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business
management cost accounting

Questions and Answers of Management Cost Accounting

Define marginal costing. Discuss its usefulness.
From the following information, calculate (a) P/V ratio, (b) BEP and (c) margin of safety:Rs Total sales 3,60,000 Selling price per unit 100 Variable cost per unit 50 Fixed costs 1,00,000 If the
From the following data, calculate (a) BEP (in units). (b) If sales are 10% and 15% above the breakeven volume, determine the net profit.Selling price per unit = Rs 10 Direct material per unit = Rs 3
From the following details, find(a) P/V ratio(b) Break-even sales(c) Margin of safety Sales Rs 1,00,000 Total cost Rs 80,000 Fixed cost Rs 20,000 Net profit Rs 20,000
From the following information find (a) BEP and (b) margin of safety:Rs Total fixed costs 1,80,000 Total variable cost 3,00,000 Selling price is Rs 6 per unit, number of units sold 2,00,000
Calculate the BEP from the following:(a) Sales price = Rs 10 per unit(b) Variable cost = Rs 6 per unit(c) Fixed overheads = Rs 20,000 Calculate the revised BEP if (i) Sales price is increased to Rs
From the following information, find P/V ratio and margin of safety:Rs Sales 10,00,000 Variable cost 4,00,000 Fixed cost 4,00,000
From the following data, find out BEP and break-even sales. If selling price is reduced to Rs 18 per unit, what will be the new BEP and new break-even sales?Budgeted output = 1,00,000 units Fixed
From the following data, calculate BEP expressed in terms of units and also the new BEP if selling price is reduced by 10%:Fixed expenses:Depreciation Rs 1,00,000 Salaries Rs 1,00,000 Variable
The details of cost per unit at an activity level of 10,000 units of a product are as follows:Rs Raw materials 10 Direct expenses 8 Labour charges 2 Variable overheads 4 Fixed overheads 6 Total cost
In break-even chart, x-axis represents(a) Sales or volume of production (b) Profit(c) Loss (d) Soundness of business
Contribution =(a) Fixed cost − loss (b) Profit + variable cost(c) Sales − fixed cost − profit (d) None of the above Ans: (a)
Margin of safety is the difference between(a) Planned sales and planned profit (b) Actual sales and break-even sales(c) Planned sales and actual sales (d) None of the above Ans: (b)
In marginal costing, fixed costs are charged to(a) Profit and loss account (b) Income account(c) Costing profit and loss account (d) Stores ledger Ans: (c)
P/V ratio is an indicator of(a) The rate at which goods are sold (b) Volume of sales(c) Volume of profit (d) Rate of profit Ans: (d)
A large margin of safety indicates(a) Overproduction (b) Overcapitalization(c) Soundness of business (d) None of the above Ans: (a)
An increase in variable cost results in(a) Increase in P/V ratio (b) Increase in profit(c) Decrease in contribution (d) Decrease in profit Ans: (c)
Period costs are(a) Overhead costs (b) Prime cost(c) Variable cost (d) Fixed cost Ans: (d)
Contribution margin is also known as(a) Marginal income (b) Gross profit(c) Net profit (d) Loss Ans: (a)
Marginal costing does not include(a) Fixed cost (b) Variable cost(c) Contribution (d) Sales
Marginal costing is a technique of cost control.
There is loss in marginal costing when there is production but no sales.
Profit in marginal costing is more when production is more than sales.
Absorption costing is more suitable for decision making than marginal costing.
In marginal costing, managerial decisions are guided by contribution margin than by profit.
In absorption costing, valuation of stock is higher than that in marginal costing.
At BEP contribution is equal to fixed cost.
Marginal costing may be used in conjunction with standard costing.
In marginal costing, fixed costs are apportioned on some arbitrary basis.
In marginal costing, fixed costs are excluded in the valuation of work-in-progress.
The following information is given for process I for B Ltd. The average method of pricing work-inprogress is used.Work-in-progress in January:Rs Materials on 500 units 900 Labour on 500 units 1,000
In process I, opening work-in-progress in February 1989 was 200 units, 40% complete. 1,050 units were introduced during the period. 1,100 completed units were transferred to process II and 150 units
Calculate equivalent production from the following data:20,000 units of work-in-progress were there in process I on 1 January 1997 and it was 60% complete.50,000 units were introduced into the
From the following details, prepare a statement of equivalent production and a statement of cost, and find the value of the following:Output transferred Closing work-in-progress, by the average cost
During January 2,000 units were introduced into process I. The normal loss was estimated at 5% on input. At the end of the month 1,400 units had been produced and transferred to the next process.460
During a month, 2,000 units of raw materials at a cost of Rs 9,500 were issued to process A. At the end of the month 1,500 units had been produced; 300 units were still in process; and 200 units had
Calculate the estimated costs of production of by-products X and Y at the point of separation from the main product.By-product By-product X Y Selling price per unit Rs 12 Rs 24 Cost per unit after
AB Co. Ltd manufactures product A, which yields two by-products B and C. The actual joint expenses of manufacturing for a period were Rs 8,200. The profits on each product as a percentage of sales
A factory producing an article P also produces a by-product Q, which is further processed into finished product. The joint cost of manufacture is as follows:Rs Materials 5,000 Labour 3,000 Overheads
A factory producing an article A also produces a by-product B, which is further processed into finished product. The joint cost of manufacture is given as follows:Material 50,000 Labour 30,000
A factory produces an article A; this process yields B and C as by-products. The costs are as follows:Actual joint costs Subsequent cost A B C Material 10,000 1,500 1,300 1,000 Labour 1,600 200 150
Vasanth Ltd manufactures product A, which yields two by-products B and C. The actual joint expense of manufacture for a period was Rs 8,000. Subsequent expenses and other data are as follows:A (Rs) B
A company producing product X yields two by-products Y and Z. The following particulars relate to a particular period of operation in which the joint cost amounted to Rs 1,40,000:Product Sales (Rs)
The following data have been extracted from the books of M/s. East India Coke Company Ltd:Yield (Rs) of recovered products per tonne of coal Coke 1,420 Coal tar 120 Benzol 22 Sulphate of ammonia 26
A coke manufacturing company produces the following products by putting 5,000 tonnes of coal at Rs 25 per tonne into the common process:Coke: 3,500 tonnes Tar: 1,200 tonnes Sulphate: 52 tonnes
Sujatha Industries produces three products X, Y and Z from a joint processing operation. The cost before separation amounted to Rs 1,25,000. The outputs of X, Y and Z were 5,000; 6,000; and 1,500
In manufacturing the main product, a company processes the incidental waste into two by-products A and B. From the following data relating to the products, you are required to prepare a comparative
M/s. XYZ Co. has a single process.Work-in-progress (opening) = 8,000 units Rs Cost: Materials 29,600 Wages 6,600 Overheads 5,800 During the period, the input was 32,000 units. Additional cost data is
A product passes through three processes A, B and C. The details of expenses incurred on the three processes during the year 1992 are as follows:Process A Process B Process C Units issued/introduced
A product passes through three processes, processes I, II and III. 15,000 units of crude material were introduced into process I at Re 1 per unit. Additional information is as follows:Process I (Rs)
The product of a manufacturing concern passes through two processes A and B and then to finished stock.It is ascertained that in each process normally 5% of the total weight is lost and 10% is scrap
In a factory, the product passes through two processes A and B. A loss of 5% is allowed in process A and 2% in process B, nothing being realized by disposal of the wastage. During April, 10,000 units
A product passes through three processes. The following data relate to the three processes during September 1998:Total Process I Process II Process III Materials (Rs) 5,625 2,600 2,000 1,025 Labour
The product of a company passes through three distinct processes to reach completion. They are A, B and C. From past experience it is ascertained that loss is incurred in each process as
A product passes through three process I, II and III. From the following information, prepare the process accounts assuming that there are no opening or closing stocks:Process I (Rs) Process II (Rs)
From the following information, prepare process cost accounts and normal loss, abnormal loss or gain accounts:Process A (Rs) Process B (Rs)Material 30,000 3,000 Labour 10,000 12,000 Overheads 7,000
The product of a company passes through three distinct processes to reach completion. From past experience it is ascertained that wastage is incurred in each process as under process A—2%, process
A product passes through three processes X, Y and Z. The normal waste of each process was 3%, 5%and 8% for X, Y and Z, respectively. The waste of process X was sold at Rs 2.50 per unit, that of Y at
A particular brand of scent passed through three important processes. During the week ending on 15 January 1987, 600 bottles were produced. The costbooks show the following information:Process A (Rs)
Calculate the cost of each process and the total cost of production from the following data:Process 1 Process 2 Process 3(Rs) (Rs) (Rs)Material 2,250 750 300 Wages 1,200 3,000 900 Direct expenses 500
What do you mean by equivalent production?
Write a note on interprocess profits.
What are known as separate expenses and joint expenses?
What is the meaning of the term split-off point?
State the differences between joint products and by-products.
Write notes on(a) Normal loss(b) Abnormal loss(c) Abnormal gain
Name some industries where process costing is applied?
Discuss the features of process costing.
The method of accounting for joint product cost that will produce the same gross profit for all the products is(a) Reverse cost method (b) Opportunity cost method(c) Sales value method (d) Other
Products that cannot be produced separately are known as(a) By-products (b) Co-products(c) Joint products (d) Main product
Avoidable losses arising from the nature of a productive process is termed as(a) Normal loss (b) Abnormal loss(c) Net loss (d) Gross loss
Process costing is adopted by(a) Paper mills (b) Chemical industries(c) Textile mills (d) All the above
A bakery producing cakes, biscuits and breads should be treated as(a) Joint product (b) Main product(c) By-product (d) Co-product
Credit is given to a process account at a predetermined value of the by-product under(a) Points value method (b) Sales value method(c) Standard cost method (d) Opportunity cost method
Individual products, each of a significant value, produced simultaneously from the same raw material are known as(a) By-products (b) Joint products(c) Main products (d) Co-products
The type of process loss that should not affect cost of inventories is(a) Standard loss (b) Seasonal loss(c) Normal loss (d) Abnormal loss
Which of the following methods of costing can be used in a large oil refinery?(a) Job costing (b) Unit costing(c) Process costing (d) Operating costing
In process costing, cost follows(a) Finished goods (b) Product flow(c) Price rise (d) Price decline
When actual loss is more than estimated loss, the difference between the two is considered as abnormal gain.
The method of costing applied in biscuit industry is process costing.
The cost of abnormal process loss is not included in the cost of a process.
In process costing, ordinarily no distinction is made between direct and indirect materials.
Abnormal gain should reduce normal loss.
Abnormal loss is spread on good units of production.
Normal loss does not increase the cost per unit of usual production.
Process costing is applied in chemical works.
Process costing is applied in garment industry.
Process costing is one aspect of operation costing.
From the following particulars, prepare operating cost sheet.Total units generated 20,00,000 kWh.Operating labour Rs 50,000 Repairs Rs 50,000 Lubricants Rs 40,000 Plant supervision Rs 30,000
Following is the information given by the owner of a hotel. You are required to advise him what rent should be charged from customers per day so that he is able to earn 25% profit on cost other than
From the following data, find out the cost per ‘room-day’ and the charge to the customers if the profit required is 20% on cost.Room accommodation available 50 double rooms 100 single rooms Each
A Transport Company operates two trucks. Following is the data regarding the monthly cost of operating them.Trucks A Rs B Rs Driver’s salary 250 275 Cleaner’s wages 150 160 Petrol 300 350 Mobil
XY & Co. owns a fleet of 10 trucks each costing Rs 60,000. The company has employed one manager to whom it pays Rs 450 p.m., an accountant who gets Rs 250 p.m. and a peon who gets Rs 100 p.m. The
From the following, data relating to vehicle ‘X’ calculate the cost per running kilometre.Vehicle X Kilometres run (annual) 15,000 Tons per km (average) 6 Cost of vehicle Rs 25,000 Road licence
The following figures are extracted from the books of a firm for the year 1994.Passenger buses 5 Numbers Bus costing Rs 50,000; Rs 1,20,000; Rs 45,000 Rs 55,000 and Rs 80,000 Depreciation 20% of the
From the following data relating to vehicle ‘A’ compute the cost per running ton-km.Vehicle A Kilometres run (annual) 15,000 Tons per km (average) 6 Rs Cost of vehicle 2,50,000 Road licence
From the following data relating to a lorry of 4 tonne capacity, you are required to compute the operating cost per tonne-mile.Truck cost Rs 1,00,000 Estimated life in years 10 Maintenance Rs 500
From the following data, calculate the cost per kilometre of a vehicle:Rs Value of vehicle 75,000 Road licence fee per year 500 Insurance per year 100 Garage rent per year 600 Driver’s wage per
Sohan Singh has started transport business with a fleet of 10 taxis. The various expenses incurred by him are given below:(a) Cost of each taxi—Rs 75,000(b) Salary of office staff—Rs 1,500
From the following particulars, calculate the cost of running a taxi per kilometre: 1. Number of taxis 10 2. Cost of each taxi Rs 2,00,000 3. Salary of manager Rs 6,000 p.m. 4. Salary of accountant

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