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knowledge bank -basic learning MCQ(CA)

1. A company makes and sells a single product. If the fixed cost incurred in making and selling the product increase: a. The breakeven point will increase b. The breakeven point will decrease c. The breakeven point will remain the same d. Neither a nor b nor c 2. ABC Ltd manufactures a single product which it sells for Rs 20 per unit. Fixed costs are Rs 60,000 per annum. The contribution to sales ratio is 40 percent. ABC Ltd breakeven point in units is a. 7,500 b. 8,000 c. 7,000 d. 7,400 3. ABC Ltd sells a single product for Rs 9 per unit. The variable cost is Rs 6 per unit and the fixed cost total Rs 54,000 per month. Compute the Breakeven point in quantity. 4. Variable costs are budgeted to be 60% of the sales value whereas the fixed costs are estimated as 10% of the sales value. If the company increases its selling price by 10% and fixed cost per unit, variable cost per unit and the sales volume remain the same , the effect of the contribution will be a. An increase by 3% b. An increase by 10% c. A increase by 25% d. A increase by 30% 5. Increase in total variable cost is due to : (i) increase in fixed cost; (ii) increase in sales; (iii) increase in production. 6. An example of fixed cost is : (i) direct material cost; (ii) works manager�s salary; (iii) depreciation of machinery; (iv) chargeable expenses. 7. Cost of goods produced includes : (i) production cost and finished goods inventory (ii) production cost and work-in-progress; (iii) production cost, work-in-progress and finished goods inventory. 8, Indirect costs are known as, (i) Variable costs (ii) Fixed costs (iii) Overheads (iv)None of the above. 9. Accounting standard 2 recommends the valuation of inventory on, (i) Absorption costing (ii) Marginal costing (iii) Activity based costing (iv) None of the above 10. If Rs 10 is spend on producing 10 units and Rs 15 for producing 15, then the fixed cost per unit is, (i) Rs 0 (ii) Rs 1 (iii) Rs 2 (iv) None of the above 11 The variable cost per unit is, (i) Variable in nature. (ii) Fixed in nature. (iii) Semivariable in nature. (iv) None of the above. 12. A company presently does not utilise its available capacity. In case of full capacity utilisation, the cost per unit shall, (i) Increase (ii) Decrease (iii) Remain constant (iv) None of the above 13. Price per unit Rs 150, annual consumption 2,000 units, ordering cost Rs 300 per order and other charges 20% of cost. What should be the quantity of each order? (i) 150 units (ii) 200 units (iii) 225 units ` (iv) None of the above 14. Bin card is maintained by the (i) Accounts department (ii) Costing department (iii) Stores (iv) None of the above 15. Bin card contains (i) Details of the price of raw material lying in the Bin (ii) Details of the price and quantity of raw material lying in the Bin (iii) Details of quantity of material lying in the Bin (iv) None of the above 16. Which of the following assumptions hold true for the calculation of Economic Order Quantity? (i) Anticipated usage of material in units is known (ii) Cost per unit of material is constant and known (iii) Ordering cost per order is fixed (iv) All of the above 17. When the amount of overhead absorbed is less than the amount of overhead incurred, its is called : (a) Under-absorption of overhead (b) Over-absorption of overhead (c) Proper absorption of overhead. (d) None of the above 18. When comparing the profits reported under marginal and absorption costing during a period when the level of stocks increased a. Absorption costing profits will be higher and closing stock valuations lower than those under marginal costing b. Absorption profits will be higher and closing stock valuations higher than those under marginal costing c. Marginal costing profits will be higher and closing stock valuations lower than those under absorption costing d. Marginal costing profits will be lower and closing stock valuations higher than those under absorption costing. 19. A company made 17,500 units at a total cost of Rs 16 each. Three quarters of the cost were variable and one quarter fixed . 15,000 units were sold at Rs 25 each.There were no opening stocks. By how much will profit calculated under absorption costing differ from the profit if marginal costing principles were used? a. Absorption costing profit will be Rs 22,500 less. b. Absorption costing profit would be Rs 10,000 greater. c. Absorption costing profit would be Rs 1,35,000 greater 20. The standard raw material cost for producing one unit of a finished product is Rs 27. Standard raw material usage for every unit of finished product is 3 kg. If 200 units were produced and Rs 5,518 was paid for 620 kg of raw material then the direct material price variance is (a) Rs 62 (F) (b) Rs 72(A) � Rs 100(F) (d) Rs 100(A) 21. The direct material usage variance computed from details of the above question is (a) Rs 200 (F) (b) Rs 200(A) � Rs 180(F) (d) Rs 180(A) 22. The direct material usage variance for last period was Rs 3,400 adverse. What reasons could have contributed such a variance (a) Output was higher than budgeted (b) The purchase department bought poor quality material (c) The original standard usage was set extremely high (d) An old inefficient machine was causing excess wastage 23. A budget that gives a summary of all the functional budgets and projected Profit and Loss Account is known as (a) Capital budget (b) Flexible budget (c) Master budget (d) Discretionary budget 24. The fixed-variable cost classification has a special significance in the preparation of (a) Flexible budget (b) Master budget (c) Cash budget (d) Capital budget 25. The basic difference between a fixed budget and a flexible budget is that a fixed budget (a) includes only fixed costs, and a flexible budget only variable costs (b) is a budget for a single level of some measures of activity, while a flexible budget consists of several budgets based on different activity levels (c) is concerned with future acquisition of fixed assets, while a flexible budget is concerned with expenses that vary with sales (d) cannot be changed after a fiscal period begins, while a flexible budget can be changed after a fiscal period begins 26. When preparing a production budget, the quantity to be produced equals: (a) Sales quantity + opening stock + closing stock (b) Sales quantity - opening stock + closing stock (c) Sales quantity + opening stock + closing stock (d) Sales quantity + opening stock - closing stock 

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Accounting And Finance