COST ACCOUNTING

INTRODUCTION

1. The basic objective of cost accounting is

a. Tax exemption b. financial audit c. Cost ascertainment d) None of these
2. Cos incurred is identified with
a. each executive b. Each unit of output c. each month d. None of these
3. Overhead costs the total of
a. all indirect costs b. All direct costs
c Direct and indirect costs d. specific costs
4. Conversion costs excludes
a. labour cost b. factory overheads c. direct expenses d. Direct materials
5. Imputed costs is a
a. National cost b. Real cost c. Abnormal cost d. variable cost
6. Sunk cost is a cost relating to
a. the present b. Future c. Past d. Tax
7. Operating cost is suitable for
a. Job order businesses b. Contractors c. sugar Industry d. Service Industries
8. Multiple costing is using in the same firm
a. A single costing method b. Several methods of costing c. tax saving measures d. none of these
9. Process costing is suitable for
a. Hospitals b. transport firms c. Oil refining firmsd. brick laying firms
10. Cost classification can be done in
a. Two ways b. Three ways c. Four ways d. several ways
Fill Ups:
1. Costing refers to the techniques and processes of __________ costs. (ascertaining)
2. Cost accounting was developed because of the ________ of financial accounting. (limitations)
3. Cost accounting deals partly with facts and figures and partly with ________. (Estimates)
4. Cost accounting provides data to managerial ______________.(Decisions)
5. Variable cost increases or _________ in proportion to the output.(decreases)
6. An uncontrollable cost cannot be ____________ by any specific member of a firm.
( Influenced)
7. cost centre may be location, persons or item of equipment for which costs may be ______.
(Ascertained)
8. Operating costing is more suitable for _____ industries. (service)
9. All costing methods can be grouped into two categories (a) specific order costing and (b)
___________ costing. (Operations)
10. ______________ cost is to be incurred even when a business unit is closed.(Shutdown)
Cost sheet, Tenders, Quotations
1. Classification of cost is useful to
A. Find gross profit b. Find net profit c. To identify costs d. None of these
2. Elements of costs are
A. Three types b. Two types c. four types d. five types
3. Direct expenses are also called
A. Major expenses b. Sundry expenses c. Overhead expenses d. Chargeable expenses
4. Factory overhead is also termed as Manufacturing overhead or
 A. Office overhead b. selling overhead c. Distribution overhead d. production overhead
5. Warehouse rent is a part of
a. Prime cost b. Distribution overhead c. Selling overhead d. factory overhead
6. Indirect material scrap is adjusted along with
a. Prime cost b. works cost c. In Profit 7 Loss a/c d. In trading account
7. Goodill written off is a part of
A. Prime cost b. factory overhead c. Office overhead d. None of these
8. Sale of defective is reduced from
a. Prime cost b. Works cost c. Cost of production d. cost of sales
9. Tenders is an
a. estimation of cost only b. estimation of profit only c. estimation of selling price d. None of
these
10. Cost of sales plus profit is
a. Selling price b. value off finished goods c. value of goods produced d. value of stocks

FILL UPS
1. Prime cost includes direct materials, direct labour and direct ____________.( Expenses)
2. Total of direct costs is termed as ________ cost.( Prime )
3. Woks cost is the total of prime cost and ______ overhead.( factory or works or
production)
4. Work-in-progress is adjusted before ascertaining ____________ cost.(works or factory)
5. Finished goods stocks are adjusted after finding cost of _____________. (Production)
6. Overheads is the total of all ________costs.( indirect)
7. Depreciation of plant & machinery is a part of _____________ overhead.( factory)
8. Audit fees is a part of __________overhead. (Administration)
9. Bad debts written off is a part of __________ overhead.( Selling)
10. Warehouse rent is a part of _________ overhead.( Distribution)
MATERIALS
1. Material control involves
A. consumption of materials b. Issue of materials c. Purchase of materials d. Purchase
storage and issue of materials
2. Materials requisition is meant for
a. Purchaseof materialsb. Supply of material from stores
b. C. sale of materials d. none of the above
3. Stock control through stock levels and EOQ is called
A. demand and supply methodb. perpetual inventory systemc. Control by importance and
exception d. none of these
4. ABC analysis is
a. Always better control b. Advantage of better control c. at best control d.None of the
above
5. JIT inventory system is
a. Job in time b. Just Inventory Time c. Just in Time d. None of the above
6. Perpetual Inventory system involves
b. Bin card and stores ledger
c. Bill of materials and material requisitions
d. Purchase requisition and purchase order
 e. Inward and outward invoices
7. FIFO is
f. Fast Investment in Future orders
g. B. first in First out c. fast issue of first orders d. None of these
8. LIFO method of pricing of material issues is more suitable when
a. material prices are rising b. material prices are falling c. material prices are fluctuating
d. material prices are unchanging
9. Average price methods are more suitable when
A. material prices are rising b. material prices are falling c. material prices are
fluctuating d. material prices are constant.
10. Scrap is
A. residue of raw material b. wastage of material c. surplus material d. abnormal loss
of material

Fill Ups:
1. Material control involves purchase, shortage and ____ of materials.(issue)
2. Material is issued by storekeeping against __ requisitions.(materials)
3. Perpetual inventory system is based on bincard, stores ledger and physical _ of stock.
(verification)
4. EOQ is economic _____ quantity.(Ordering)
5. ____________ Note is prepared after receiving and inspecting materials.(Goods
received Note)
6. ABC analysis is always ____control analysis.(better)
7. VED analysis is Vital __ and Desirable analysis. (Essential)
8. LIFO is ____ in First out method. (Last)
9. Weighted average is computed by dividing total purchase cost of material in stock
with total _______ in stock.(quantity)
10. Defectives can be sold as _______- after rectification.( seconds)

LABOUR
1. Labour turnover is
h. Productivity oflabour b. efficiency of labour c. Change in labour force d. none of
these
2. Time study I for
A. Measurement of workb. Fixation of standard time c. Ascertainment of work d, None of
these
3. Idle time is
a. Tim spent by workers in factory b. time spent by workers off their work c. Time spent by
workers on their jobs d. none of these
4. Over time is
a. actual hours being more than normal hours
. Actual hours being more than standardhours c, standard hours being more than actual hours
None of these
5. Time keeping refers to
a. time spent by workers on their jobs
b. time spent by workers in the factory
 c. time spent by workers without work
d. none of these
6. Time booking refers to
a. Time scent b workers on their jobs
b. Time spent by workers without work
c. Time spent by workers I the factory
d.None of these
7. Jon evaluation is
a. Process of studying and assessing relative values of jobs
b. studying methods of performing jobs
c. determining the best way to perform jobs
d. none of these
8. Difference between attendance time and job time is
A. job time b. over time c. idle time d production time
9. Time wages are paid on the basis of
a. standard time b. time saved c. output produced d. Actual time.
10. Piece workers are paid on the basis of
a. output sold b. output produced c. output in stock d. None of these
11. Differential piece wages means
A. Different wages for different leaves of performance
B. wages for different times consumed c. wages for time saved d. None of these
12.Bonus under Haley plan is paid
a. At 100% of Time saved b. At 75% of Time saved c. at 80% of Time saved d. At50% of
time saved.
13. Halsey premium scheme is
a. Individual incentive scheme b. Group incentive scheme c. Time and piece wage system d.
Differential piece wage system
14. Bonus under rowan scheme is paid
a. As a proportion of standard time to actual time b. As a proportion of actual time to standard
time c. As a proportion of time saved to standard time d. None of these
FILL IN THE BLANK

1. Labour cost is the second element of ___________.(cost)

2. Labour turnover is usually measured by anyone of _____ methods.(Three)

3. There are two broad methods of time keeping manual methods and _______ methods.
(Mechanical)
4. Two types of causes for labour turnover are avoidable causes and ___________ causes.
(unavoidable)
5. ________ reveals time spent by workers in the factory.(time keeping)
6. __ reveals time spent by workers on their job. (Time booking)
7. Two types of idle time are normal idle time and ____idle time.(abnormal)
8. Over time premium s paid at _____ the normal rate.(double)
9. ____department prepares wages bill/pay bill.(Payroll)
 10. Actual time spent in the factory I the basis for _____ % of Time saved a bonus.(time rate)
11. ____________method is based on output produced by workers. (Piece rate)
12. Taylor’s wage payment method is called ___ piece rate system. (differential)
13. Time rate guaranteed under Gantt’s ____ Bonus plan.(Task)
14. Halsey plan provides for _______ % of time saved as Bonus.(50)

OVERHEADS

1. Overheads is also known as

A. On cost b. Basic cost c. Extra cost d. Chargeable expenses
2. Factory overheads is also termed as
A. Sundry overheads b. Extra overheads c. Works overheads d. None of these
3. Primary packing is a part of
a. Distribution overheads b. selling overhead c. factory overhead d. Prime cost
4. Appropriate basis for apportionment of material handling charges is

A. material purchased b. material in stock.c material consumed d. Material wasted

5. Recreation expenses in factory are apportioned on the basis of

A. material cost b. wages c. Prime cost d. Number of employees
6. Sundry overhead expenses may be apportioned in the ratio of
A. material consumed b. Number of employee c. labour hours d. None of these
7. Departmentalization of overhead is known as
A. Primary distribution b. Secondary distribution c. Absorption d. one of these
8. Charging output with overhead at some reasonable rate is called
A. Allocation b. Absorptionc. Apportionment d. None of these
9. Under absorption of overhead takes place when
A. Actual overhead is more than actual overhead
B. Absorbed overhead is more than actual overhead
C. Standard overhead is more than actual overhead
D. None of these
10. Comprehensive machine hour rate includes
a. machine operator’s wages b. managing director’s salary
c. Income tax d. Office rent
FILL IN THE BLANK

1. Expenditure over and above rime is known as _____. (overhead)

2. Overhead is the aggregate of indirect material cost, indirect labour cost and indirect
___________.(expenses)
3. A cost is ____ if it does not change with change in activity level.(fixed)
4. Variable cost varies in total but remain _______ per unit. ( Constant or fixed)
5. Allocation and apportionment of overhead to all the department is known as __________
distribution.( Primary)
 6. Apportionment of service department overhead to all the departments is known as
________ distribution.(Secondary)
7. Charging production department overhead to the output is called ______.(Absorption)
8. Power cost is apportioned on the basis of _____ hours.(Kilowatt)
9. In the case of machine dominated activities ________________ rate of absorption is
more appropriate.( machine hour)
10. _____________rate of absorption is suitable for labour oriented manufacturing.(labour
hour)

RECONCILIATION OF COST AND FINANCIAL ACCOUNTS

1. Reconciliation is usually done between

A. Gross profit and net profit
B. Previous year’s Profit and current year’s profit
C. Costing profit and financial accounts profit
2. Over absorption of overheads in cost accounts results in
A. decrease in costing profits b. Decrease in financial accounts profit c. No effect on
profits of both the accounts
3. Over valuation of opening stock in Financial accounts
a. Decreases costing profit b. Increases financial accounts profit c. decreases Financial
accounts profit
4. Notional charges in Cost accounts like rent on own buildings
A. Increase costing profit b. decrease costing profit c. Increase financial accounts profit
5. Undervaluation of closing stock in cost accounts
a. Decreases costing profit b. Increase cost profit c. decrease financial accounts profit.

FILL IN THE BLANK

1. Reconciliation I to be done between the profits disclosed by cost accounts and

_____________ accounts.(financial )
2. Reconciliation is unnecessary under __________ Accounting system.(integrated)
3. Undervaluation of closing stock in cost accounts is to be _____________ to costing profit
while reconciling it with Financial accounts profit.(Added)
4. Losses shown in financial accounts alone are to be ________________ costing profit to
find profit as per Financial accounts.(reduced from )
5. ____________ charge of depreciation in Financial accounts is to be deducted from
costing profit while reconciling it with Financial accounts profit.(excess)

JOB BATCH AND CONTRACT COSTING

1. Job costing is the most suitable method for

A. Oil processing units b. transport companies c. Sugar industry d. repair shops.
2. Job cost is usually estimated on the basis of
 a. Customer’s specification b. production cost c. competitor’s prices d. Government
regulations.

3. Batch costing is useful to determine

A. maximum quantity f output b. minimum quantity o output c. economic batch
quantity d. none of these
4. Contract costing is the most appropriate method of costing for
a. Construction industry b. banking industry c. textile mills d. Cement industry.
5. Cost of a contract and profit or loss thereon are determined by preparing
A. Cost sheet b. P & L A/C c. trading A/c d. separate ledger account.
6. The basis for determining profit to be taken into account on incomplete contract is
A. Cost of contract b. contract price c. Percentage of work certified as done d.
uncertified work
7. When there is loss on an incomplete contract the transfer to P & L A/C is
a. Proportionate loss to work certified b. Proportionate loss to cash received to work
certified c. Full amount of the loss d. None of these
8. Usually, a contract account of an incomplete contract reveals
a. Gross profit b. Net profit c. Operating profit d. notional profit

9. Profit to be transferred to profit and loss account, If a contract is complete to the

extent of only 20% is
a. 2/3 b. Nil c. 1/3 d. Full profit
10. When a contract is completed to the extent of 40%, profit to be taken to p& L A/C
is
a. Full amount b Nil c. 1/3 d. 2/3

FILL IN THE BLANK

1. Specific order costing includes job costing ___ costing and contract costing. (Batch )
2. In job costing each ______ is a cost unit.(Job)
3. Optimum quantity to be manufactured in a batch is called ______ batch quantity.
(economic)
4. Most of the costs in contract costing are _______ costs.(direct)
5. In contract costing payment of cash to the contractor is made on the basis of work
____________.(certified)
6. When a contract is debited with the original cost of the plant issued to contract, it should
be credited with its _________ value at the end of the accounting period, or at the time
the contract is completed.(depreciated)
7. ______________ profit is he basis or computing profit on incomplete contracts.
(Notional)
 8. The full amount of loss, whether a contract is complete or incomplete is transferred to the
costing ____________ account.(Profit and loss)
9. In ____________ contracts, the contactor gets a predetermined profit in addition to his
cost.(Cost Plus)
10. _____- clause is inserted in contract to provide for expected increase in material prices,
wag rates etc.(escalation

UNIT OR SINGLE OR OUTPUT COSTING

1. Unit costing is also called

a. Process costing b. Job costing c. Multiple costing d. Single or output costing
2. The basic characteristics of unit costing is that
A. Output is identical and uniform b. Output is different from each other c. It results in
services only d. It is applicable to jobs and contracts
3. Cost per u nit is ascertained under unit costing is
A. Dividing the cost with unit produced b. Dividing costs with units sold c. dividing cost
with units in stock d) None of these

4. In unit costing realization from material scrap is

a. Ignored b. Credited to P& L A/C c. reduced from direct material cost or works overhead d.
none of these

5. Tender or quotation are usually based on

a. Previous period’s cost figures alone b. future estimates alone c. previous period’s cost
adjusted for future forecasts

d. none of these

FILL IN THE BLANK

1. When output is uniform and identical in all respects ________________ costing is the
most suitable method. (Unit)
2. Total cost of output is divided with the number of units _________ to ascertain unit cost.
(Produced)
3. For the purpose of Tenders or Quotations, basis for charging production overhead is he
percentage of the Production overheads to __________ in the previous accounting period,
(wage)
4. Ratio of administration overhead to ______________ cost is used to charge the office
overhead in quotations.(works)
5. Ratio of selling and distribution overhead to ___________- cost is used to charge selling
and distribution overhead in tenders and quotations. (works)
 OPERATING AND OPERATION COSTING

1. Operating costing is a
a. Method of costing b. technique of costing c. Norm of costing d Procedure of costing
2. Operating costing is more useful in
a. Manufacturing industries b. Service industries c. trading organizations d. None of
these
3. Operating costing is widely used on
a. Chemical manufacturing b. Textile industry c. transport industry d. Sugar industry
4. Operating cost is usually ascertained through
a. A ledger b. Profit and loss account c. balance sheet d. a statement or cost sheet
5. Various items of cost are classified in operating costing under
a. Three major heads b. four categories c. Two types d. A single category
6. The physical distance covered by a vehicle is measured in terms of
A. ton kilometers b. passenger kilometers c. vehicle days d. running kilometers or miles
7. The cost unit in passenger transport service is
A. Miles per hour b. passenger kilometer or miles
b. Kilometers per day d. Cost per vehicle
8. In Goods transport service the cost unit is
a. Cost per ton b. Cost per hour c. Ton kilometers or miles d.
Cost per vehicle
9. In lodging hours, costs are expressed in terms of
a. Room-day b. Customer day cc. Customer Hour d. Cost per month
10. Standing charges are
a. Semi-variable b. Fixedc. variable d. None of these

FILL IN THE BLANK

1. Operating costing is a sort of refined __________ costing, applied to a series of small
operations. (process)
2. Operating costing is suitable to ascertain costs in _____ Industries.(Service)
3. Costs are classified into ______categories in operating costing.(Three)
4. Depreciation can be either a standing charge or __________ charge in operating costing.
(Running)
5. Garage rent is a ___________ charge on operating costing.(Standing)
6. Cost of tyres and Tubes is a ____________ charge in operating costing.(maintenance)
7. The cost unit in passenger transport industry is ______ Kilometers.(passenger)
8. The cost unit in goods transport industry is ______ kilometer.(Tonne)
9. The cost unit in cinema theaters is __________ show.(man)
10. The cost unit in Hospitals is _______ day.(Patient bed)

PROCESS COSTING
1. Process costing is suitable to industries where
A. Production s carried on in two or more different stages b. Production is as per
customer specifications c. Specialized services are rendered d contracts are
undertaken
2. Process cost is ascertain and recorded in
A. balance sheet b. profit and loss account c. separate statement d. separate account in
ledger
3. Finished product of a preceeding process is
a. The raw material for subsequent process b. cost of production of subsequent process
c. credited to subsequent process d. none of these
4. Scrap value of normal loss is
a. Credited to P&L A/c b. Shown in Balance sheet c. Credited to Process A/c d. debited to
process account
5. Abnormal Loss and gain Units are valued at
a. Market value b. scrap value c. realizable value d. Cos per unit of the process, just like
good output
6. Cost of Abnormal Loss is shown in
a. Balance Sheet b. P& L A/C credit side c. P&L A/c debit side d. None of these
7. Scrap value of Abnormal Loss and gain are transferred to
a. Balance sheet b. P&L A/c debit side c. P& L A/c credit side d. Abnormal Loss or
Abnormal gain A/C in the ledger
8. Major purpose of ascertaining equivalent production is
a. To ascertain cost of output b. to find profit or loss c. to control and reduce cost d. None of
these
9. Interprocess profits are
A. Credited to each process b. debited to the respective process accounts c. shown only in
the finished stock A/c d. shown in the Balance Sheet.
10. Joint costs of manufacturing are
a. Directly transferred to P&L A/c b. divided to the products produced in the process c.
Shown as deferred costs in balance sheet d. None of these

FILL IN THE BLANK

1. When the raw material has to pass through two or more distinct stages to be converted
into finished product, the costing method usually employed is _______.(process costing)
2. Unit cost for each process is ascertained by dividing the net cost of the process with the
units of __________ in the process.(Output)
3. Normal Loss and its scrap value are shown on the _______side of the process account.
(credit)
4. Abnormal gain or effective and its cost are shown on the ________ side of the process
account.(debit)
5. When actual loss in a process is more than the normal loss, the excess loss is termed as
________ loss.(Abnormal)
6. Net cost of Normal Loss is absorbed by the other ______ units produced in the process.
(Good)
7. ____________loss is transferred to costing P&L A/c.(Abnormal)
8. __________Production represents the output of a process in terms of finished units.
(equivalent)
9. The two methods usually adopted to calculate equivalent production are average cost
method and __________ method.(FIFO)
10. Interprocess profits create the problem of __________ profit in stocks. (unrealized)
11. By-products are always of lower value and importance than the __________ product.
(Main)