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Question Bank- Theory

Subject: CMA

Semester: II


Overview of Cost Management Accounting

1. How do you differentiate cost accounting from management accounting?

Discuss the concept of Cost accounting and Management accounting. Also explain
the difference between the Cost accounting and Management accounting.

2. Define following terms: Cost Object, Sunk Cost, Margin of safety and cost driver
3. Define Cost Accounting. Explain the advantages of cost accounting.
4. Give the Cost unit for the following industries: 1. Cement 2. Petroleum 3. Soft Drink 4.
Hospital 5. Transport 6. Cotton 7. Hotel 8. Education 9. Carpets 10. Timber 11. Paper
12. Gas 13.Building Construction 14. Interior Decoration
5. Explain the differences between the costing, cost accountancy and cost accounting.
6. Explain the following terms: Cost Center, Overheads, Profit Center, standard cost
7. The subject of Management Accounting is very important and useful for optimum
utilization of resources. It is an indispensable discipline for corporate planning,
management and control Justify this statement in the light of importance of
Management Accounting.
8. Explain (1) Engineered Cost (2) Joint Cost (3) Opportunity Cost.
9. What do you mean by Management Accounting? How will you differentiate the
functions of Controller and Treasurer?
10. Write a short note on - Types of Costing Systems
11. Define cost accounting. State its functions
12. Explain the following terms with practical example:
i) Cost Unit
ii) Cost Reduction

Direct expenses & Overheads

13. Explain the terms cost tracing, cost allocation and cost apportionment with suitable
14. What is over-absorption and under absorption? State the reasons for over and
under absorption.

Unit Costing

15. With a hypothetical example, prepare a complete cost sheet showing: Flat Cost, Cost of
Operations, Factory Cost, Cost of Production, Cost of Production of Goods Sold and
Cost of Sales.
Job and Batch Costing

16. What do you understand by job order Costing? Under what conditions, it is Suitable?
How batch costing is different from it?
17. Write a short note on Batch Costing and Economic Batch Quantity
18. What do you mean by Job Costing? Under what conditions, it is suitable? How batch
costing is different from it?
19. What do you mean by Job costing? Discuss the difference between Job order costing and
batch Costing.

Activity Based Costing

20. How would you allocate cost in activity based costing? Illustrate your answer with
imaginary figures?

21. What do you understand by Activity Based Costing (ABC)? Briefly discuss the key
advantages and limitations of ABC


Operating Costing

22. What is operating costing? Draw a Specimen cost sheet for canteen costing?
23. What is operating costing? To what industries is this method of costing applicable?
24. What is Boiler House Costing? Draw a specimen cost sheet for Boiler House Costing
with imaginary figures.
25. What do you mean by Operating Costing? Explain characteristics, features and types of
cost units used in operating costing.

Process Costing

26. Explain features of process costing. Name the industries where process costing can be
applied. Give three different between process & Job costing?
27. Explain Normal Loss, Abnormal Loss and Abnormal Gain with an example under
process costing.

Joint Costing and By-product costing

28. Define by products and joint products, what are the distinctions between them? Give
29. What are By-Products? What is the method of accounting for by- product?

30. Briefly explain any two methods of apportionment of Joint Cost.

31. What is Joint product & By-product? Explain any one method employed in costing
Joint product.

Marginal (variable) Costing and CVP Analysis

32. What is CVP analysis / How does it help the management ?

33. Discuss in brief advantages and limitations of marginal costing.
34. Define Marginal Costing. State its characteristics.
35. Marginal Costing is a valuable technique to the management. Critically evaluate and
discuss the limitations of marginal costing.
36. Marginal Costing is a valuable technique to the management critically evaluate
the marginal costing. Also state the difference between marginal costing and absorption
37. Write a note on Absorption Costing
38. What is CVP Analysis? Explain its uses and limitations

39. Explain Key factor (Limiting factor) with imaginary figures.

40. Explain the term with practical example marginal cost and margin of safety

Decisions Involving Short-run Alternative choices

41. Explain the various steps involved in the decision making process?

Pricing Decision

42. State the factors influencing pricing decisions. Explain premium pricing & skimming


Budgeting & Budgetary Control Systems

43. What do you mean by budgetary control? Mention the necessary features of Budget?
44. Write a note on zero-base budgeting.
45. What do you understand by flexible budget? Difference between fixed budget and
flexible budget.
46. Explain the concept of budgetary control and standard costing and variance Analysis.
Also state difference between Standard costing and budgetary control.
47. Define Flexible Budget. Explain its importance as a budgeting technique and tool of
48. Write short notes on: Activity Based Budgeting
49. What do you mean by Planning, Programming and Budgeting System (PPBS)? Explain
with stages and advantages of it.

50. State features of a budget and steps involved in preparation of budget.

51. What is Zero Base Budgeting? Discuss its advantages and disadvantages

Standard Costing and Variance Analysis

52. Illustrate, by means of suitable example the significance of variances in standard Costing
and discuss the interpretation of such variances?

53. State advantages and disadvantages of standard costing.

54. How do companies price products using the Cost Plus Approach?

Cost Accounting Standards

55. What do you understand by cost audit? As a cost auditor of a large organization, describe
the procedure you would adopt with regards to labour & material cost?
56. Write a short note on Cost Accounting Standards (CAS).
57. Explain any two cost accounting standards applicable in India.

58. Elaborate the cost bifurcation needed for life cycle cost analysis?
59. Explain the objectives and salient features of Statutory Cost Audit in India.
60. Write a note on Target Costing and Life Cycle Costing