Note: Yellow font indicate correct answer. 1. Period Cost means : a) variable cost c) prime cost b) fixed cost d) indirect cost 2. Raw materials that are directly identifiable as part of the final product are classified as: a) indirect materials c) production materials b) direct materials d) process materials 3. Notional cost is also known as: a) opportunity cost c) imputed cost b) out of pocket cost d) variable cost 4. Generally an item of expense, when identified with a specific cost unit is treated as : a) prime cost c) unit cost b) relevant cost d) direct expense 5. Wages paid to the workers engaged in machining department in an engineering industry is called : a) actual labor c) indirect labor b) direct labor d) production labor 6. The cost of drawings, design and layout is an example of : a) production cost c) indirect cost b) direct expense d) direct material 7. The unavoidable costs are also called : a) inescapable cost c) implicit cost b) urgent cost d) explicit cost 8. The cost which does not involve actual cash outlay is called : a) imputed cost c) Indirect cost b) traceable cost d) expected cost 9. Costs incurred in closing down a department or division is called : a) shutdown cost c) sunk cost b) abandonment cost d) urgent cost 10. Costs involve cash outlay or payment to other parties is called : a) out of pocket costs c) period costs b) book costs d) urgent costs 11. the hypothetical cost taken into a particular situation to represent the benefit enjoyed by an entity in respect of which no actual expenditure is incurred is called a) explicit cost c) hypothetical cost b) rational cost d) notional cost 12. Cost which should be incurred in the event of a temporary cessation of activities, and which can be saved if activities are allowed to continue are known as : a) shutdown cost c) explicit cost b) imputed cost d) fixed cost 13. Royalties payable on use of patents, copyrights etc. is an example of: a) direct expenses c) indirect expenses b) production expenses d) selling expenses 14. Costs which has definite relationship with plant capacity and output of the product astermed as : a) fixed cost c) capacity cost b) plant cost d) engineered cost 15. The basic research cost should be treated as: a) product cost c) production overhead b) production cost d) period cost 16. The total direct material ,direct labor and direct expenses is called : a) production cost c) relevant cost b) essential cost d)prime cost 17. A cost that tends to be unaffected by changesin level of activity during a given period of time : a) fixed cost c) variable cost b) direct cost d) unit cost 18. To study the cause and effect relationship, one variable istaken as dependent while the other is taken as independent in : a) goodness of fit c) correlation analysis b) regression analysis d) method of least squares 19. The cost per unit of a product manufactured in a factory amounts to Rs 160 (75% variable) when production is 10,000 units, when production increases by 255, the cost of production will be Rs _______ / unit. a) 145 c) 150 b) 152 d) 140 20. The total production cost of Lalaji Ltd. For making 6000 units is Rs 35,000 and the total production cost of making 15,000 units is Rs. 67,000. Once the production exceeds 10,000 units, the additional fixed cost of Rs.5, 000 are incurred. What will be full production cost per unit for making 12,000 units? a) Rs 5.21 c) Rs. 4.64 b) Rs. 4.83 d) insufficient data Material Procurement Procedure 21. A comprehensive list of materials, with specifications, material codes and quantity of each material required for a particular job, process or production units is called: a) Purchase order c) bills of materials b) Purchase requisition d) material requisition 22. Issue of materials during a period of time are priced at the latest purchase cost under: a) FIFO c) single leverage b) LIFO d) weighted average 23. Materials are issued at predetermined prices in: a) method c) actual cost method b) Standard costing method d) market price method 24. An internal instruction on purchase department to purchase goods or service is called: a) Material requisition c) bin card