related to changes in production.
C. It is constant per unit of change in production.
D. It may change in total where such change depends on production within the relevant
range.
7. The main purpose of Cost Accounting is
A. to maximise profit.
B. to help in inventory valuation.
C. to help in the fixation of selling price.
D. to provide information to management for decision making.
8. Costs which are ascertained after they have been incurred are known as
A. Sunk Costs
B. Imputed Costs
C. Historical Costs
D. Opportunity Costs

1
9. Which of the following classification is meant for distinction between direct cost and
indirect cost?
A. Function
B. Element
C. Variability
D. Controllability
10. Which of the following is applicable for Cost Control?
A. It is related with the future
B. It is a corrective function
C. It ends when the targets are achieved
D. It challenges the standards set
11. ______ is anything for which a separate measurement of cost is required.
A. Cost driver
B. Cost centre
C. Cost unit
D. Cost object
12. Ticket counter in a Metro Station is an example of
A. Profit centre
B. Investment centre
C. Cost centre
D. Revenue centre
13. Which of the following is an example of functional classification of cost?
A. Direct labour cost
B. Direct material cost
C. Factory overhead
D. Indirect material cost
14. Absorption costing is also referred as
A. Historical costing
B. Traditional costing
C. Full costing
D. All of the above terms
15. What is the primary objective of cost accounting?
A. Maximize profits
B. Record financial transactions
C. Provide financial statements
D. Facilitate cost control and decision-making
16. What does the term “opportunity cost” refer to in cost accounting?
A. Actual monetary expenditure
B. Cost of the next best alternative foregone
C. Fixed manufacturing costs
D. Variable selling expenses

2
17. If a business has an opportunity cost of ₹10,000 for choosing one project over another,
what is the economic cost?
A. ₹ 10,000
B. ₹ 0
C. The same as opportunity cost
D. Cannot be determined
18. If fixed manufacturing costs are ₹ 50,000 and the number of units produced is 5,000, what
is the fixed cost per unit?
A. ₹10
B. ₹ 5
C. ₹ 50
D. ₹ 0.1
19. If the gross profit is ₹ 40,000, selling expenses are ₹ 10,000, and administrative expenses
are ₹ 5,000, what is the net profit?
A. ₹ 40,000
B. ₹ 35,000
C. ₹ 25,000
D. ₹ 15,000
20. The most important element of cost is
A. Material
B. Labour
C. Overheads
D. All of these
21. Direct Material is a
A. Administration Cost
B. Selling and Distribution Cost
C. All of these
D. None of these
22. Direct Expenses includes imputed cost.
A. Shall
B. Shall not
C. Shall be
D. None of these
23. Direct expenses do not meet the test of materiality can be part of overhead.
A. Treated
B. Not treated
C. All of these
D. None of these

3
24. Cost Control represents
A. efforts made towards achieving target or goal
B. the achievement in reduction of cost
C. existence of concealed potential savings in standards or norms
D. a corrective function
25. Which of the following is considered as normal loss of material?
A. Pilferage
B. Loss due to accident
C. Loss due to careless handling of material
D. None of the above.
26. Which of the following items is not included in preparation of cost sheet?
A. Carriage inward
B. Purchase returns
C. Sales Commission
D. Interest paid
27. Packing cost is a
A. Production of cost
B. Selling cost
C. Distribution cost
D. It may be any or the above
28. Directors remuneration and expenses form a part of
A. Production overhead
B. Administration overhead
C. Selling overhead
D. Distribution overhead
29. Warehouse expense is an example of
A. Production overhead
B. Selling overhead
C. Distribution overhead
D. None of above
30. Which of the following items is not included in preparation of cost sheet?
A. Carriage inward
B. Purchase returns
C. Sales commission
D. Interest paid
31. Which of the following items is not excluded while preparing a cost sheet?
A. Goodwill written off
B. Provision for taxation
C. Property tax on Factory building

4
 D. Transfer to reserves
E. Interest paid
32. What is prime cost
A. Total direct costs only
B. Total indirect costs only
C. Total non-production costs
D. Total production costs
33. Which of the following is not an element of works overhead?
A. Sales manager’s salary
B. Plant manager’s salary
C. Factory repairman’s wages
D. Product inspector’s salary
34. Prime cost plus variable overheads is known as
A. Factory Cost
B. Marginal Cost
C. Cost of Production
D. Total Cost
35. Prime cost is
A. all costs incurred in manufacturing a product
B. the total of direct costs
C. the material cost of a product
D. the cost of operating a department
36. A company employs three drivers to deliver goods to its customers. The salaries paid to
these drivers are:
A. a part of prime cost
B. a direct production expense
C. a production overhead
D. a selling and distribution overhead
37. In the context of cost elements, which category includes the cost of raw materials, direct
labour, and direct expenses?
A. Prime Cost
B. Conversion Cost
C. Overhead Cost
D. Indirect Cost
38. What is the formula for calculating the cost of production in a manufacturing entity?
A. Total Cost - Opening Stock
B. Opening Stock + Purchases - Closing Stock
C. Direct Materials + Direct Labour + Factory Overhead
D. Selling Price - Gross Profit

5
39. Which of the following is deducted from the total cost to calculate the net profit?
A. Selling Expenses
B. Opening Stock
C. Direct Materials
D. Indirect Labour
40. If direct materials cost ₹ 20,000, direct labour is ₹ 15,000, and direct expenses are ₹
5,000, what is the prime cost?
A. ₹ 40,000
B. ₹ 35,000
C. ₹ 20,000
D. ₹ 15,000
41. If the direct materials consumed are ₹ 30,000, direct labour is ₹ 20,000, and factory
overhead is ₹15,000, what is the total manufacturing cost?
A. ₹ 50,000
B. ₹ 65,000
C. ₹ 30,000
D. ₹ 20,000
42. Directors’ remuneration and expenses form a part of
A. Production Overhead
B. Administration Overhead
C. Selling Overhead
D. Distribution Overhead
43. Which of the following items is not included in preparation of cost sheet?
A. Carriage inward
B. Purchase returns
C. Sales commission
D. Interest paid
44. Which of the following items is not excluded while preparing a cost sheet?
A. Goodwill written off
B. Provision for taxation
C. Property tax on factory building
D. Transfer to reserves
45. What is prime cost?
A. Total direct cost only
B. Total indirect costs only
C. Total non-production csots
D. Total production costs
46. Which of the following is not an element of works overhead?
A. Sales manager’s salary

6
 B. Plant manager’s salary
C. Factory repairman’s wages
D. Product inspector’s salary
47. For the purpose of Cost Sheet preparation, costs are classified based on:
A. Functions
B. Relevance
C. Variability
D. Nature
48. Salary paid to an office supervisor is a part of:
A. Direct expenses
B. Administration cost
C. Quality control cost
D. Factory overheads
49. Audit fees paid to cost auditors is part of:
A. Selling and distribution cost
B. Production cost
C. Administration cost
D. Not recorded in the cost sheet
50. A company has set up a laboratory for testing of products for compliance with standards.
Salary of this laboratory stuffs are part of:
A. Direct expenses
B. Quality control cost
C. Works overheads
D. Research and development cost
51. Canteen expenses for factory workers are part of:
A. Administration cost
B. Factory overhead
C. Marketing cost
D. None of the above
52. Which of the following items should be added to costing profit to arrive at financial profit?
A. Income tax paid
B. Over absorption of works overhead
C. Interest paid on debentures
D. All of the above

7
1. At the economic ordering quantity level, the following is true:
A. The ordering cost is minimum
B. The carrying cost is minimum
C. The ordering cost is equal to the carrying cost
D. The purchase price is minimum
2. Which of the following is considered as normal loss of material?
A. Pilferage
B. Loss due to accident
C. Loss due to careless handling of material
D. None of these
3. Continuous stock taking is a part of-
A. ABC analysis
B. Annual stock taking
C. Perpetual Inventory
D. None of these
4. In a process 8000 units are introduced during a period. 5% of input is normal loss. Closing
work in progress 60% complete is 1000 units. 6600 completed units are transferred to next
process. Equivalent production for the period is:
A. 9000 units
B. 7440 units
C. 5400 units
D. 7200 units
5. Direct material is a –
A. Administration Cost
B. Selling and Distribution cost
C. All of these
D. None of these
6. Continuous stock taking is a part of-
A. ABC analysis
B. Annual stock taking
C. Perpetual Inventory
D. None of these
7. Which of the following is considered as accounting record?
A. Bin Card
B. Bill of material
C. Store Ledger
D. None of these
8. Which of the following is considered as normal loss of material?
A. Pilferage

8
 B. Loss due to accident
C. Loss due to careless handling of material
D. None of these
9. Which of the following is considered as accounting record?
A. Bind Card
B. Bill of Material
C. Store Ledger
D. None of these
10. Direct Material can be classified as
A. Fixed Cost
B. Semi-Variable Cost
C. Variable Cost
D. Prime Cost
11. In which of the following methods of pricing, costs lag behind the current economic values?
A. Replacement price method
B. Last in first out price method
C. First in first out price method
D. Weighted average price method
12. In which of the following methods, issues of materials are priced at pre-determined rate?
A. Replacement price method
B. Inflated price method
C. Specific price method
D. Standard price method
13. Which of the following methods smoothes out the effect of fluctuations when material
prices fluctuate widely?
A. FIFO
B. Simple Average
C. LIFO
D. Weighted average
14. Which of the following is considered as normal loss of material?
A. Pilferage
B. Loss due to accident
C. Loss due to careless handling of material
D. None of the above.
15. What is scrap?
A. Discarded material having no or insignificant value
B. Loss in the production process
C. Production that does not meet the qua lity requirements
D. None of the above

9
1. Cost of idle time arising due to non-availability of raw material is
A. Charged to costing profit and loss A/c
B. Charged to factory overheads
C. Recovered by inflating the wage rate
D. Ignored
2. Over time is
A. Actual hours being more than normal time
B. Actual hours being more than standard time
C. Standard hours being more than actual hours
D. Actual hours being less than standard time
3. Time and motion study is conducted by the
A. Time –keeping department
B. Personnel department
C. Payroll department
D. Engineering department
4. Time keeping refers to
A. Time spent by workers on their job
B. Time spent by workers in factory
C. Time spent by workers without work
D. Time spent by workers on their job
5. In which of the following incentive plan of payment, wages on time basis are not
Guaranteed?
A. Halsey plan
B. Rowan plan
C. Taylor’s differential piece rate system
D. Gantt’s task and bonus system
6. Under the high wage plan, a worker is paid
A. At a time rate higher than the usual rate
B. According to his efficiency
C. At a double rate for overtime
D. Normal wages plus bonus
7. When overtime is required for meeting urgent orders, overtime premium should be
A. Charged to costing profit and loss A/c
B. Charged to overhead costs
C. Charged to respective jobs
D. Ignored
8. Wages sheet is prepared by
A. Time –keeping department
B. Personnel department
C. Payroll department
D. Engineering department

10
9. Labour turnover is measured by
A. Number of workers replaced average number of workers
B. Number of workers left / number in the beginning plus number at the end
C. Number of workers joining / number in the beginning of the period
D. All of these
10. Over time is
A. Actual hours being more than normal time
B. Actual hours being more than standard time
C. Standard hours being more than actual hours
D. Actual hours being less than standard time
11. For reducing the labour cost per unit, which of the following factors is the most important?
A. Low wage rates
B. Longer hours of work
C. Higher input-output ratio
D. Strict control and supervision
12. In which of the following incentive plan of payment, wages on time basis are not Guaranteed?
A. Halsey Plan
B. Rowan Plan
C. Taylor’s differential piece rate system
D. Gantt’s task and bonus system
13. Cost of idle time arising due to non availability of raw material is
A. Charged to costing profit and loss account
B. Charged to factory overheads
C. Recovered by inflating the wage rate
D. Ignored
14. When overtime is required for meeting urgent order, overtime premium should be
A. Charged to costing profit and loss account
B. Charged to overhead costs
C. Charged to respective jobs
D. Ignored
15. Labour turnover is measured by
A. Number of workers replaced / average number of workers
B. Number of workers left / number in the beginning plus number at the end
C. Number of workers joining / number in the beginning of the period
D. All of these
16. Idle time is
A. Time spent by workers in factory
B. Time spent by workers in office
C. Time spent by workers off their work
D. Time spent by workers on their job

11
17. Overtime is
A. Actual hours being more than normal time
B. Actual hours being more than standard time
C. Standard hours being more than actual hours
D. Actual hours being less than standard time
18. Labour productivity is measured by comparing
A. Total output with total man-hours
B. Added value for the product with total wage cost
C. Actual time and standard time
D. All of the above
19. If the time saved is less than 50% of the standard time, then the wages under Rowan and Halsey
premium plan on comparison gives:
A. Equal wages under two plans
B. More wages to workers under Halsey Plan than Rowan Plan
C. More wages to workers under Rowan Plan than Halsey Plan
D. None of the above
20. Under Taylor’s differential piece rate scheme, if a worker fails to complete the task within the
standard time, then he is paid
A. 83% of the piece work rate
B. 175% of the piece work rate
C. 67% of the piece work rate
D. 125% of the piece work rate
21. The total earnings of a worker both under Halsey and Rowan plan will be equal when:
A. Time save is 40% of time allowed
B. Time save is 50% of time allowed
C. Time save is 40% of time allowed
D. None of the above
22. Normal Idle time cost shall be assigned to:
A. Employee cost
B. Overheads
C. Any one of (a) or (b)
D. None of the above

12
1. When a direct worker is paid on a monthly fixed salary basis, the following is true:
A. There is no idle time lost.
B. There is no idle time cost.
C. Idle time cost is separated and treated as overhead.
D. The salary is fully treated as factory overhead cost.
2. Royalty paid on sales Rs. 89,000 and Software development charges related to product is Rs.
22,000. Calculate Direct Expenses.
A. 1,11,100
B. 1,11,000
C. 1,11,110
D. 1,10,000
3. Direct Expenses that does not meet the test of materiality can be ———— part of overhead.
A. Treated
B. Not treated
C. All of the these
D. None of these
4. Direct Expenses ———— include imputed cost.
A. Shall
B. Shall not
C. None of these
5. Example of Direct Expenses.
A. Rent
B. Royalty charged on production
C. Bonus to employee
D. None of these
6. A manufacturing Industry produces product P, Royalty paid on sales is Rs. 23,500 and
design charges paid for the product is Rs. 1,500. Compute the Direct Expenses.
A. 25,000
B. 22,000
C. 26,500
D. None of these
7. Which of the following are direct expenses?
(1) The cost of special designs, drawings or layouts
(2) The hire of tools or equipment for a particular job
(3) Salesman’s wages
(4) Rent, rates and insurance of a factory
A. (1) and (2)
B. (1) and (3)
C. (1) and (4)
D. (3) and (4)

13
8. Most of the expenses are direct in
A. Job costing
B. Batch costing
C. Contact costing
D. None of the above
9. A company has to pay a Re 1 per unit royalty to the designer of a product which it manufactures
and sells. The royalty charge would be classified in the company’s accounts as a
A. Direct expense
B. Production overhead
C. Administrative overhead
D. Selling overhead
10. Example of Direct Expenses.
A. Rent
B. Royalty charged on production
C. Bonus to employee
D. None of these
11. Which of the following are direct expenses?
i. The cost of special designs, drawings or layouts
ii. The hire of tools or equipment for a particular job
iii. Salesman’s wages
iv. Rent, rates and insurance of a factory
A. (i) and (ii)
B. (i) and (iii)
C. (i) and (iv)
D. (iii) and (iv)
12. A company pays royalty to State Government on the basis of production, it is treated as:
A. Direct expenses
B. Factory overheads
C. Direct Material Cost
D. Administration Cost
13. A technical writer is to set up her own business. She anticipates working a 40 -hour week and
taking four weeks’ holiday per year. General expenses of the business are expected to be ₹
10,000 per year, and she has set herself a target of ₹ 40,000 a year sal ary. Assuming that only
90% of her time worked will be chargeable to customers, her charge for each hour of writing
(to the nearest Rupee) should be;
A. ₹ 32.04 per hour
B. ₹ 35.06 per hour
C. ₹ 28.94 per hour
D. ₹ 27.20 per hour

14
1. The following is not treated as a manufacturing overhead:
A. Lubricants
B. Cotton waste
C. Apportioned administration overheads
D. Night shift allowance paid to a factory worker due to general work pressure.
2. The allotment of whole items of cost centres or cost unit is called
A. Cost allocation
B. Cost apportionment
C. Overhead absorption
D. None of the above
3. When the amount of under-or-over-absorption is significant, it should be disposed of by
A. Transferring to costing profit and loss A/c
B. The use of supplementary rates
C. Carrying over as a deferred charge to the next accounting year
D. None of above
4. Charging to a cost center those overheads that result solely for the existence of that cost
Center is known as
A. Allocation
B. Apportionment
C. Absorption
D. Allotment
5. Absorption means
A. Charging or overheads to cost centers
B. Charging or overheads to cost units
C. Charging or overheads to cost centers or cost units
6. Which method of absorption of factory overheads do you suggest in a concern which
produces only one uniform type of product :
A. Percentage of direct wages basis
B. Direct labour rate
C. Machine hour rate
D. A rate per units of output
7. Which of the following is a service department?
A. Refining department
B. Machining department
C. Receiving department
D. Finishing department
8. Maximum possible productive capacity of a plant when no operating time is lost is its
A. Normal capacity
B. Practical capacity
C. Theoretical capacity
D. Capacity based on sales expectancy

15
9. _____ is a method of dealing with overheads which involves spreading common costs over cost
centers on the basis of benefit received.
A. overhead absorption
B. overhead apportionment
C. overhead allocation
D. overhead analysis
10. Which of the following is an example of functional classification of cost?
A. Direct labour cost
B. Direct material cost
C. Factory overhead
D. Indirect material cost
11. The allotment of whole items of cost of centres or cost unit is called
A. Cost Allocation
B. Cost Apportionment
C. Overhead Absorption
D. None of the above
12. Absorption means
A. Charging of overheads to cost centres
B. Charging of overhead to cost units
C. Charging of overheads to cost centres or cost units
D. None of the above
13. When the amount of under or over absorption is significant, it should be disposed of by
A. Transferring to costing profit and loss account
B. The use of supplementary rates
C. Carrying over as a deferred charge to the next accounting year
D. None of the above
14. When the amount of overhead absorbed is less than the amount of overhead incurred, it is called
A. Under absorption of overhead
B. Over absorption of overhead
C. Proper absorption of overhead
D. None of the above
15. Normal capacity of a plant refers to the difference between:
A. Maximum capacity and practical capacity
B. Maximum capacity and actual capacity
C. Practical capacity and estimated idle capacity as revealed by long term sales trend
D. Practical capacity and normal capacity
16. Charging to a cost centre those overheads that result solely for the existence of that cost
centre is known as
A. Allocation
B. Apportionment
C. Absorption
D. Allotment

16
17. Absorption means
A. Charging of overheads to cost centres
B. Charging of overhead to cost units
C. Charging of overheads to cost centres or cost units
D. None of the above
18. Which method of absorption of factory overheads do you suggest in a concern which produces
only one uniform type of product?
A. Percentage of direct wages basis
B. Direct labour rate
C. Machine hour rate
D. A rate per units of output
19. Warehouse expense is an example of
A. Production overhead
B. Selling overhead
C. Distribution overhead
D. None of the above
20. Normal capacity of a plant refers to the difference between:
A. Maximum capacity and practical capacity
B. Maximum capacity and actual capacity
C. Practical capacity and estimated idle capacity as revealed by long term sales trend
D. Practical capacity and normal capacity
21. Selling and distribution overheads are absorbed on the basis of
A. Rate per unit
B. Percentage of works cost
C. Percentage of selling price of each unit
D. Any of the above.
22. Warehouse expense is an example of Production
A. overhead
B. Selling overhead
C. Distribution overhead
D. None of above
23. Assignment number 652 took 86 hours of a senior consultant’s time and 220 hours of junior time.
What price should be charged for assignment number 652? The following information is also
given;
Overhead absorption rate per consulting hour ₹ 12.50
Salary cost per consulting hour (senior) ₹ 20.00
Salary cost per consulting hour (junior) ₹ 15.00
The firm adds 40% to total cost to arrive at a selling price
A. ₹ 7028
B. ₹ 8845
C. ₹ 12383
D. ₹ 14742

17
1. The following is an example of direct expenses as per CAS-10:
A. Special raw material which is a substantial part of the prime cost.
B. Travelling expenses to site.
C. Overtime charges paid to direct worker to complete work before time.
D. Catalogue of prices of finished products.
2. deals with the principles and methods of determining the production or
operation overheads.
A. CAS-3
B. CAS-5
C. CAS-9
D. CAS-16
3. CAS 21 stands for
A. Capacity Determination
B. Joint Cost
C. Direct Expenses
D. None of these.
4. Standards deals with determination of averages/equalized transportation cost –
A. CAS 6
B. CAS 22
C. CAS 9
D. CAS 5
5. Standards deals with the principles and methods of determining depreciation and
amortization cost-
A. CAS 9
B. CAS 12
C. CAS 15
D. CAS 16
6. CAS 21 stands for
A. Capacity Determination
B. Joint Cost
C. Direct Expenses
D. None of these.
7. CAS 13 stands for
A. Joint Cost
B. Interest and financing charges
C. Employee Cost
D. Cost of Service cost centre
8. Standard deals with the principles and methods of determining the manufacturing Cost of
excisable goods-

18
 A. CAS 12
B. CAS 15
C. CAS 22
D. CAS 2
9. Standards deals with determination of averages/ equalized transportation cost-
A. CAS 6
B. CAS 22
C. CAS 9
D. CAS 5
10. What is the primary objective of Cost Accounting Standards (CAS)?
A. Ensure profitability
B. Ensure consistency and standardization in cost accounting practices
C. Minimize costs
D. Maximize revenue
11. Who formulates Cost Accounting Standards in India?
A. Ministry of Corporate Affairs
B. Institute of Chartered Accountants of India (ICAI)
C. Institute of Cost Accountants of India (ICAI)
D. Securities and Exchange Board of India (SEBI)
12. In which section of the Companies Act, 2013, is the provision related to the maintenance of
cost records and cost audit found?
A. Section 142
B. Section 148
C. Section 164
D. Section 176
13. What is the primary focus of CAS-11?
A. Determining principles for sales and distribution overheads
B. Outlining principles for administrative overheads
C. Establishing guidelines for financial reporting
D. Addressing manufacturing costs
14. CAS 6 focuses on
A. Material Cost
B. Employee Cost
C. Activity-Based Costing
D. Repairs and Maintenance Cost
15. Which CAS deals with the classification, measurement, and assignment of administrative
overheads?
A. CAS 3
B. CAS 8
C. CAS 11
D. CAS 15

19
16. What does CAS 16 cover?
A. Borrowing Costs
B. Selling and Distribution Overheads
C. Cost of Transportation
D. Standard Costing
17. Which CAS deals with the classification, measurement, and assignment of selling and
distribution over- heads?
A. CAS 3
B. CAS 8
C. CAS 11
D. CAS 15
18. Which term is defined by CAS-15: Definitions as the cost incurred due to unforeseen
circumstances and not part of normal business operations?
A. Absorption of Overheads
B. Abnormal Cost
C. Imputed Costs
D. Selling Overheads
19. Which section of the Companies Act, 2013, deals with the adoption and adherence to Cost
Accounting Standards (CAS)?
A. Section 135
B. Section 148
C. Section 170
D. Section 184
20. CAS 9 specifically deals with:
A. Employee Cost
B. Packing Material Cost
C. Direct Expenses
D. Repairs and Maintenance Cost
21. What principle is encouraged by CAS-15 for transparency in the disclosure of changes in cost
account- ing principles?
A. Confidentiality
B. Consistency
C. Transparency
D. Secrecy
22. CAS 17: Cost of Transportation primarily focuses on:
A. Classification of transportation costs
B. Measurement of transportation costs
C. Assignment of transportation costs
D. Determination of total transportation costs

20
23. What does CAS 22: Intangible Assets primarily cover?
A. Classification of intangible assets
B. Measurement of intangible assets
C. Assignment of intangible assets costs
D. Determination of total intangible assets
24. CAS 23: Overheads for Intermediary Services deals with:
A. Classification of intermediary service costs
B. Measurement of intermediary service costs
C. Assignment of intermediary service costs
D. Determination of total intermediary service costs
25. What does CAS-11 emphasize regarding the treatment of abnormal administrative costs?
A. Inclusion in cost calculations
B. Exclusion from cost calculations
C. Separate disclosure in footnotes
D. Attestation by external auditors
26. Which of the following is a key significance of CAS in cost accounting practices?
A. Increasing the subjectivity of cost information
B. Reducing transparency in financial reporting
C. Enhancing the reliability, comparability, and relevance of cost information
D. Limiting the scope of cost management
27. What does CAS contribute to in terms of transparency?
A. Complexity in cost structures
B. Ambiguity in cost reporting
C. Clear and understandable disclosure of relevant cost information
D. Hiding cost details from stakeholders
28. How does CAS promote improved decision-making within organizations?
A. By introducing ambiguity in cost information
B. By providing inaccurate cost data
C. By ensuring accurate and reliable cost information
D. By limiting the availability of cost data
29. Which of the following classifies cost as direct and indirect cost as per CAS 1
A. By nature of expenses.
B. By nature of traceability.
C. By function.
D. By nature of behavior.
30. CAS 10 stand for :
A. Direct expenses;
B. Repairs & Maintenance cost;
C. Selling and Distribution overhead;
D. Research & Development cost.

21
31. Uniformity and Consistency in the principles and method of depreciation and Amortization
deals by:
A. CAS19;
B. CAS24;
C. CAS16;
D. CAS14.
32. Packing material cost deals by :
A. CAS 9;
B. CAS 10;
C. CAS11;
D. CAS 12.
33. Research & Development cost are linked with:
A. CAS 17;
B. CAS16;
C. CAS19;
D. CAS 18.
34. Standard deals with captive consumption:
A. CAS 3;
B. CAS 4;
C. CAS 5
D. CAS 18.
35. Any perquisites provided to an employee by the employer deals by.
A. CAS 10;
B. CAS11;
C. CAS 12;
D. CAS 7

22
1. When you attempt a reconciliation of profits as per Financial Accounts and Cost
Accounts, the following is done:
A. Add the under absorption of overheads in Cost Accounts if you start from the profits
as per Financial Accounts.
B. Add the under absorption of overheads in Cost Accounts if you start from the profits as per
Cost Accounts.
C. Add the over absorption of overheads in Cost Accounts if you start from the profits as per
Financial Accounts.
D. Add the over absorption of overheads in Cost Accounts if you start from the profits as per
Cost Accounts.
2. In Reconciliations Statements Expenses shown only in financial accounts are.
A. Added to financial profit
B. Deducted from financial profit
C. Ignored
D. Added to costing profit
3. Selling and distribution overheads are absorbed on the basis of
A. rate per unit.
B. percentage on works cost.
C. percentage on selling price of each unit.
D. Any of the above
4. What entry will be passed under integrated system for purchase of stores on credit?
A. Dr. Stores
Cr. Creditors
B. Dr. Purchases
Cr. Creditors
C. DrStores Ledger Control A/c
Cr. Creditors
D. Dr. Stores Ledger Control A/c
Cr. General Ledger Adjustment A/c
5. There is a loss as per financial accounts Rs. 10,600, donations not shown in cost accounts Rs.
6,000. What would be the profit or loss as per cost accounts?
A. Loss Rs. 16,600
B. Profit Rs. 16,600
C. Loss Rs. 4,600
D. Profit Rs. 4,600
6. Integral accounts eliminate the necessity of operating
A. Cost Ledger control account
B. Store Ledger control account
C. Overhead adjustment account
D. None of the above

23
7. Selling and Distribution overhead are absorbed on the basis of
A. Rate per unit
B. Percentage on works cost
C. Percentage on selling price of each unit
D. Any of these
8. In Reconciliations Statements Expenses shown only in financial accounts are.
A. Added to financial profit
B. Deducted from financial profit
C. Ignored
D. Added to costing profit
9. In Reconciliations Statements Expenses shown only in cost accounts are.
A. Added to financial profit
B. Deducted from financial profit
C. Ignored
D. Deducted from costing profit
10. In Reconciliations Statements, transfers to reserves are.
A. Added to financial profit
B. Deducted from financial profit
C. Ignored
D. Added to costing profit
11. In Reconciliations Statements, Incomes shown only in financial accounts are.
A. Added to financial profit
B. Deducted from financial profit
C. Ignored
D. Deducted from costing profit
12. In Reconciliations Statements, Closing Stock Undervalued in Financial accounts is
A. Added to financial profit
B. Deducted from financial profit
C. Ignored
D. Added to costing profit
13. Integral accounts eliminate the necessity of operating
A. Cost Ledger control account
B. Store Ledger control account
C. Overhead adjustment account
D. None of the above
14. What entry will be passed under integrated system for payment to creditors for supplies
made?
A. Dr. Creditors
Cr. Cash
B. Dr. Creditors
Cr. Stores Ledger Control A/c
C. No entry

24
 15. The accounting entry in integrated accounts for recording sales will be:
A. Dr. Cost ledger control account
Cr. Profit and loss account
B. Dr. Sales account
Cr. Profit and Loss A/c
C. Dr. Cash A/c Cr. Sales A/c
16. What will be the accounting entry for absorption of factory overhead?
A. Dr. Works in progress control A/c
Cr Factory overhead control A/c
B. Dr. Factory overhead
Cr. Factory overhead control A/c
C. No entry is required
17. In Reconciliation Statement expenses shown only in financial accounts are
A. added to financial profit.
B. added to costing profit.
C. ignored.
D. deducted from financial profit.
18. Selling and Distribution overhead are absorbed on the basis of
A. Rate per unit
B. Percentage on works cost
C. Percentage on selling price of each unit
D. Any of these
19. Primary packing cost is a part of
A. Direct material cost
B. Distribution overhead
C. Selling overhead
D. Production cost
20. Find out from the following scientific and accurate method of factory overhead absorption:
A. Percentage of prime cost method
B. Machine hour rate method
C. Percentage of direct material cost method
D. Percentage of direct labour cost method
21. Packing cost is a
A. Production Cost
B. Selling Cost
C. Distribution Cost
D. It may be any of the above
22. When the amount of under or over absorption is significant, it should be disposed of by
A. Transferring to costing profit and loss account
B. The use of supplementary rates
C. Carrying over as a deferred charge to the next accounting year
D. None of the above

25
23. When the amount of overhead absorbed is less than the amount of overhead incurred, it is called
A. Under absorption of overhead
B. Over absorption of overhead
C. Proper absorption of overhead
D. None of the above
24. Selling and Distribution overhead are absorbed on the basis of
A. Rate per unit
B. Percentage on works cost
C. Percentage on selling price of each unit
D. Any of these
25. Primary packing cost is a part of
A. Direct material cost
B. Distribution overhead
C. Selling overhead
D. Production cost
26. Chairman’s remuneration and expenses form part of
A. Administration overhead
B. Production overhead
C. Distribution overhead
D. Selling overhead
27. Find out from the following scientific and accurate method of factory overhead absorption:
A. Percentage of prime cost method
B. Machine hour rate method
C. Percentage of direct material cost method
D. Percentage of direct labour cost method
28. In Reconciliation Statements, expenses shown only in financial accounts are:
A. Added to financial profit
B. Deducted from financial profit
C. Ignored
D. Added to costing profit
29. In Reconciliation Statement, expenses shown only in cost accounts are:
A. Added to financial profit
B. Deducted from financial profit
C. Ignored
D. Deducted from costing profit
30. In Reconciliation Statement, transfers to reserves are:
A. Added to financial profit
B. Deducted from financial profit
C. Ignored
D. Added to costing profit

26
31. In Reconciliation Statement, incomes shown only in financial accounts are:
A. Added to financial profit
B. Deducted from financial profit
C. Ignored
D. Deducted from costing profit
32. In Reconciliation Statement, Closing Stock undervalued in Financial Accounts is
A. Added to financial profit
B. Deducted from financial profit
C. Ignored
D. Added to costing profit
33. Under non-integrated accounting system:
A. Separate ledgers are maintained for cost and financial accounts
B. Same ledger is maintained for cost and financial accounts by accountants
C. (A) and (B) both
D. None of the above
34. Under non-integrated accounting system, the account made to complete double entry is:
A. Finished goods control account
B. Work in progress control account
C. Stores ledger control account
D. General ledger adjustment account
35. Under non-integrated system of accounting, purchase of raw material is debited to
A. Purchase account
B. Material control account / stores ledger control account
C. General ledger adjustment account
D. None of the above
36. When costing loss is ₹ 5,600, administrative overhead under-absorbed being ₹ 600, the loss as
per financial accounts should be .
A. ₹ 5,000
B. ₹ 5,600
C. ₹ 6,200
D. None of the above
37. Which of the following items should be added to costing profit to arrive at financial profit?
A. Income tax paid
B. Over absorption of works overhead
C. Interest paid on debentures
D. All of the above
38. Integral accounts eliminate the necessity of operating .
A. Cost ledger control account
B. Store ledger control account
C. Overhead adjustment account
D. None of the above

27
39. What is the primary goal of introducing integrated accounting?
A. Maintaining separate records
B. Streamlining cost analysis
C. Increasing clerical efforts
D. Reconciling accounts annually
40. Why is reconciliation important in accounting?
A. To complicate financial reporting
B. To identify differences in profits
C. To avoid integration
D. To discourage cost analysis
41. What characterizes a non-integrated cost accounting system?
A. Unified ledger system
B. Separate cost and financial accounts
C. Sole reliance on cost principles
D. Complex reconciliation processes
42. In a non-integrated system, what ledger is used for recording indirect costs?
A. Cost ledger control account
B. Overhead ledger
C. Financial ledger
D. General ledger
43. Which ledger records direct costs in a non-integrated system?
A. General ledger
B. Cost ledger control account
C. Prime cost ledger
D. Financial ledger
44. What is the primary purpose of the overhead ledger in a non-integrated system?
A. Recording direct costs
B. Managing general ledger entries
C. Controlling indirect costs
D. Maintaining financial transactions
45. How is the purchase of raw materials typically recorded in a non-integrated system?
A. Credit to cash account
B. Debit to general ledger
C. Debit to stores control account
D. Credit to sundry creditors
46. What entry is made to record wages paid in a non-integrated system?
A. Credit entry
B. Debit entry
C. Contra entry
D. No entry is made

28
47. What is a significant benefit of reconciling cost accounting records with financial accounts?
A. Increased clerical efforts
B. Improved transparency
C. Limited financial reporting
D. Reduced reconciliation complexity
48. When is the reconciliation of cost accounting records and financial accounts particularly
important?
A. Only in integrated systems
B. During tax season
C. At the end of the financial year
D. In non-integrated systems
49. What defines an integrated accounting system?
A. Separation of cost and financial records
B. Streamlining reconciliation
C. Sole reliance on financial principles
D. Consolidation of cost and financial information
50. Why is an integrated accounting system considered cost-effective?
A. Increased clerical workload
B. Centralization of accounting functions
C. Complexity of financial reporting
D. Limited coordination between staff

51. A firm operates an integrated cost and financial accounting system. The accounting entries for

an issue of direct materials to production would be

A. DR work in progress control account; CR stores control account

B. DR finished goods account; CR stores control account
C. DR stores control account; CR work in progress control account
D. DR cost of sales account; CR work in progress control account
52. A firm operates an integrated cost and financial accounting system. The accounting entries for
direct wages transferred to WIP A/c would be:
A. Debit Wages control account, Credit Work in progress account
B. Debit Work in progress account, Credit Wages control account
C. Debit Cost of sales account, Credit Work in progress account
D. Debit Finished goods account, Credit Work in progress account
53. A firm operates an integrated cost and financial accounting system. The accounting entries for
indirect wages incurred would be:
A. Debit Wages control account Credit Overhead control account
B. Debit Work in progress account Credit Wages control account
C. Debit Overhead control account Credit Wages control account
D. Debit Wages control account Credit Work in progress account

29
54. Non- integral accounting means
A. Cost Ledger accounting
A. Financial accounting
B. Management accounting
C. Cost & Management accounting
55. Integrated accounting means
A. Cost & Financial Management
B. Cost & Financial Reporting
C. Cost & Financial Transactions
D. Cost & Management Accounting.
56. Losses due to Scrapping of machinery is an items of
A. Cost Accounts
B. Financial Accounts
C. Management Accounts
D. Human Resource Accounts
57. The complimentary status of cost and financial accounts shown in
A. Cost Accounting
B. Financial Accounting
C. Integral Accounting
D. Non Integral Accounting
58. When Reconciliation start with cost accounts profit, the under charges of depreciation in Cost
A/ Cs to be
A. Added with Cost Accounts profit
B. Added with Financial Accounts profit
C. No Adjustment is required
D. Deducted from Cost Accounts profit.
59. There is no need to open a Cost Ledger Control Account in:
A. Integral Accounting System;
B. Non-integral Accounting System;
C. Management Accounting System
D. Both a and b

30
1. Job costing is used in
A. Furniture making
B. Repair shops
C. Printing press
D. All of the above
2. Job costing is used in
A. Furniture making
B. Repair shops
C. Printing press
D. All of the above
3. In a job cost system, costs are accumulated
A. On a monthly basis
B. By specific job
C. By department or process
D. By kind of material used
4. In job costing to record the issue of direct materials to a job which of the following
document is used?
A. Purchase order
B. Goods receipt note
C. Material requisition
D. Purchase requisition
5. In job costing, which of the following documents is used to record the issue of direct
materials to a job?
A. Goods Receipt Note
B. Purchase Order
C. Purchase Requisition Note
D. Material Requisition Note
6. Job Costing is used in:
A. Furniture making
B. Repair shops
C. Printing press
D. All of the above
7. In a job cost system, costs are accumulated .
A. On a monthly basis
B. By specific job
C. By department or process
D. By kind of material used
8. The most suitable cost system where the products differ in type of material and work performed
is ________.
A. Operating Costing
B. Job Costing
C. Process Costing
D. All of these

31
9. Which of the following documents are used in job costing to record the issue of direct materials
to a job:
A. Purchase order
B. Purchase requisition
C. Goods received note
D. Material requisition
10. Which of the following statements is true:
A. Batch costing is a variant of jobs costing
B. Job cost sheet may be used for estimating profit of jobs
C. Job costing cannot be used in conjunction with marginal costing
D. In cost plus contracts, the contractor runs a risk of incurring a loss
11. Which of the following statement is true:
A. Job costing can be suitably used for concerns producing any specific product uniformly
B. Job costing cannot be used in companies applying standard costing
C. Job cost sheet may be prepared to facilitate routing and scheduling of the job
D. Neither A. nor B. nor C.
12. A company does job work for customers. Job 947 has direct materials costs of ₹ 125, direct
labour costs of ₹80 and direct expenses of ₹ 25. Direct labour is paid ₹ 20 per hour. Production
overheads are charged at the rate of ₹ 35 per hour and non-production overheads are charged
as 60% of prime cost. What is the cost for Job 947?
A. ₹ 493
B. ₹ 508
C. ₹ 514
D. ₹ 592
13. A company operates a job costing system. Job number 6789 will require ₹ 345 of direct materials
and ₹ 210 of direct labour, which is paid ₹ 14 per hour. Production overheads are absorbed at
the rate of ₹ 30 per direct labour hour and non-production overheads are absorbed at the rate
of 40% of prime cost. Required What is the total expected cost of the job?
A. ₹ 7,221
B. ₹ 1,272
C. ₹ 2,127
D. ₹ 1,227
14. ASA LLP operates a job costing system. The company’s standard net profit margin is 20 per cent
of sales value. The estimated costs for job B124 are as follows.
Direct materials 3 kg @ ₹ 5 per kg Direct labour 4 hours @ ₹ 9 per hour
Production overheads are budgeted to be ₹ 2,40,000 for the period, to be recovered on the basis
of a total of 30,000 labour hours.
Other overheads, related to selling, distribution and administration, are budgeted to be ₹
1,50,000 for the period. They are to be recovered on the basis of the total budgeted production
cost of ₹ 7,50,000 for the period.

32
 The price to be quoted for job B124 is ₹
A. ₹ 153.50
B. ₹ 124.50
C. ₹ 145.50
D. ₹ 142.50
15. 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 ₹ 1,690 and incurred overheads
of ₹ 694. What was the prime cost of the job?
A. ₹ 489
B. ₹ 606
C. ₹ 996
D. ₹ 1,300
16. Which of the following item is not contained in a typical job cost?
A. Actual material cost
B. Actual manufacturing overheads
C. Absorbed manufacturing overheads
D. Actual labour cost
17. Which of the following is a feature of job costing?
A. Production is carried out in accordance with the wishes of the customer
B. Associated with continuous production of large volumes of low - cost items
C. Establishes the cost of services rendered
D. Costs are charged over the units produced in the period
18. Which of the following statements is/ are correct?
1. A materials requisition note is used to record the issue of direct material to a specific
job
2. 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
3. The job costing method can be applied in costing batches
A. (1) only
B. (1) and (2) only
C. (1) and (3) only
D. (2) and (3) only
19. 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 ₹ 36,300, what is the labour cost per hour? 108
A. ₹ 8.25
B. ₹ 8.80
C. ₹ 11.00
D. ₹ 14.67
20. The main points of distinction between job and contract costing includes
A. Length of time to complete
B. Big jobs
C. Activities to be done outside the factory area
D. All of the above

33
1. Batch Costing is suitable for-
A. Sugar Industry
B. Chemical Industry
C. Pharma Industry
D. Oil Industry
2. Batch costing is a type of:
A. Direct Costing
B. Process Costing
C. Job Costing
D. Differential Costing
3. Batch costing is similar to that under job costing except with the difference that:
A. Process becomes a cost unit
B. Job becomes a cost unit
C. Batch become the cost unit instead of a job
D. None of the above
4. Economic batch quantity is that size of the batch of production where:
A. Carrying cost is minimum
B. Set-up cost of machine is minimum
C. Average cost is minimum
D. Both A. and B.

34
1. In the context of Contract a/c, work completed and not yet certified will beshown
A. at cost plus + 2/3rd of the notional profit under 'Completed Work'.
B. at cost plus notional profit less retention money under 'Completed Work'.
C. at cost under 'Completed Work'.
D. at cost under WIP a/c.
2. Cost Price is not fixed in case of
A. Cost plus contracts
B. Escalation clause
C. De escalation clause
D. All of the above
3. Cost plus contact is usually entered into those cases where
A. Cost can be easily estimated
B. Cost of certified and uncertified work
C. Cost of certified work, cost of uncertified work and amount of profit transferred to Profit
and Loss Accounts.
4. Cost plus contract is usually entered into those cases where .
A. Cost can be easily estimated
B. Cost of certified and uncertified work
C. Cost of certified work, cost of uncertified work and amount of profit transferred to
Profit and Loss Account
D. Determination of contract cost with reasonable accuracy is not possible
5. Cost Price is not fixed in case of .
A. Cost plus contracts
B. Escalation clause
C. De-escalation clause
D. All of the above
6. A road building company has the following data concerning one of its contracts.

Contract price ₹11,200,000

Cost of work certified to date ------ ₹ 3,763,200

Estimated costs to completion -------- ₹ 2,956,800

No difficulties are foreseen on the contract.

The profit to be recognised on the contract to date is ₹

A. ₹ 25,88,000

B. ₹ 25,80,800

C. ₹ 20,58,800

D. ₹ 25,08,800

35
7. Which of the following costing methods is most likely to be used by a company involved in the
construction of hotels?
A. Batch costing
B. Contract costing
C. Job costing
D. Process costing
8. Which of the following would best describe the characteristics of contract costing?
1. Homogeneous products;
2. Customer driven production;
3. Short period of time between the commencement and completion of the cost unit
A. (1) and (2i) only
B. (2) and (3) only
C. (1) and (3i) only
D. (2) only
9. Which of the following statements about contract costing are correct?
1. Work is undertaken to cu stomers’ special requirements
2. Work is usually undertaken on the contractor’s premises
3. Work is usually of a relatively long duration
A. (1) and (2) only
B. (1) and (3) only
C. (2) and (3) only
D. All of them
10. Contract number 145 commenced on 1 st March and plant from central stores was delivered to
the site. The book value of the plant delivered was ₹ 420,000. On 1 July further plant was
delivered with a book value of ₹ 30,000. Company policy is to depreciate all plant at a rate of
20% of the boo k value each year. The depreciation to be charged to contract number 145 for
the year ending 31 December is;
A. ₹ 37000
B. ₹ 57000
C. ₹ 73000
D. ₹ 89000

36
1. In a process 800 units are introduced during 2016-17. 5% of input is normal loss. Closing work-
in-progress 60% complete is 100 units. 660 completed units are transferred to next process.
Equivalent production for the period is
A. 760 units
B. 744 units
C. 540 units
D. 720 units
2. In a process 6,000 units are introduced during a period. 5% of input is normal loss. Closing work-
in-process 60% complete is 800 units. 4,900 completed units are transferred to next process.
Equivalent production for the period is
A. 6,800 units
B. 5,700 units
C. 5,680 units
D. 5,380 units
3. In a process 10000 units are introduced during a period. 10% of input is normal loss. Closing
work-in-process 70% complete is 1500 units. 7500 completed units are transferred to next
process. Equivalent production for the period is
A. 9550 units
B. 9000 units
C. 8550 units
D. 8500 units
4. In a process 4000 units are introduced during a period. 5% of input is normal loss.
Closing work-in-progress 60% complete is 500 units. 3300 completed units are
transferred to next process. Equivalent production for the period is
A. 3550 units
B. 3600 units
C. 3800 units
D. 3950 units
5. The type of process loss that should not be allowed to affect the cost of good units is called:
A. Standard Loss
B. Normal Loss
C. Abnormal Loss
D. Seasonal Loss
6. In which of the following situations an abnormal gain in a process occurs:

A. When normal loss is equal to actual loss

B. When the actual output is greater than the planned output

C. When actual loss is more than the expected

D. When actual loss is less than the expected loss

37
7. The value of abnormal loss is equal to:
A. Total cost of materials
B. Total process cost less cost of scrap
C. Total process cost less realisable value of normal loss less value of transferred
out goods.
D. Total process cost less realisable value of normal loss
8. A process account is debited by abnormal gain, the value is determined as:
A. Equal to the value of good units less closing stock
B. Equal to the value of normal loss
C. Cost of good units less realisable value of normal loss
D. Cost of good unit less realisable value of actual loss
9. Process B had no opening inventory. 13,500 units of raw material were transferred in at ₹ 4.50
per unit. Additional material at ₹ 1.25 per unit was added in process. Labour and overheads were
₹ 6.25 per completed unit and ₹ 2.50 per unit incomplete.
If 11,750 completed units were transferred out, what was the closing inventory in Process B?
A. ₹ 6,562.50
B. ₹ 12,250.00
C. ₹ 14,437.50
D. ₹ 25,375.00
10. A company makes a product, which passes through a single process.
Details of the process for the last period are as follows.
Materials 10,000 kg at 50 paisa per kg
Labour ₹ 1,000
Production overheads 200% of labour
Normal losses are 10% of input in the process, and without further processing any losses
can be sold as scrap for 20 paisa per kg.
The output for the period was 8,400 kg from the process. There was no work in progress
at the beginning or end of the period.
The value of the abnormal loss for the period is _____
A. ₹ 200
B. ₹ 220
C. ₹ 80
D. None of the above
11. Equivalent production of 1,000 units, 60% complete in all respect, is:
A. 1,000 units
B. 1,600 units
C. 600 units
D. 1,060 units
(1000 × 60%)

38
12. In a process 8,000 units are introduced during a period. 5% of input is normal loss. Closing work
in progress 60% complete is 1,000 units. 6,600 completed units are transferred to next process.
Equivalent production for the period is:
A. 9,000 units
B. 7,440 units
C. 5,400 units
D. 7,200 units
(6,600 + 60% × 1,000)
13. 400 units were introduced in a process in which 40 units is the normal loss. If the actual output
is 300 units, then there is:
A. No abnormal gain
B. Abnormal loss of 60 units
C. No abnormal loss
D. Abnormal gain of 60 units
{(400 – 40) – 300}
14. Which of the following is not a stepin the analysis of process costing;
A. compute output in terms of equivalent units, summarize the total costs to be accounted
for by cost categories
B. compute the unit costs per equivalent unit
C. apply total costs to units completed
D. allocate overhead on the equivalent units
15. An abnormal gain in a process occurs in which of the following situations?
A. When the actual output is greater than the planned output.
B. When actual loss is more than the expected.
C. When actual loss is less than the expected loss
D. When normal loss is equal to actual loss.
16. The value of abnormal loss is equal to
A. Total cost of materials
B. Total process cost less realizable value of normal loss
C. Total process cost less cost of scrap
D. Total process cost less realizab le value of normal loss less value of transferred
out goods.
17. What is an equivalent unit?
A. A unit of output which is identical to all others manufactured in the same process
B. Notional whole units used to represent uncompleted work
C. A unit of product in relation to which costs are ascertained
D. The amount of work achievable, at standard efficiency levels, in an hour
18. Process B had no opening inventory. 13,500 units of raw material were transferred in at ₹ 4.50
per unit. Additional material a t ₹ 1.25 per unit was added in process. Labour and overheads
were ₹ 6.25 per completed unit and ₹ 2.50 per unit incomplete.

39
 If 11,750 completed units were transferred out, what was the closing inventory in Process B?
A. ₹ 6,562.50
B. ₹ 12,250.00
C. ₹ 14,437.50
D. ₹ 25,375.00
19. In process costing, a joint product is
A. a product which is later divided into many parts
B. a product which is produced simultaneously with other products and is of similar
value to at least one of the other products
C. a product which is produced simultaneously with other products but which is of a
greater value than any of the other products
D. a product produced jointly with another organisation
20. In process costing by- product is defined as;
A. A product produced at the same time as other products which has no value
B. A product produced at the same time as other products which requires further
processing to put it in a saleable state
C. A product produced at the same time as other products which has a relatively low
volume compared with the other products
D. A product produced at the same time as other products which has a relatively low
value compared with the other products
21. In process costing, where losses have a positive scrap value, when an abnormal gain arises the
abnormal gain account is;
A. debited with the normal production cost of the abnormal gain units and debited with
the scrap value of the abnormal gain units
B. debited with the normal production cost of the abnormal gain units and credited with
the scrap value of the abnormal gain units
C. credited with the normal production cost of the abnormal gain units and debited
with the scrap value of the abnormal gain units
D. credited with the normal production cost of the abnormal gain units and credited with
the scrap value of the abnormal gain units
22. The following information is available for SM Co for last month.
Conversion costs ₹105,280
Completed during the period 18,000 units
Closing work in progress 2,000 units
(40% complete as to conversion costs)
The conversion cost per unit of production is;
A. ₹. 6.50
B. ₹. 5.60
C. ₹. 7.20
D. ₹. 5.90

40
23. A food manufacturing process has a normal wastage of 10% of input. In a period, 3,000 kg of
material were input and there was an abnormal loss of 75 kg. No inventories are held at the
beginning or end of the process.
What is the quantity of good production achieved?
A. 2625 Kg.
B. 2700 kg.
C. 2925 kg
D. None of the above

41
1. Batch Costing is applied effectively in the following situation:
A. paper manufacturing
B. drug manufacturing
C. designer clothes manufacturing
D. oil refining
2. Joint Cost is suitable for-
A. Infrastructure Industry
B. Ornament Industry.
C. Oil Industry
D. Fertilizer Industry
3. The main purpose of accounting of joint products and by-products is to
A. determine the profit/loss on each product line.
B. determine the selling price.
C. comply with the statutory requirements.
D. identify the cost and load it on the main product.
4. In sugar manufacturing industry molasses is also produced along with sugar. Molasses may be
of small value as compared with the value of sugar and is known as:
A. Joint product
B. Common product
C. By-product
D. None of them
5. Method of apportioning joint costs on the basis of output of each joint product at the point
of split-offs is known as:
A. Physical unit method
B. Sales value method
C. Average cost method
D. Marginal cost and contribution method
6. The main purposes of accounting of joint products and by-products is to:
A. Determine the replacement cost
B. Determine the opportunity cost
C. Determine profit or loss on each product line
D. None of the above
7. Under net realisable value method of apportioning joint costs to joint products, the selling &
distribution cost is:
A. Ignored
B. Deducted from sales value

C. Deducted from further processing cost

D. Added to joint cost

42
8. Which of the following is an example of by-product:
A. Mustard seeds and mustard oil
B. Diesel and Petrol in an oil refinery
C. Edible oils and oil cakes
D. Curd and butter in a diary
9. Which of following methods can be used when the joint products are of unequal quantity and
used for captive consumption:
A. Physical units method
B. Net realisable value method
C. Technical estimates, using market value of similar goods
D. Market value at spit-off method

43
1. Cost Unit of Hospital Industry is
A. Tonne
B. Student per year
C. Kilowatt Hour
D. Patient Day
2. Operating costing is applicable to:
A. Hospitals
B. Cinemas
C. Transport undertaking
D. All of the above
3. A hotel having 100 rooms of which 80% are normally occupied in summer and 25% in winter.
Period of summer and winter be taken as 6 months each and normal days in a month be
assumed to be 30. The total occupied room days will be
A. 1525 Room days
B. 18900 Room days
C. 36000 Room days
D. None of the above
4. Cost units of Hospital Industry is-
A. Tonne
B. Student per year
C. Kilowatt Hour
D. Patient Day
5. Cost units of Automobile Industry is-
A. Cubic meter
B. Bed Night
C. Number of Call
D. Number of vehicle
6. Cost of service under operating costing is ascertained by preparing:
A. Cost sheet
B. Process account
C. Job cost sheet
D. Production account
7. Operating costing is applicable to:
A. Hospitals
B. Cinemas
C. Transport undertaking
D. All of the above
8. Cost of a particular service under operating costing is ascertained by preparing:
A. Cost sheet
B. Process account
C. Job cost sheet
D. Production account

44
9. Operating costing is applicable to:
A. Hospitals
B. Cinemas
C. Transport undertaking
D. All of the above
10. Composite cost unit for a hospital is:
A. Per day
B. Per bed
C. Per patient day
D. Per patient
11. Cost units used in power sector is called:
A. Number of hours
B. Number of electric points
C. Kilowatt-hour (KWH)
D. Kilo meter (K.M.)
12. Absolute Tonne-Km is an example of:
A. Composite unit for bus operation
B. Composite unit of transport sector
C. Composite unit for oil and natural gas
D. Composite unit in power sector
13. A road haulage company transports goods. It operates two trucks. During a particular period,
the two trucks travelled a total of 80,000 kilometers carrying goods. The average load was 3
tonnes per journey. In total they made 200 journeys. Total costs were ₹ 7,20,000. What is the
average cost per tonne-kilometer transported?
A. ₹ 3
B. ₹ 4.50
C. ₹ 6
D. ₹ 12
14. A hotel has 80 standard twin-bedded rooms. The hotel is fully-occupied for each of the 350
days in each year that it is open. The total costs of running the hotel each year are ₹ 3,360,000.
Calculate the cost per room/day
A. ₹ 120
B. ₹ 240
C. ₹ 360
D. None of the above
15. 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 Tonne-miles carried 375,200
Costs incurred ₹ 562,800

45
 A. ₹ 0.88
B. ₹ 1.50
C. ₹ 15.84
D. ₹ 28,140
16. State which of the following are characteristics of service costing.
1. High levels of indirect costs as a proportion of total costs
2. Use of composite cost units
3. Use of equivalent units
A. (1) only
B. (1) and (2) only
C. (2) only
D. (2) and (3) only
17. Which of the following organisations should not be advised to use service costing?
A. Distribution service
B. Hospital
C. Maintenance division of a manufacturing company
D. A light engineering company
18. Which of the following would be appropriate cost units for a transport business?
1. Cost per tonne- kilometre
2. Fixed cost per kilometre
3. Maintenance cost of each vehicle per kilometre
A. (1) only
B. (1) and (2) only
C. (1) and (3) only
D. All of them
19. Cost of service under operating costing is ascertained by preparing:
A. Cost sheet
B. Process account
C. Job cost sheet
D. Production account
20. Operating costing is applicable to:
A. Hospitals
B. Cinemas
C. Transport undertaking
D. All of the above
21. In Transport Companies, Cost of diesel and lubricants is an example of:
A. Operating cost
B. Fixed charges
C. Semi-variable cost
D. None of the above

46
22. Which of the following would be appropriate cost units for a private taxi company?
A. Total operating cost per passenger -kilometre
B. Maintenance cost per vehicle per kilometre
C. Fixed cost per passenger
D. Fuel cost per kilometre
23. Which of the following are characteristics of service costing?
A. High levels of indirect costs as a proportion of total cost
B. Cost units are often intangible
C. Use of composite cost units
D. Use of equivalent units
24. Which of the following would be suitable cost units for a hospital?
A. Patient/day
B. Operating theatre hour
C. Ward
D. Outpatient visit
25. Cost units used in power sector is:
A. Kilo meter (K.M)
B. Kilowatt- hour (kWh)
C. Number of electric points
D. Number of hours
26. A private hospital has a budgeted annual overhead cost for cleaning of ₹12,50,000. There are
300 beds in the hospital and these are expected to be in use 95% of the year. The hospital
uses a composite cost unit of occupied bed per night. What is the overhead absorption rate for
cleaning? (Assume a year has 365 days).
A. ₹ 10.36
B. ₹ 11.54
C. ₹ 12.02
D. ₹ 16.04

47
1. If sales are Rs. 90,000 and variable cost to sales is 75%. Contribution is
A. Rs. 21,500
B. Rs. 22,500
C. Rs. 23,500
D. Rs. 67,500
2. P/V Ratio will increase if the
A. There is a decrease in fixed cost
B. There is an increase in fixed cost
C. There is a decrease in selling price per unit
D. There is a decrease in variable cost per unit.
3. In a process 8000 units are introduced during a period. 5% of input is normal loss. Closing work

in progress 60% complete is 1000 units. 6600 completed units are transferred to next process.

Equivalent production for the period is:

A. 9000 units
B. 7440 units
C. 5400 units
D. 7200 units
4. If sales are Rs. 150,000 and variable cost are Rs. 50,000. Compute P/V ratio.
A. 66.66%
B. 100%
C. 133.33%
D. 65.66%
5. A firm has fixed expenses Rs. 90,000, sales Rs. 3,00,000 and profit Rs. 60,000. The P/V
ratio of the firm is
A. 10%
B. 20%
C. 30%
D. 50%
6. If sales are Rs. 90,000 and variable cost to sales is 75%, contribution is
A. Rs. 21,500
B. Rs. 22,500
C. Rs. 23,500
D. Rs. 67,500
7. Variable cost
A. Remains fixed in total
B. Remains fixed per unit
C. Varies per unit
D. Nor increase or decrease

48
8. If sales are Rs. 150,000 and variable cost are Rs. 50,000. Compute P/V ratio.
A. 66.66%
B. 100%
C. 133.33%
D. 65.66%
9. Marginal Costing technique follows the following basis of classification
A. Element wise
B. Function Wise
C. Behaviour wise
D. Identifiability wise
10. P/V ratio will increase if the
A. There is an decrease in fixed cost
B. There is an increase in fixed cost
C. There is a decrease in selling price per unit.
D. There is a decrease in variable cost per unit.
11. The technique of differential cost is adopted when
A. To ascertain P/V ratio
B. To ascertain marginal cost
C. To ascertain cost per unit
D. To make choice between two or more alternative courses of action
12. Difference between the costs of two alternative is known as the
A. Variable cost
B. Opportunity cost
C. Marginal cost
D. Differential cost
13. Contribution is Rs. 300,000 and sales is Rs. 1,500,000. Compute P/V ratio.
A. 15%
B. 20%
C. 22%
D. 17.5%
14. Variable cost to sales ratio is 40%. Compute P/V ratio.
A. 60%
B. 40%
C. 100%
D. None of the these
15. Fixed cost is 30,000 and P/V ratio is 20%. Compute breakeven point.
A. Rs. 160,000
B. Rs. 150,000
C. Rs. 155,000
D. Rs. 145,000

49
16. Materials become key factor, if
A. quota restrictions exist
B. insufficient advertisement prevails
C. there is low demand
D. there is no problem with supplies of materials
17. The sales and profit of a firm for the year 2016 are Rs.1,50,000 and Rs.20,000 and for the
year 2017 are Rs.1,70,000 and Rs.25,000 respectively. The P/V Ratio of the firm is
A. 15%
B. 20%
C. 25%
D. 30%
18. Product A generates a contribution to sales ratio of 40%. Fixed cost directly attributable to
A amount Rs. 60,000. The sales revenue required to achieve a profit of Rs.15,000 is
A. Rs 2,00,000
B. Rs 1,85,000
C. Rs 1,87,500
D. Rs 2,10,000
19. PQR Ltd. manufactures a single product which it sells forRs.40per unit. Fixed cost is Rs.
60,000 per year. The contribution to sales ratio is 40%. PQR Ltd.’s Break Even Point in units is
_____.
A. 3500
B. 3700
C. 3750
D. 4000
20. In order to determine cost of the products or services, different business firms follow:
A. Different techniques of costing
B. Uniform costing
C. Different methods of costing
D. None of the above
21. The cost of a product under marginal costing system includes
A. Prime cost plus variable overhead
B. Prime cost plus fixed overhead
C. Prime cost plus factory overhead
D. Only prime cost
22. The difference between absorption costing and marginal costing is in regard to the treatment
of
A. Direct materials
B. Fixed overhead
C. Prime cost
D. Variable overhead

50
23. Fixed costs are treated as
A. Overhead costs
B. Prime costs
C. Period costs
D. Conversion costs
24. When sales and production (in units) are same then profits under
A. Marginal costing is lower than that of absorption costing
B. Marginal costing is higher than that of absorption costing
C. Marginal costing is equal to that of absorption costing
D. None of the above
25. When sales exceed production (in units) then profit under
A. Marginal costing is higher than that of absorption costing
B. Marginal costing is equal to that of absorption costing
C. Marginal costing is lower than that of absorption costing
D. None of the above
26. Which of the following factors responsible for change in the break-even point?
A. Change in selling price
B. Change in variable cost
C. Change in fixed cost
D. All of the above
27. Variable cost
A. Remains fixed in total
B. Remains fixed per unit
C. Varies per unit
D. Nor increase or decrease
28. Marginal Costing technique follows the following basic of classification
A. Element wise
B. Function Wise
C. Behaviour wise
D. Identifiability wise
29. P/V ratio will increase if the
A. There is a decrease in fixed cost
B. There is an increase in fixed cost
C. There is a decrease in selling price per unit.
D. There is a decrease in variable cost per unit.
30. The technique of differential cost is adopted when
A. To ascertain P/V ratio
B. To ascertain marginal cost
C. To ascertain cost per unit
D. To make choice between two or more alternative courses of action

51
31. Materials become key factor, if
A. quota restrictions exist
B. insufficient advertisement prevails
C. there is low demand
D. there is no problem with supplies of materials
32. If sales are ₹ 90,000 and variable cost to sales is 75%, contribution is
A. ₹ 21,500
B. ₹ 22,500
C. ₹ 23,500
D. ₹ 67,500
33. If sales are ₹ 1,50,000 and variable cost are ₹ 50,000. Compute P/V ratio.
A. 66.66%
B. 100%
C. 133.33%
D. 65.66%
34. Contribution is ₹ 3,00,000 and sales is ₹ 15,00,000. Compute P/V ratio.
A. 15%
B. 20%
C. 22%
D. 17.5%
35. Variable cost to sales ratio is 40%. Compute P/V ratio.
A. 60%
B. 40%
C. 100%
D. None of the these
36. Fixed cost is ₹ 30,000 and P/V ratio is 20%. Compute breakeven point.
A. ₹ 1,60,000
B. ₹ 1,50,000
C. ₹ 1,55,000
D. ₹ 1,45,000
37. Marginal Cost is
A. The amount at any given volume of output by which aggregate costs are changed
if the volume of output is increased or decreased by one unit.
B. Prime Cost plus Fixed Overheads
C. a variable ratio which may be expressed in terms of an amount per unit of output
D. not normally traceable to particular unit
38. Marginal costing is
A. A cost accounting technique where valuation of stocks such as finished goods, work-
in-progress is made at Total Cost.

52
 B. A cost accounting technique where there is no need to segregate between Fixed
Cost and Variable Cost.
C. the ascertainment of marginal costs and of the effect on profit of changes in volume
or type of output by differentiating between fixed costs and variable costs.
D. A simple cost accounting technique as fixed cost need not be considered as period
cost and can be apportioned on each uni t of goods produced.
39. A company makes a single product and incurs fixed costs of ₹ 30,000 per month. Variable cost
per unit is ₹ 5and each unit sells for ₹ 15. Monthly sales demand is 7,000 units. The breakeven
point in terms of monthly sales units is:
A. 2,000 units
B. 3,000 units
C. 4,000 units
D. 6,000 units
40. Which of the following statements is/ are correct?
(i) The incremental cost of buying a larger quantity of material might be a negative
cost, which is a cost reduction
(ii) If a company reduces its selling price by 2 0% so that sales volume increases by 25%,
total profit will remain unchanged
(iii) A direct cost need not be a variable cost, but might be a fixed cost
A. only
B. and (ii) only
C. and (iii) only
D. and (iii) only
41. If the selling price and variable cost increase by 20% and 12% 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?
A. 24.2% decrease
B. 24.2% increase
C. 39.4% decrea se
D. 39.4% increase
42. Which of the following statements about profit/volume graphs are correct?
(i) The profit -volume line starts at the origin
(ii) The profit -volume line crosses the x axis at the breakeven point
(iii) Any point on the profit -volume line above the x axis indicates the profit (as
measured on the vertical axis) at that level of activity
A. and (ii) only
B. and (iii) only
C. and (iii) only
D. All of them

53
43. A company’s single product has a contribution to sales ratio of 20%. The unit selling price is
₹ 12. In a period when fixed costs were ₹ 48,000 the profit earned was ₹ 5,520. Direct wages
were 30% of total variable costs, and so the direct wages cost for t he period was;
A. ₹ 64,224
B. ₹ 22,624
C. ₹ 44,226
D. ₹ 75,000
44. A company produces and sells a single product whose variable cost is ₹ 15 per unit. Fixed costs
have been absorbed over the normal level of activity of 500,000 units and have been calculate
d as ₹ 5 per unit. The current selling price is ₹ 25 per unit.
Profit made under marginal costing if the company sells 625,000 units would be;
A. 25,00,000
B. 37,00,000
C. 42,50,000
D. None of the above

54
1. A certain process needed standard labour of 24 skilled labour hours and 30 unskilled labour
hours at Rs. 60 and Rs. 40 respectively as the standard labour rates. Actually, 20 and 25
labour hours were used at Rs. 50 and Rs. 50 respectively. Then, the labour mix variance will
be
A. Adverse
B. Favourable
C. Zero
D. Favourable for skilled and unfavourable for unskilled
2. Idle time is
A. Time spent by workers in factory
B. Time spent by workers in office
C. Time spent by workers off their work
D. Time spent by workers on their job
3. Difference between standard cost and actual cost is called as
A. Wastage
B. Loss
C. Variance
D. Profit
4. Standard cost of material for a given quantity of output is Rs. 15,000 while the actual cost of
material used is Rs. 16,200. The material cost variance is:
A. Rs. 1,200 (A)
B. Rs. 16,200 (A)
C. Rs. 15,000 (F)
D. Rs. 31,200 (A)
5. Standard price of material per kg is Rs. 20, standard usage per unit of production is 5 kg.
Actual usage of production 100 units is 520 kgs, all of which was purchased at the rate of Rs.
22 per kg. Material cost variance is
A. 2,440 (A)
B. 1,440 (A)
C. 1,440 (F)
D. 2,300 (F)
6. Standard cost of material for a given quantity of output is Rs. 15,000 while the actual cost of
material used is Rs. 16,200. The material cost variance is:
A. Rs. 1,200 (A)
B. Rs. 16,200 (A)
C. Rs. 15,000 (F)
D. Rs. 31,200 (A)

55
7. When the amount of under-or-over-absorption is significant, it should be disposed of by
A. Transferring to costing profit and loss A/c
B. The use of supplementary rates
C. Carrying over as a deferred charge to the next accounting year
D. None of above
8. Excess of actual cost over standard cost is known as
A. Abnormal effectiveness
B. Unfavourable variance
C. Favourable variance
D. None of these.
9. Difference between standard cost and actual cost is called as
A. Wastage
B. Loss
C. Variance
D. Profit
10. Standards cost is used
A. To ascertain the breakeven point
B. To establish cost-volume profit relationship
C. As a basis for price fixation and cost control through variance analysis.
11. Standard price of material per kg Rs. 20, standards consumption per unit of production is 5 kg.
Standard material cost for producing 100 units is
A. Rs. 20,000
B. Rs. 12,000
C. Rs. 8,000
D. Rs. 10,000
12. Standard cost of material for a given quantity of output is Rs. 15,000 while the actual cost of
material used is Rs. 16,200. The material cost variance is:
A. Rs. 1,200 (A)
B. Rs. 16,200 (A)
C. Rs. 15,000 (F)
D. Rs. 31,200 (A)
13. For the purpose of Proof, Material Cost Variance is equal to:
A. Material Usage Variance + Material Mix variance
B. Material Price Variance + Material Usage Variance
C. Material Price Variance + Material yield variance
D. Material Mix Variance + Material Yield Variance

56
14. Cost variance is the difference between
A. The standard cost and marginal cost
B. The standards cost and budgeted cost
C. The standards cost and the actual cost
D. None of these
15. Standard price of material per kg is Rs. 20, standard usage per unit of production is 5 kg. Actual
usage of production 100 units is 520 kgs, all of which was purchase at the rate of Rs. 22 per
kg. Material usage variance is
A. Rs. 400 (F)
B. Rs. 400 (A)
C. Rs. 1,040 (F)
D. Rs. 1,040 (A)
16. Standard price of material per kg is Rs. 20, standard usage per unit of production is 5 kg. Actual
usage of production 100 units is 520 kgs, all of which was purchase at the rate of Rs. 22 per
kg. Material cost variance is
A. 2,440 (A)
B. 1,440 (A)
C. 1,440 (F)
D. 2,300 (F)
17. Standard quantity of material for one unit of output is 10 kgs. @ Rs. 8 per kg. Actual output during
a given period is 800 units. The standardquantity of raw material
A. 8,000 kgs
B. 6,400 Kgs
C. 64,000 Kgs
D. None of these.
18. Standard quantity of material for one unit output is 10 kg @ Rs.8 per kg. Actual output during
a given period is 600 units. The standard quantity of material for actual output is
A. 1200 kg
B. 6000 kg
C. 4800 kg
D. 48000 kg
19. During a period 2560 labour hours were worked at a standard rate of Rs. 7.50 per hour. The
direct labour efficiency variance was Rs. 825 (A). How many standard hours were produced?
A. 2400
B. 2450
C. 2500
D. 2550

57
20. Which of the following would not be used to estimate standard direct material prices?
A. The availability of bulk purchase discounts
B. Purchase contracts already agreed
C. The forecast movement of prices in the market
D. Performance standards in operation
21. What is an attainable standard?
A. A standard which includes no allowance for losses, waste and inefficiencies. It
represents the level of performance which is attainable under perfect operating
conditions
B. A standard which includes some allowance for losses, waste and inefficiencies. It
represents the level of performance which is attainable under efficient operating
conditions
C. A standard which is based on currently attainable operating conditions
D. A standard which is kept unchanged, to show the trend in costs
22. Standard price of material per kg ₹ 20, standards consumption per unit of production is 5 kg.
Standard material cost for producing 100 units is
A. ₹ 20,000
B. ₹ 12,000
C. ₹ 8,000
D. ₹ 10,000
23. Standard cost of material for a given quantity of output is ₹ 15,000 while the actual cost of
material used is ₹ 16,200. The material cost variance is:
A. ₹ 1,200 (A)
B. ₹ 16,200 (A)
C. ₹ 15,000 (F)
D. ₹ 31,200 (A)
24. Standard price of material per kg is ₹ 20, standard usage per unit of production is 5 kg. Actual
usage of production 100 units is 520 kgs, all of which was purchase at the rate of ₹ 22 per kg.
Material usage variance is
A. ₹ 400 (F)
B. ₹ 400 (A)
C. ₹ 1,040 (F)
D. ₹ 1,040 (A)
25. Standard price of material per kg is ₹ 20, standard usage per unit of production is 5 kg. Actual
usage of production 100 units is 520 kgs, all of which was purchase at the rate of ₹ 22 per kg.
Material cost variance is
A. ₹ 2,440 (A)
B. ₹ 1,440 (A)
C. ₹ 1,440 (F)
D. ₹ 2,300 (F)

58
26. Standard quantity of material for one unit of output is 10 kgs. @ ₹ 8 per kg. Actual output during
a given period is 800 units. The standards quantity of raw material
A. 8,000 kgs
B. 6,400 kgs
C. 64,000 kgs
D. None of these
27. What is the labour rate variance if standard hours for 100 units of output are 400 @ ₹ 2 per
hour and actual hours taken are 380 @ ₹ 2.25 per hour?
A. ₹ 120 (adverse)
B. ₹ 100 (adverse)
C. ₹ 95 (adverse)
D. ₹ 25 (favourable)
28. In a period, 11280 kilograms of material were used at a total standard cost of ₹ 46,248. The
material usage variance was ₹ 492 adverse. What was the standard allowed weight of material
for the period?
A. 11600 kg
B. 11160 kg
C. 12190 kg
D. 10590 kg
29. The operations to produce a unit of product L require 9 active hours. Budgeted idle time of 10%
of total hours paid for is to be incorporated into the standard times for all products. The wage
rate is ₹ 4 per hour. The standard labour cost of one unit of product L is:
A. ₹ 10.00
B. ₹ 36.00
C. ₹ 39.60
D. ₹ 40.00
30. Under standard cost system the cost of the product determined at the beginning of production
is its:
A. Direct cost
B. Pre-determined cost
C. Historical cost
D. Actual cost
31. Which of the following variance arises when more than one material is used in the manufacture
of a product?
A. Material price variance
B. Material usage variance
C. Material yield variance
D. Material mix variance

59
32. Standard price of material per kg 20, standards consumption per unit of producti on is 5 kg.
Standard material cost for producing 100 units is;
A. 20,000
B. 12,000
C. 8,000
D. 10,000
33. Favourable variance is when;
A. The standard cost is equal to actual cost
B. Standard cost is greater than actual cost
C. Standard cost is less than actual cost
D. None of the above
34. Product A required 25 kg of material at a rate of ₹11 per kg. The actual consumption of material
for the manufacturing product A comes to 30 kg of material at the rate of ₹11.25 per kg. The
Ma terial Cost Variance is;
A. 62.5 (Favourable)
B. 62.5 (Adverse)
C. 7.5 (Favourable)
35. 55 (Adverse) Product A required 25 kg of material at a rate of ₹11 per kg. The actual consumption
of material for the manufacturing product A comes to 30 kg of mater ial at the rate of ₹ 11.25
per kg. The Material Cost Variance comprise of Material Price Variance and Material Usage
Variance, which are;
A. 7.5 (Adverse) and 55 (Adverse) respectively
B. 7.5 (Favourable) and 55 (Adverse) respectively
C. 7.5 (Adverse) and 55 (Favourable) respectively
D. 7.5 (Favourable) and 55 (Favourable) respectively
36. Standard price of material per kg is 20, standard usage per unit of production is 5 kg. Actual
usage of production 100 units is 520 kgs, all of which was purchase at the rate of 22 per kg.
Material cost variance is
A. 2,440 (A)
B. 1,440 (A)
C. 1,440 (F)
D. 2,300 (F)
37. Standard price of material per kg is ₹ 20, standard usage per unit of production is 5 kg. Actual
usage of production 100 units is 520 kgs, all of which was purchase at the rate of ₹ 22 per kg.
Material usage variance is The Material Co st Variance comprise of Material Price Variance and
Material Usage Variance, which are;

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 A. 1040 (Adverse) and 400(Adverse) respectively
B. 1040 (Favourable) and 400 (Adverse) respectively
C. 1040 (Adverse) and 400 (Favourable) respectively
D. 400 (Favoura ble) and 1040 (Favourable) respectively
38. The standard operating capacity of Vermont Manufacturing, Inc., is 2,000 units. It should take
three hours of direct labour time to produce one unit of product, at a standard rate of 15 per
hour. It actually took 6,500 direct labour hours to produce the 2,000 units, at an actual wage
rate of 16 per hour. Based on the information above, the labour cost variance is
A. 7500 (Adverse)
B. 6500 (Adverse)
C. 14000 (Favourable)
D. 14000 (Adverse)

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1. If an organization has all the resources it needs for production, then the principal budget
factor is most likely to be
A. non-existing
B. sales demand
C. raw materials
D. labour supply
2. Sales Budget is a-
A. Expenditure budget
B. Functional budget
C. Master budget
D. None of the above
3. Which of the following is not a potential benefitsof using a budget?
A. More motivated managers
B. Enhanced co-ordination of firm activities
C. Improved inter-departmental communication
D. More accurate external financial statements
4. The basic difference between a fixed budget and flexible budget is that a fixed budget -
A. is concerned with a single level of activity, while flexible budget is prepared for
different levels of activity
B. Is concerned with fixed costs, while flexible budget is concerned with variable costs.
C. is fixed while flexible budget changes
D. None of these.
5. Budgets are shown in ……. Terms
A. Qualitative
B. Quantitative
C. Materialistic
D. both (b) and (c)
6. Which of the following is not an element of master budget?
A. Capital Expenditure Budget
B. Production Schedule
C. Operating Expenses Budget
D. All above
7. Which of the following is not a potential benefit of using a budget?
A. Enhanced coordination of firm activities
B. More motivated managers
C. Improved interdepartmental communication
D. More accurate external financial statements
8. Which of the following is a long-term budget?
A. Master Budget

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 B. Flexible Budget
C. Cash Budget
D. Capital Budget
9. The difference between fixed cost and variable cost assumes significance in the
preparation of the following budget.
A. Master Budget
B. Flexible Budget
C. Cash Budget
D. Capital Budget
10. The budget that is prepared first of all is
A. Master budget
B. Budget, with key factor
C. Cash Budget
D. Capital expenditure budget
11. Sales budget is a …
A. expenditure budget
B. functional budget
C. Master budget
D. None of these
12. A flexible budget requires a careful study of
A. Fixed, semi-fixed and variable expenses
B. Past and current expenses
C. Overheads, selling and administrative expenses.
D. None of these.
13. Which of the following is a long-term Budget?
A. Master Budget
B. Production Budget
C. Flexible Budget
D. Capital Budget
14. Cash Budget of ABC Ltd. forewarns of a short-term surplus. Which of the following would be
appropriate action to be taken in such a situation?
A. Purchase new fixed assets
B. Repay long-term loans
C. Write off preliminary expenses
D. Pay creditors early to obtain a cash discount
15. Budgets are shown in-Terms
A. Qualitative
B. Quantitative
C. Materialistic
D. both (b) and (c)

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16. Which of the following is not an element of master budget?
A. Capital Expenditure Budget
B. Production Schedule
C. Operating Expenses Budget
D. All above
17. Which of the following is not a potential benefit of using a budget?
A. Enhanced coordination of firm activities
B. More motivated managers
C. Improved inter-departmental communication
D. More accurate external financial statements
18. Which of the following is a long-term budget?
A. Master Budget
B. Flexible Budget
C. Cash Budget
D. Capital Budget
19. The difference between fixed cost and variable cost assumes significance in the preparation
of the following budget
A. Master Budget
B. Flexible Budget
C. Cash Budget
D. Capital Budget
20. The budget that is prepared first of all is .
A. Master budget
B. Sales budget assuming that it is the key factor
C. Cash Budget
D. Capital expenditure budget
21. Sales budget is a _______.
A. expenditure budget
B. functional budget
C. master budget
D. None of these
22. When a company wants to prepare a factory overhead budget in which the estimated costs are
directly derived from the estimates of activity levels, which of the following budget should be
prepared by the company?
A. Flexible budget
B. Fixed budget
C. Master budget

D. R & D budget

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23. Which of the following budgets facilitates classification of fixed and variable costs:
A. Capital expenditure budget
B. Flexible budget
C. Cash budget
D. Raw materials budget
24. The entire budget organisation is controlled and headed by a senior executive known as:
A. General Manager
B. Accountant
C. Budget Controller
D. None of the above
25. Which of the following is generally a long term budget:
A. Cash budget
B. Sales budget
C. Research and Development budget
D. Capital expenditure budget
26. A flexible budget requires a careful study of
A. Fixed, semi-fixed and variable expenses
B. Past and current expenses
C. Overheads, selling and administrative expenses.
D. None of these.
27. The basic difference between a fixed budget and flexible budget is that a fixed budget
_________.
A. is concerned with a single level of activity, while flexible budget is prepared for
different levels of activity
B. Is concerned with fixed costs, while flexible budget is concerned with variable costs.
C. is fixed while flexible budget changes
D. None of these.s
28. Budgetary Control involves mainly
A. establishment of budgets,
B. continuous compassion of actual with budgets
C. revision of budgets.
D. All of the above
29. Which of the following is not a major step in preparing the master budget?
A. Prepare a standard cost card
B. Estimate manufacturing costs and operating expenses.
C. Determine cash flow and other financial effects.
D. Formulate projected financial statements.
30. Which of the following is a long -term budget?
A. Master Budget

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 B. Flexible Budget
C. Cash Budget
D. Capital Budget
31. Principles of responsibility accounting are as follows:
A. A target is fixed for each department or responsibility center.
B. Actual perf ormance is compared with the target.
C. The variances from plan are analyzed so as to fix the responsibility.
D. Operating budget is prepared to carry out responsibility.
32. The classification of fixed and variable cost is useful for the preparation of
A. Master budget
B. Flexible budget
C. Cash budget
D. Capital budget
33. If a company wishes to establish a factory overhead budget system in which estimated costs
can be derived directly from estimates of activity levels, it should prepare a
A. Master budget
B. Cash budget
C. Flexible budget
D. Fixed budget
34. The basic steps to effective zero -base budgeting are:
A. Describe each organization’s activity in a “decision” package.
B. Analyze, evaluate, and rank all these packages in priority on the basis of cost -
benefit analysis.
C. Allocate resources accordingly.
D. All of the above
35. Sales budget is a …
A. expenditure budget
B. functional budget
C. Master budget
D. None of these
36. Flexible budget requires a careful study of
A. Fixed, semi -fixed and variable expenses
B. Past and current expenses
C. Overheads, selling and administrative expenses.
D. None of these.
37. The basic difference between a fixed budget and flexible budget is that a fixed budget…….
A. is concerned with a single level of activity, while flexible budget is prepared for
different levels of activity
B. Is concerned with fixed costs, while flexible budget is concerned with variable costs.
C. is fixed while flexi ble budget changes
D. None of these.

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