AMITY SCHOOL OF DISTANCE LEARNING

Post Box No. 503, Sector-44
Noida – 201303
Cost and Managerial Accounting
(BBA)
Assignment A
Marks 10
Answer all questions.
1. ‘Cost accounting is becoming more and more relevant in the emerging economic
scenario in India’. Comment.

Ans:
Cost accounting is a process of collecting, analyzing, summarizing and evaluating various
alternative courses of action. Its goal is to advise the management on the most appropriate
course of action based on the cost efficiency and capability. Cost accounting provides the
detailed cost information that management needs to control current operations and plan for
the future.
In emerging countries like india, managers are making decisions only for their own
organization, there is no need for the information to be comparable to similar information from
other organizations. Instead, information must be relevant for a particular environment. Cost
accounting information is commonly used in financial accounting information, but first we are
concentrating on its use by managers to make decisions.

In emerging counties, unlike the accounting systems that help in the preparation of financial
reports periodically, the cost accounting systems and reports are not subject to rules and
standards like the Generally Accepted Accounting Principles. As a result, there is wide variety
in the cost accounting systems of the different companies and sometimes even in different
parts of the same company or organization.

Advantages Of Cost Accounting

Following are the most important advantages of a good cost accounting system:

1) Classification and Subdivision of Costs:
In the contrast to a single profit or loss figure supplied by general accounting, the cost accounting
classifies costs and income by every conceivable subdivision of the business enterprise. In a
good costing system data regarding costs by departments, processes, functions, products,
orders, jobs, contracts and services can easily computed. This detailed cost information for
managerial control is one of the most important contributions of cost accounting.

2) Adequacy or Inadequacy of Selling Prices:
Unit cost of production, administration and safe made possible by cost accounting aids
management in deciding the adequacy or inadequacy of selling prices i.e. neither too high
detracting business, nor too low resulting in losses to the concern.

In period of depressions, slumps, or in case of competition management forced to lower prices
even below cost of production and sale. In such circumstances, cost accounting will help
management in deciding the proper reduction.

3) Disclosure of profitable Products:
Cost Accounting will disclose activities, departments, products and territories, which bring profit
and those that result in losses. Management to determine what products because of profit margin
the sales department because of their greater profit margin should emphasize will use this
information. What products arte unprofitable or less profitable and might be eliminated or lesser
sales pressure be given to them. What activities or territories are not producing sufficient profit
and should be either further improved or eliminated and what methods of production and
distribution are most profitable for the firm. This will increase the overall profit of the concern.

4) Control of Material and Supplies:
In a good costing system materials and supplies must be accounted for in terms of departments,
jobs, units of production or service. This will eliminate altogether or reduce to the minimum
misappropriations, embezzlements, deterioration, obsolescence, and losses from defective,
spoiled, scrap and out of date materials and supplies.

5) Maintenance of Proper Investment in Inventories:
A costing system will help in the maintenance of various inventory items of materials and supplies
in line with production and sale requirements. If these quantities are too small, production may
stop or sales may be lost. On the other hand, if quantities of such materials and supplies are in
excess of the production and sales requirements, too much working capital may unnecessarily tie
up in inventories. The detailed quantity information furnished by the cost accountant at all times
will go a long way in reducing or eliminating this possibility.

6) Correct Valuation of Inventories:
Cost Accounting plays a basic role in the correct valuation of inventories of finished goods, work
in process, materials and supplies. The book inventory method (as opposed to physical inventory
method) made possible by cost accounting system will involve the operation of the various
inventory control accounts in such a manner that the balances of these accounts well be
inventory valuations required for periodic financial statements. This enables the preparation of
monthly financial statements without the trouble and expense of taking monthly physical
inventories.

7) Whether to Manufacture or Purchase from Outsiders:
Cost records furnish information regarding the cost of manufacturing of different finished parts,
which assist management in making a decision whether to purchase these parts from outside
manufacturers or manufacture them in the factory.

8) Control of Labour Cost:
Orders, jobs, contracts, departments, processes, or services record cost of labour. In many
manufacturing enterprises, daily time reports are prepared showing the number of hours and
minutes spent and the wage rate for each worker per job or operation. This enables management
to compare the current cost of labour per job or operation with some previously incurred or
determined cost thus measuring the efficiency or inefficiency of the labour force and assigning the
work to employees best suited for it.

9) Use of Company-wide Wage Incentive Plans:
When labour cost is accounted for by jobs and operations, it is possible to use effectively wage
incentive plans or bonus schemes for the remuneration of labour force. Carefully planned and
administered incentive schemes are an effective means of enforcing superior performance and
cost reduction. Workers are more co-operative, responsive and productive when some form of
incentive offered to them for surpassing stipulated standards of perfection and performance. Cost
of accounting has developed incentive plans, which are applicable not only to factory workers but
also to clerks, salespersons, and other executives for above standard performance.

8. points out the deviations from the pre-determined level and thus demands suitable action to eliminate such deviations in future. wage level fixation. losses or inefficiencies in any form. It provides information and data to the management to serve as guides in making decisions involving financial considerations. Cost Accounting is useful for identifying the exact causes for decrease or increase in the. 6.. The application of cost reduction techniques. A good Cost Accounting System helps in identifying unprofitable activities. 9. etc. The price determined may be useful for preparing estimates or filling tenders. tariff protection.2. operations research techniques and value analysis technique. Such a comparison may be made from period to period by using the figures in respect of the same unit of firms or of several units in an industry by employing uniform costing and inter-firm comparison methods. Guidance may also be given by the Cost Accountant on a host of problems such as. Ans: An efficient system of accounting is an essential factor for industrial control under consitions of business due to the following advantages 1. when a concern is not working to full capacity. processes or cost centres. price control. variance analysis. Cost comparison helps in cost control. helps in achieving the objective of economy in concern's operations. which machine to purchase when a number of choices are available. 7. It serves as a guide to test the adequacy of selling prices. 4. It also helps in identifying unprofitable products or product lines so that these may be eliminated or alternative measures may be taken. Wage Tribunals and other bodies for dealing with a variety of problems. Some such problems include price fixation. ‘ An efficient system of costing is essential factor for industrial control under modern conditions of business and as such may be regarded as an important part in the efforts of any management to secure business stability’. 3. whether to accept orders below cost. The use of cost accounting technique viz. Continuous efforts are being made by the business organization for finding new and improved methods for reducing costs. profit/loss of the business. Comparison may be made in respect of costs of jobs. whether to purchase or manufacture a given component. 2. The cost of idle capacity can be easily worked out. A system of costing provides figures for the use of Government. Cost Accounting is quite useful for price fixation. . Elaborate. 5.

2=0. The use of Marginal Costing technique.3 2010 April 29 Issues 100 a) consumption value of raw material in the month Ans 300*9.) Stock Value 2010 Opening 300 9. may help the executives in taking short term decisions.3=240 2010 1=0. The marginal cost has linear relationship with production volume and hence in formulating and solving "Linear Programming Problems".7 1 April 1 Stock 300 2910 2010 Purchases 250 9.8 2010 April 11 Issues 400 2010 April 15 Purchases 300 10. 00. 10.7 + 250*9.3=30 Purchases 300 10. marginal cost is useful.5 2010 April 20 Issues 210 2010 April 25 Purchases 150 10.5 3 April 15 450 4620 0 2010 Issues 210 April 20 240 2520 1=0. From the following information prepare a cost sheet showing cost profit per unit Direct materials consumed Rs. Work out a) consumption value of raw material in the month and b) value of closing stock as on 31 April 2011 under the FIFO method of pricing issues: Quantity in Units Rate per unit (Rs.000 Direct labour 40% of direct material cost Direct expenses 50% of direct labour cost Factory overheads 25% of prime cost Office and admin expenses are @ Rs.2=0. 11.8 2 April 3 550 5360 2010 Issues 400 April 11 150 1470 1=0.3=140.2=150. This technique of costing is highly useful during the period of trade depression. Issues 100 April 29 290 3015 4=150 4. as the orders may have to be accepted during this period at a price less than the total cost. From the following transactions extracted from the books of accounts of a manufacturing concern as on 31 April 2011.7 2010 April 3 Purchases 250 9.5=6965 Ans b) value of closing stock as on 31 April 2011 Ans 3015 Quantity Rate per Current Current Id Stock in Units unit (Rs.2=150 2010 1=0.2=0.3 4 April 25 390 4065 4=150 2010 1=0. 3.150 per 10 units produced .3=240.) 2010 April 1 Opening Stock 300 9.5 + 160*10.4. Purchases 150 10.

500 per 100 units sold Opening finished stock 800 units @ Rs. and they remain attached as the goods go into . Expense 82000 5. product costs include all costs involved in acquiring or making a product. Product costs “attach” to units of product as the goods are purchased or manufactured. Answer any three questions of the following: a. these costs consist of direct materials.125 Units Products 16000 Cost Per unut 71.125 Profit per unit 189333.83333333 5. and manufacturing overhead.85. In the case of manufactured goods. Explain product cost and period cost with 2 examples of each Ans: Product Costs For financial accounting purposes.400 units Profit 1/6th of sales Ans Areas Cost Cost Per unit Productions 16000 1 Direct Material 400000 25 Direct Labour 160000 10 Diect Expense 80000 5 Factory Overhead 160000 10 Office & admin expense 240000 15 Seeling & dist.333 Profit(units) 3 11.50 Closing stock 400 units Finished goods sold 16. direct labor. Selling & distribution overheads are Rs.

Advertising. abnormal losses etc. [1] The manufacture of products or goods required material as the prime element. Period costs are not included as part of the cost of either purchased or manufactured goods. . executive salaries. What is meant by direct material cost? Direct materials cost is the cost of direct materials which can be easily identified with the unit of production. carriage inwards and all such costs that contributes and are necessary to bring the inventory to their present location and condition for example handling costs. as explained above. We want to emphasize that product costs are not necessarily treated as expenses in the period in which they are incurred. As suggested above. selling and marketing costs. product development costs that failed to fulfill capitalization criteria. the costs are released from inventory as expenses (typically called cost of goods sold) and matched against sales revenue.e. they are treated as expenses in the period in which the related products are sold. amortized development costs. and other nonmanufacturing costs discussed earlier are all examples of period costs. Examples of these costs include administrative costs. finance costs or borrowing costs (excluding such costs that can be included in the inventory). When the goods are sold. They appear on the income statement as expenses in the period in which they are incurred. For example. Period Costs Period costs are all the costs that are not product costs. public relations. the costs of liability insurance are spread across the periods that benefit from the insurance— regardless of the period in which the insurance premium is paid. Examples are direct material costs. For example. the cost of glass is a direct materials cost in light bulb manufacturing. borrowing costs in specific cases. Product costs are initially assigned to an inventory account on the balance sheet. Keep in mind that the period in which a cost is incurred is not necessarily the period in which cash changes hands. all selling and administrative expenses are considered to be period costs. sales commissions. In general. these materials are divided into two categories. . they are also known as inventoriable costs. direct labour costs manufacturing overheads. storage costs where production process requires goods to be stored i. These categories are direct materials and indirect materials. as discussed earlier. storage is part of the production process for example pickles. b. For example. instead. Since product costs are initially assigned to inventories.inventory awaiting sale. product research costs. sales commissions and the rental costs of administrative offices are period costs. Rather. This means that a product cost such as direct materials or direct labor might be incurred during one period but not recorded as an expense until a following period when the completed product is sold. period costs are expensed on the income statement in the period in which they are incurred using the usual rules of accrual accounting.

Ltd has three production depts A. Pharmaceutical or drug industries. Cost and Managerial Accounting (BBA) Assignment B xMarks 10 Answer all questions.Mosaic Co. raw materials. A costing system used by organizations whose products are easily identified by batches. 1500 Power Rs. electronic component manufacturing units. Distinguish between costing and cost accounting.Direct materials are also called productive materials. Find out the cost of raw material purchased from the data given below: Particular Amount Prime cost 200000 Closing stock of raw material 20000 Direct labour cost 100000 Expenses on purchases 10000 Ans: Cost of Production = Prime Costs + Factory Overheads Factory Overheads= Direct labour cost+ Expenses on purchases. Batch cost is a cost that is incurred when a group of products or services are produced. 5000 Indirect wages Rs. Define batch costing. 1. Info: Rent Rs. radio manufacturing units too use this method of costing for ascertaining the cost of their product. stores and only materials without any descriptive title. e. Give examples of industries which adopt batch costing. raw stock.Closing stock of raw material Factory Overheads=100000+10000 -20000 Factory Overheads=90000 Cost of Production = Prime Costs + Factory Overheads Cost of Production =200000 +90000 Cost of Production =290000 d.1500 Depreciation of Machinery Rs. It is used by readymade garment factories for ascertaining the cost of each batch of cloths made by them. B & C and two service depts D & E. c.10000 . and which cannot be identified to specific products or services within each group Batch costing is employed by companies manufacturing in batches.

40 Variable cost Rs. of machines 150 60 30 50 10 - Value of machines (Rs. Ans: Basis A B C D E Total Rent Space 1000 1250 1500 1000 250 5000 General Lighting Light Points 100 150 200 100 50 600 Direct Wages Actual 3000 2000 3000 1500 500 10000 H. 6 Profit Rs.ft.) 10000 3000 2000 3000 1500 500 H. 10 Present sales volume is 2000 units . 10000 Total A B C D E Floor space (sq.) 250000 60000 80000 100000 5000 5000 Prepare a statement showing distribution of overheads to various departments. 24 Fixed costs Rs. General lighting Rs.P. The following information is provided to you: Selling price per unit Rs.) 20000 4000 5000 6000 4000 1000 Light points 120 20 30 40 20 10 Direct wages (Rs.p of Power Machine 600 300 500 100 0 1500 Indirect Wages Equal 300 300 300 300 300 1500 Depreciation of machine Value 2400 3200 4000 200 200 10000 Sundry Expenses Equal 2000 2000 2000 2000 2000 10000 2. 600 Sundry expenses Rs.

26. Calculate: (a) P/V ratio (b) BEP (c) Margin of safety (d) profit at a sales volume of 2500 units (e) sales required to earn a profit of Rs.Variable Cost per unit =40-24 =16 Break Even Point= Fixed Cost/ Contribution per unit =(6*2000)/16 =750 d) profit at a sales volume of 2500 units Sales= (Fixed Cost + Desired Profit)/PV Ratio 2500= (12000 + Desired Profit) /40 .25 c) BEP Break-Even Point in Units =Fixed Cost/ Contribution per unit Contribution per unit = Selling Price per unit .Variable Cost per unit = 40-16 =16 Sales=40 P/V=(16/40)*100 =40% b) Margin of Safety MOS=Profit/PV Ratio =10/40 =0.000 Ans a) P/V Ratio P/V Ratio=(Contribution/Sales)*100 Contribution= Selling Price per unit .

Ans: a) Budget: A formal statement of the financial resources set aside for carrying out specific activities in a given period of time. 2500*40=(12000 + Desired Profit) Desired Profit=(2500*40)-12000 Desired Profit =88000 e) sales required to earn a profit of Rs. 26.000 Sales= (Fixed Cost + Desired Profit)/PV Ratio =(12000+26000)/40 =950 3. An example would be an advertising budget or sales force budget. It helps to co-ordinate the activities of the organisation. . What are budget and budgetary control? Discuss the advantages and essential for success of budgetary control.

Control is provided by comparisons of actual results against budget plan.  Motivates employees by participating in the setting of budgets. A budget is basically a yardstick against which actual performance is measured and assessed. Forces management to look ahead. Requires managers of budget centres to be made responsible for the achievement of budget targets for the operations under their personal control.  Economize management time by using the management by exception principle.b) Budgetary control: A control technique whereby actual results are compared with budgets.  Clearly defines areas of responsibility. Particulars Amount $ Amount $ Revenue 5000 Cost of Beverage & snacks 2000 Cost of napkins.  Improves the allocation of scarce resources. operation and (ideally) each manager. to anticipate and give the organisation purpose and direction. Read the case below and answer the questions given at the end Case Study Coffee Cart Supreme sells hot and iced coffee beverages and small snacks.  Provides a basis for performance appraisal (variance analysis). The following is last month’s income statement.  Promotes coordination and communication. Departures from budget can then be investigated and the reasons for the differences can be divided into controllable and non- controllable factors. Any differences (variances) are made the responsibility of key individuals who can either Advantages of budgeting and budgetary control There are a number of advantages to budgeting and budgetary control:  Compels management to think about the future. to set out detailed plans for achieving the targets for each department. 4. which is probably the most important feature of a budgetary planning and control system. straws etc 500 Cost of rent cart 500 Employee wages 1000 4000 Pre tax profit 1000 .  Enables remedial action to be taken as variances emerge.

or mixed. the cost function is TC _ Rs 1. We estimate fixed costs as the sum of these two costs (Rs 500 + Rs 1.000. D.500 + (50% * Revenue) B. What is the total cost function for Coffee Cart Supreme? B.000 = 0. Taxes 250 After tax profit 750 Questions A. To estimate the cost function.500. etc.500. We use income tax expense and pretax profit from last month to estimate the tax rate: Tax rate = Taxes / Pretax profit = Rs 250 / Rs 1. We first calculate the amount of pretax profit needed to achieve an after-tax profit of Rs 1. Calculate the amount of sales needed to reach a target after-tax profit of $1. straws. What was Coffee Cart Supreme’s margin of safety percentage last month? G. We use the revenues as the cost driver to estimate variable costs as Rs 2.000 and pretax profit is $2.500) / 5.500). variable.25) = Rs 2. Targeted pretax profit = Rs 1. rent and wages are likely to be fixed. or 50% of revenues. It seems reasonable that the costs of beverages and snacks (Rs 2. What is the tax rate for Coffee Cart Supreme? C. What was Coffee Cart Supreme’s margin of safety in revenue last month? F.000 = Rs 1. For a typical retail business. (Rs 500) would vary with revenues.000 The contribution margin ratio is (5.2.500 / (1 = 0. Coffee costs are volatile because worldwide coffee production varies from year to year.000) and napkins. Ans A.500 / Rs 5. we use judgment to classify costs as fixed.50 or 50% . Suppose next month’s actual revenues are $8. Would actual costs be higher or lower than expected? H.50.000 .000 = 0. Explain how this volatility affects the quality of the cost function for Coffee Cart Supreme. Thus. What was Coffee Cart Supreme’s degree of operating leverage last month? E.000 = 25% C.

500 Actual Costs = Rs8.000 D. Revenue = (Rs1.500 + Rs2.000) = Rs5.000 . The expected and actual costs at Rs 8. such as weather conditions in coffee growing areas. 2 2 H.000 Actual costs are Rs 500 higher than expected. Cost and Managerial Accounting (BBA) Assignment C Marks 10 Answer all questions. and coffee demand patterns. so the margin of safety is calculated as Margin of safety = Rs5. which means that the quality of the cost function is diminished.000 = Rs6.We then perform the CVP calculation for revenues.Rs3. broader factors such as changes in economies and political upheaval influence costs. In addition.000. Tick mark (√) the most appropriate answer. the ability of farmers to increase crops.000 = Rs2.000) / 0.000 / Rs5.50 = Rs7.40 = 2. We do not have unit or product mix information. Worldwide coffee prices are uncertain for many reasons.500 + (50% * Rs8.500 / 0.000 in revenues Current revenues are Rs5.000 = 2. All of these factors reduce our ability to develop a cost function that accurately predicts future costs. Note that the margin of safety must be calculated in revenue dollars. When any costs are volatile.50 = Rs3.000 .Rs2. predicting them is problematic. We use the results of our previous computations to calculate the contribution margin.000 F.500 / Rs1.000 .50 G.50 E.500 Degree of operating leverage = Contribution margin / Profit Degree of operating leverage = Rs2.500 = Rs2.500 / 0. and we then calculate the degree of operating leverage: Contribution margin = Rs5.Rs2. We use the formula to calculate margin of safety percentage: Margin of safety percentage = Rs2.50 = Rs3. The breakeven point is calculated as Rs1. . we need to calculate the breakeven point. Before calculating the margin of safety.000 = 40% Note that we can check our previous degree of operating leverage computation as follows: Degree of operating leverage = 1 / Margin of safety percentage = 1 / 0.000 revenue are Expected Costs = Rs1.

1. 10. Factory overhead is Rs. The Process of cost apportionment is carried out so that-- a) Cost may be controlled b) Cost unit gather overheads as they pass through cost centers c) Whole items of cost can be charged to cost centers d) Common costs are shared among cost centers 3.000. 60. 50. Direct labor cost is Rs. When prices are rising over time.000 b) Rs.400 units cost incurred Rs. Which of the following manufacturers is most likely to use a job order cost accounting system? a) A soft drink producer b) A flour mill c) A textile mill d) A builder of offshore oil rigs 8.33 per unit c) Rs. 80.000. Direct materials cost is Rs. 15. The main difference between the profit center and investment center is-- a) Decision making b) Revenue generation c) Cost in occurrence d) Investment 6. c) 30. The cost of goods manufactured is Rs. Which of the following statement measures the financial position of the entity on particular time? a) Income Statement b) Balance Sheet c) Cash Flow Statement d) Statement of Retained Earning 2.200 units cost incurred Rs. 45. The variable cost per unit would be? a) Rs. What is the cost assigned to the ending goods in process? a) Rs. 8.000 d) There will be no ending Inventory Solution: 4.000 and production volume of 1.00 per unit b) Rs. Beginning goods in process were Rs.000. 90. 100 per unit . 15.20. which of the following inventory costing methods will result in the lowest gross margin/profits? a) FIFO b) LIFO c) Weighted Average d) Cannot be determined 5.000 Rs.20 per unit d) Rs.000. Which of the following is a characteristic of process cost accounting system? a) Material. 000.000. 245. 14. Labor and Overheads are accumulated by orders b) Companies use this system if they process custom orders c) Opening and Closing stock of work in process are related in terms of completed units d) Only Closing stock of work in process is restated in terms of completed units 7. Production volume of 1.

b) Production volume decreases. The components of the prime cost are-- a) Direct Material + Direct Labor + Other Direct Cost b) Direct Labor + Other Direct Cost + FOH c) Direct Labor + FOH d) None of the given options 15. c) Variable cost per unit decreases.The quantity of unit produced would be-- a) 7500 units b) 6500 units c) 4500 units d) 5500 units 13. 10. The main purpose of cost accounting is to-- a) Maximize profits b) Help in inventory valuation c) Provide information to management for decision making d) Aid in the fixation of selling price 11. Cost accounting concepts include all of the following EXCEPT-- a) Planning b) Controlling c) Sharing d) Delegating. Examples of industries that would use process costing include all of the following EXCEPT-- a) Beverages b) Food c) Hospitality d) Petroleum 14. An organization sold units 4000 and have closing finished goods 3500 units and opening finished goods units were 1000. . Fixed cost per unit decreases when-- a) Production volume increases. Period costs are -- a) Expensed when the product is sold b) Included in the cost of goods sold c) Related to specific Period d) Not expensed 12. Opportunity cost is the best example of-- a) Sunk Cost b) Standard Cost c) Relevant Cost d) Irrelevant Cost 16. d) Variable cost per unit increases.9.

Opening work in process inventory can be calculated as under-- . a) FIFO b) Weighted average method c) Most recent price method d) LIFO 22. 20. 10. 18.000 respectively. a) Financial statement b) Production Process report c) Order Sheet d) None of above . 90. d) None of given option. The Economic order quantity would be-- a) 365 units.000 d) Rs. Cost of production report is a _________________. Find the value of purchases if Raw material consumed Rs. Carrying cost Rs 1 per unit and lead time is 3 week. Annual requirement is 7800 units. For which one of the following industry would you recommend a Job Order Costing system? a) Oil Refining b) Grain dealing c) Beverage production d) Law Cases 21.60. Unit price Rs 5. 70. b) 300 units c) 250 units d) 150 units 20. b) Production cost. Prime cost + Factory overhead cost is-- a) Conversion cost.000 b) Rs.000 c) Rs. c) Total cost.000. Opening and closing stock of raw material is Rs. order cost Rs 10 per order. 50. 1.000 19. 17. 23.000 and 30. consumption per week is 150 units. ______________ method assumes that the goods received most recently in the stores or produced recently are the first ones to be delivered to the requisitioning department. a) Rs.

A typical factory overhead cost is-- a) Audit b) Compensation of plant manager c) Design distribution d) Internal 28.000 d) None of given options 25. what is probably the most appropriate basis of applying factory costs to work in process? a) Machine hours b) Cost of materials used c) Direct labor hours d) Direct labor dollars 27. 000. Complete the following table-- . Calculate cost assigned to the December 31. During the year Manuel’s cost of goods sold was Rs. 2.000 c) Rs. 16. 4. finished goods inventory of Manuel Company was Rs.3. When a manufacturing process requires mostly human labor and there are widely varying wage rates among workers. 00. The cost expended in the past that cannot be retrieved on product or service-- a) Relevant Cost b) Sunk Cost c) Product Cost d) Irrelevant Cost 26.000. sales were Rs. 19. 6. 00.00.000 with a 20% gross profit.000. Jan 1. finished goods inventory.000 b) Rs. a) Rs. a) FIFO and Average costing b) LIFO and Average costing c) FIFO and LIFO costing d) None of given option 24.00.00.

Decrease. Percentage of Margin of Safety can be calculated in which one of the following ways? a) Based on budgeted Sales b) Using budget profit c) Using profit & Contribution ratio d) All of the given options 32. it will show a month end inventory of-- a) $240 b) $784 c) $759 d) $767 30. Decrease c) c. Decrease. Information as to balances on hand. Increase d) Increase.) + Fixed expenses + Profits b) Sales = Contribution margin ratio + Fixed expenses + Profits c) Sales = Variable expenses + Fixed expenses + profits d) Sales = Variable expenses – Fixed expenses + profits . The Kennedy Corporation uses Raw Material Z in a manufacturing process. 29. Increase. The difference between total revenues and total variable costs is known as-- a) Contribution margin b) Gross margin c) Operating income d) Fixed costs 31. Decrease b) b. purchases and requisitions of Raw Material Z is given below-- If a perpetual inventory record of Raw Material Z is maintained on a FIFO basis. Which of the following represents a CVP equation? a) Sales = Contribution margin (Rs. a) Constant.

400.000 units d) None of the given options 38.000 c) Rs. If 120 units produced. 5. 7.000 units c) 80.000 units c) 106. For which one of the following industry would you recommend a Process Costing system? a) Grain dealer b) Television repair shop c) Law office d) Auditor 34. 480. Inventory control aims at-- a) Achieving optimization . 1. 200 per unit. What is the company's margin of safety in Rs? a) Rs. What is the company's contribution margin ratio? a) 30% b) 70% c) 150% d) None of given options 37. If the management wants to decrease sales price by 10%. 150 per unit and fixed cost is Rs. what will be increasing sales profit of company by increasing unit sales price? (Cost & volume profit analysis keep in mind while solving) a) Rs. 100 units were sold @ Rs. How many units would the company have to sell to attain target profits of Rs.000 b) Rs.000 c) Rs. 150 per unit and fixed cost is Rs. Variable cost related to production & selling is Rs.000 d) None of the given options 36.600.000.000 b) Rs.000 units b) 100. What is the company's break-even in units? a) 48. 600. Variable cost related to production & selling is Rs. If 120 units produced. 100 units were sold @ Rs.000. If the management wants to increase sales price by 10%. 5.668 units d) None of given options 39.000 units b) 72. 200 per unit. what will be the effect of decreasing unit sales price on profitability of company? (Cost & volume profit analysis keep in your mind while solving it) a) Remains constant b) Profits will increased c) Company will have to face losses d) None of the given options 35.000 d) None of given options 40.2.000? a) 88. 2.33. 5.

b) Ensuring against market fluctuations c) Acceptable customer service at low capital investment d) Discounts allowed in bulk purchase .