Management Accounting Suggestion

ক- : ও

1.Define conversion cost? Ans. The term used to describe direct labour cost combined
with manufacturing overhead cost.

(2) What is prime cost? Ans. Prime cost is the combined form of direct materials, direct
labour and direct expenses.

(3) What is cost statement? Ans. The statement that shows all the costs related to cost
of production is called cost statement.

(4) What is flexible budget? Ans. Flexible Budget is a budget which is designedto change
in accordance with the level of activity actually attained.

(5) What is cash budget? Ans. Cash budget is plan indicating expected inflows (receipts)
and outflows (disbursements) of cash

(6) What is sunk cost? Ans. Sunk cost is the cost that has already been incurred and that
cannot be changed by any 500 decision made now or in the future.

(7) What is IRR? Ans. IRR method is an alternative method of NPV. The rate at which the
NPV is zero. Thus, it does not involve any assumptions about interest rate.

(8) Which costing method is also known as 'full costing'?

Ans. Absorption costing is also known as full costing

(9) What is working capital? Ans. Working Capital simply refers to the capital which is
required to finance current assets.

(10) Elaborate 'GAAP'.

Ans. Generally Accepted Accounting Principals.

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(11) What do you mean by margin of safety? Ans. The excess of budgeted (or actual)
sales over the break-even volume is margin of safety.

(12) What is sales mix?

Ans. The relative combination in which a company's product are sold. Sales mix is
computed by expressing the sales of each product as a percentage of total sales.

(13)Define management accounting

Ans. Management Accounting is the process of identification measurement,

Accumulation, analysis, preparation, interpretation and communication of information
that assists executives in fulfilling organizational objectives.

(14) What is cost behavior?

Ans. Cost behavior is the way is which a cost reacts of responds to changes is the level of
business activity.

(15) In which case, more net profit arise in variable costing? Ans. It is a costing method
that includes only variable manufacturing costs- direct materials, direct labour, direct
expense and variable factory overhead in the cost of a unit of product.

(16) Define relevant range. Ans. The range of activity within which assumption relative
to variable and fixed cost behavior are valid.

(17 ) What is unavoidable cost? Ans. A cost that cannot be influenced at the business
unit level but is controllable at the corporate level is called Unavoidable cost.

(18) What is master budget? Ans. The master budget is a set of interrelated budget that
constitute a plan of action for a specified time period.

(19) What is capital rationing? Ans. It is a situation os not being able to accept all
potentially profitable investments because of limited availability of gunds to spend on
capital out lays.

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(20) What is material price variance? Ans. It refers to that portion of material cost
variance which is due to the different between the standard prices specified and the
actual price for direct materials used.

21)What is meant by value chain? Ans. Value chain is the set of business functions that
add value to the products of services of an organization.

(22) What is meant by budgetary control?

Ans. The budgetary control is Techniques and planning and control method.

(23) Which costing method is useful in external reporting?

Ans. Absorption costing is used for external reporting.

(24) What is elaboration of ICMAB? Ans. Institute of Cost and Management Accountants
of Bangladesh

25) What is opportunity cost? Ans: The potential benefit that is lost or sacrificed when
the selection of one course of action makes it necessary to give up a competing course
of action.

25) What is activity based budget?

Ans: Activity based budget is the budget for the costs of individual activities in activity
based budgeting all cost are allocated to cost centre and then are assigned to activities.

26) What is capital budgeting

Ans: Capital budgeting refers to the planning of expenditure whose returns are expected
to spread over a series of years

26) Give two examples of semi- variable cost. Ans: Telephone expenses (Fixed or land
phone),Light and Electricity expenses.

(27) What is fixed cost? Ans: A cost that remains constant. In total, regardless of change
in the level of activity. If a fixed cost is expressed on a per unit basis, it varies inversely
with the level of activity.

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(28) Define NPV.Ans: Difference between total present value of cash in flow is called
NPV.

(29) What is relevant cost? Ans: Relevant cost are those expected future cost that differ
among alternative course of action

(30) Define BEP (break even point). Ans. The level of activity at which an organization
neither earns a profit not incurs a loss. The break even point can also be defined as the
point where total revenue equals total cost and as the point where contribution margin
total equals total fixed costs.

31).What is manufacturing overhead? Ans. All costs associated with the manufacturing
process expect direct materials and direct labour.

32).What is standard cost? Ans. Standard cost is a predetermined cost to be used for
measuring the efficiency or otherwise of the actual performance.

33) Define marginal cost.

Ans. The additional cost resulting from producing and selling one additional unit is called
marginal cost

34) Write down the formula of contribution margin ratio.

Ans. Contribution margin ratio=

(35) What do you mean by variance analysis? Ans. Accounting to CIMA variance analysis
is a process of determining variance and causes of it's.

(35)What do you mean by range? Ans. Difference between highest and lowest value.

36).Differentiate between a product cost and period cost. Ans: All costs that are
matched against revenue on a time period basis, such costs consist of selling (marketing)
and administrative expenses, Product costs: All costs that are involved in the purchase
or manufacture of goods. In case of manufactured goods these costs consist of direct
materials, direct labour and manufacturing overhead. Also see inventor able costs

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(37) What type of organization make use of standard costing? Ans. The organizations
those are relating to production use slandered costing

38).Write two features associated with variable costing. Ans: There are two variable
cost: (i) Variable cost in total amount as the activity level changes. (ii) Unit variable cost
is fixed

39) What is shut down cost?

Ans: The goal of a firm is to maximize profit or minimize losses. The firm can achieve this
goal by operate where MR- MC. The shut-down price is the price at which the company
will begin to lose money for making the product

40 )What is overhead variance? Ans: Overhead variance as "the difference between the
standard cost of overhead absorbed in the output achieved and the actual overhead
incurred

41) What is ABC costing? Ans: Activity based costing (ABC) refers a costing system by
identifying individual activities as the fundamental cost objects.

(42) What are the elements of cost? Ans: The elements of cost are: a. Material. b.
Labour. c. Overhead.

(43) What is markup?

Ans: It is an amount by which price exceeds cost.

43) What is variable cost? Ans. A cost that varies, in total, in direct proportion or change
in the level of activity. A variable cost is constant per unit.

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