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1.

If overtime is resorted to at the desire of the customer, then the overtime premium:

(a) should be charged to costing profit and loss account;

(b) should not be charged at all

(c) should be charged to the job directly

(d) should be charged to the highest profit making department

Answer : (c) should be charged to the job directly

2. Labour turnover means:

(a) Turnover generated by labour

(b) Rate of change in composition of labour force during a specified period

(c) Turnover generated by employees and employer

(d) Turnover of a company

Answer : (b) Rate of change in composition of labour force during a specified period

3. Which of the following is not an avoidable cause of labour turnover?

(a) Dissatisfaction with Job

(b) Lack of training facilities

(c) Low wages and allowances

(d) Disability, making a worker unfit for work

Answer : (d) Disability, making a worker unfit for work

4. Costs associated with the labour turnover can be categorised into:

(a) Preventive Costs

(b)Preventive and replacement costs

(c) Labour costs

(d) Machine costs

Answer : (b)Preventive and replacement costs


5. Calculate workers left and discharged from the following: Labour turnover rates are 20%, 10% and 6%
respectively under Flux method, Replacement method and Separation metho(d) No. of workers replaced
during the quarter is 80.

(a) 112 (b) 80 (c) 48 (d) 64

Answer: (c) 48

6. Which of the following is a direct labour cost?

(a) Supervisors ‘salaries in the factory.

(b) Costs of the payroll accounting section.

(c) A bonus paid to the store man.

(d) The wages of an operative paid on the basis of output achieve(d)

Answer: (d) The wages of an operative paid on the basis of output achieve(d)

7. In cost Accounting, abnormal loss is charged to

(a) Factory overhead control account (b) Work in process account

(c) Income Statement (d) Entire production

Answer: (b) Work in process account.

8. Which of the following is NOT an assumption of the basic economic-order quantity model?

(a) Annual demand is known (b) Ordering cost is known

(c) Carrying cost is known (d) Quantity discounts are available

Answer: (d) Quantity discounts are available

9. In order to ensure efficient functioning of the stores department and steady flow of materials to the
production departments, the restocking of stores is duty of

(a) Managers (b) Storekeeper (c) Production In charge (d) Sales


supervisor

Answer: (b) Storekeeper

10. The flux method of labor turnover denotes

(a) Workers appointed against the vacancy caused due to discharge or quitting of the organization

(b) Workers appointed in replacement of existing employees


(c) Workers employed under the expansion schemes of the company

(d) The total change in the composition of labor force

Answer: (d) the total change in the composition of labor force

11. __________ is the time worked over and above the employee's basic working week.

(a) Flex time (b) Overtime (c) Shift allowance (d) Commission

Answer: (b) Overtime

12. Which of the following is a mechanical device to record the exact time of the workers?

(a) Clock Card (b) Store Card (c) Token System (d) Attendance Register

Answer: (a) Clock Card

13. A high inventory turnover may indicate

(a) An efficient use of the investment in inventory (b) A high risk of stock-outs

(c) Stock position of store room (d) A low risk of stock-outs

Answer: (a) An efficient use of the investment in inventory

14. Which of the following cost is used in the calculation of cost per unit?

(a) Total production cost (b) Cost of goods available for sales

(c) Cost of goods manufactured (d) Cost of goods Sold

Answer: (c) Cost of goods manufactured

15. All of the following are cases of labor turnover EXCEPT

(a) Workers appointed against the vacancy caused due to discharge or quitting of the organization

(b) Workers employed under the expansion schemes of the company

(c) The total change in the composition of labor force

(d) Workers retrenched

Answer: (d) Workers retrenched

16. The Term Minimum Level Represents.

(a) The quantity below which the stock of any item should not be allowed to fall
(b) The quantity below which the stock of any item should be allowed to fall

(c) The estimated time period in number of days or in weeks or in months.

(d) The Lead time period in number of days or in weeks or in months.

Answer: (a) The quantity below which the stock of any item should not be allowed to fall

17. Remuneration based on piece work is not suitable when:

(1) The amount of output cannot be accurately measured.

(2) The nature of work is repetitive.

(3) The quantity of work is more important than quality.

a. (1) only b. (3) only c. (1) and (3) d. (2) and (3)

Answer: a. (1) only

18. The difference between gate time and time booked for jobs in respect of a worker in due to the
following reasons except :

a. Change-over time b. Illness

c. Waiting for materials, instructions, etc. d. Breakdown of machine

Answer: b. Illness

19. The period of time for which a work station is available for production but is not utilized due to
shortage of tooling, materials, operators, etc. is known as:

a. Down time b. Operation time c. Idle time d. Set-up time

Answer: b. Operation time.

20. Favorable conditions for the operation of piece rates include :

a. Homogeneous products b. Long, uninterrupted run of production

c. Inspection d. High proportion of indirect labour

Answer: b. Long, uninterrupted run of production

21. If a company uses predetermined overhead recovery rates and at the end of a period finds that there
has been an under-recovery of overhead, which of the following best explains how the under-recovery
has occurred?
a. Actual overhead cost has exceeded the amount used as a basis for the establishment of the
predetermined rate.

b. Actual overhead cost has been less than the amount used as a basis for the establishment of the
predetermined rate.

c. Actual activity levels were higher than planned due to an increase in demand.

d. An expected price increase in the overhead costs which was built into the overhead recovery rate did
not take place.

Answer: a. Actual overhead cost has exceeded the amount used as a basis for the establishment of the
predetermined rate.

22. If there has been an over recovery of overheads, at the end of the accounting period the amount
concerned should be?

a. Debited to the company profit and loss account.

b. Credited to the company profit and loss account.

c. Carried forward to the next accounting period as a cost saving.

d. Used to reduce next period‘s overhead recovery rate.

Answer: b. Credited to the company profit and loss account.

23. Which of the following is an abnormal cause of Idle time

(a) Time taken by workers to travel the distance between the main gate of factory and place of their
work

(b) Time lost between the finish of one job and starting of next job

(c) Time spent to meet their personal needs like taking lunch, tea etc.

(d) Machine break downs

Answer: (d) Machine break downs

24. If overtime is resorted to at the desire of the customer, then the overtime premium

(a) should be charged to costing profit and loss account;

(b) should not be charged at all

(c) should be charged to the job directly


(d) should be charged to the highest profit making department .

Answer: (c) should be charged to the job directly

25. Labour turnover means

(a) Turnover generated by labour

(b) Rate of change in composition of labour force during a specified period

(c) Turnover generated by others

(d) Turnover generated by Employer

Answer: (b) Rate of change in composition of labour force during a specified period

26. Which of the following is not an avoidable cause of labour turnover

(a) Dissatisfaction with Job (b) Lack of training facilities

(c) Low wages and allowances (d) Disability, making a worker unfit for work

Answer: (d) Disability, making a worker unfit for work

27. Costs associated with the labour turnover can be categorized into

(a) Preventive Costs only (b) Replacement costs only

(c) Preventive and Replacement (d) Machine costs

Answer: (c) Preventive and Replacement

28. Calculate workers left and discharged from the following: Labour turnover rates are 20%, 10% and
6% respectively under Flux method, Replacement method and Separation method. No. of workers
replaced during the quarter is 80.

(a) 112 (b) 80 (c) 48 (d) 64

Answer: (c) 48

29. Calculate workers recruited and joined from the following: Labour turnover rates are 20%, 10% and
6% respectively under Flux method, Replacement method and Separation method. No. of workers
replaced during the quarter is 80.

(a) 112 (b) 80 (c) 48 (d) 64

Answer: (a) 112


30. Calculate the labour turnover rate according to replacement method from the following: No. of
workers on the payroll: - At the beginning of the month: 500 - At the end of the month: 600 during the
month, 5 workers left, 20 workers were discharged and 75 workers were recruited. Of these, 10 workers
were recruited in the vacancies of those leaving and while the rest were engaged for an expansion
scheme.

(a) 4.55% (b) 1.82% (c) 6% (d) 3%

Answer: (b) 1.82%

31. Calculate the labour turnover rate according to Separation method from the following: No. of
workers on the payroll: - At the beginning of the month: 500 - At the end of the month: 600 During the
month, 5 workers left, 20 workers were discharged and 75 workers were recruited. Of these, 10 workers
were recruited in the vacancies of those leaving and while the rest were engaged for an expansion
scheme.

(a) 4.55% (b) 1.82% (c) 6% (d) 3%

Answer: (a) 4.55%

32. A worker is allowed 60 hours to complete the job on a guaranteed wage of Rs. 10 per hour. Under
the Rowan Plan, he gets an hourly wage of Rs. 12 per hour. For the same saving in time, how much he
will get under the Halsey Plan?

(a) Rs. 720 (b) Rs. 540 (c) Rs. 600 (d) Rs. 900

Answer: (b) Rs. 540

33. Overhead refers to

(a) Direct or Prime Cost (b) All Indirect costs

(c) only Factory indirect costs (d) Only indirect expenses

Answer: (b) All Indirect costs

34. Allotment of whole item of cost to a cost centre or cost unit is known as

(a) Cost Apportionment (b) Cost Allocation (c) Cost Absorption ( d) Machine hour rate

Answer: (b) Cost Allocation

35. Which of the following is not a method of cost absorption?

(a) Percentage of direct material cost (b) Machine hour rate

(c) Labour hour rate (d) Repeated distribution method


Answer: (d) repeated distribution method

36. Service departments’ costs should be allocated to

(a) Only Service departments

(b) Only Production departments

(c) Both Production and service departments

(d) None of the production and service departments

Answer: (c) Both Production and service departments

37. Most suitable basis for apportioning insurance of machine would be

(a) Floor Area (b) Value of Machines (c) No. of Workers (d) No. of Machines

Answer: (b) Value of Machines

38. Blanket overhead rate is

(a) One single overhead absorption rate for the whole factory

(b) Rate which is blank or nil rates

(c) Rate in which multiple overhead rates are calculated for each production department, service
department etc.

(d) Always a machine hour rate

Answer: (a) one single overhead absorption rate for the whole factory

39. AT Co makes a single product and is preparing its material usage budget for next year. Each unit of
product requires 2kg of material, and 5,000 units of product are to be produced next year. Opening
inventory of material is budgeted to be 800 kg and AT co budgets to increase material inventory at the
end of next year by 20% the material usage budget for next year is

(a) 8,000 Kg (b) 9,840 kg (c) 10,000 Kg (d) 10,160 Kg

Answer: (c) 10,000 Kg

40. During a period 17, 500 labour hours were worked at a standard cost of Rs 6.50 per hour. The labour
efficiency variance was Rs 7,800 favourable. How many standard hours were produced?

(a) 1,200 (b) 16,300 (c) 17,500 (d) 18,700

Answer: (d) 18,700


41. Which of the following is not a reason for an idle time variance?

(a) Wage rate increase (b) Machine breakdown

(c) Illness or injury to worker (d) Non- availability of material

Answer: (a) Wage rate increase

42. During September, 300 labour hours were worked for a total cost of Rs 4800. The variable overhead
expenditure variance was Rs 60 . Overheads are assumed to be related to direct labour hours of active
working. What was the standard cost per labour hour?

(a) Rs 14 (b) Rs 16.50 (c) Rs 17.50 (d) Rs 18

Answer: (a) Rs 14

43. Which of the following would explain an adverse variable production overhead efficiency variance?
1. Employees were of a lower skill level than specified in the standard

2. Unexpected idle time resulted from a series of machine breakdown

3. Poor Quality material was difficult to process

(a) (1), (2) and (3) (b) (1) and (2) (c) (2) and (3) (d) (1) and (3)

Answer: (d) (1) and (3)

44.