Q1.In variable expense _______ remains same A. total cost B. total amt C. per unit cost D.

none Answer:
Q2. In fixed expense _______ remains same A. total cost B. total amt C. per unit cost D. none Answer:
Here, we know in variable expense – per unit cost remains same and total amount varies whereas in fixed expense – total amount remains same
and per unit cost varies
Q3. Income scarified by giving credit period to the customer is a ….. cost A. sunk cost B. Conversion Cost C. Opportunity cost D. None

Q4. The cost of production for product P is as under Direct mat = 60, direct labour = 80, factory overheads = 60, admin
overheads = 50 Total cost is is 250 find the conversion
A. 250 B. 200 C. 140 D. 190
(conversion cost = direct labour + factory OH) The cost which is incurred to convert raw material into finished goods

Q5. The book value of the machine is 8lacs, estimated realisation value is 6lacs, and cost of new machine to be
purchased is 20lacs. Find the replacement cost
A. 20lacs B. 12lacs C. 14lacs D. None of the above
20-6=14 Cost of m/c is 20lakhs

Q6 Direct material cost 5 lakhs Direct labour cost 6 lack direct expenses 4 laks factory overhead 7 lakhs from given
example find out prime cost
A. 11 B. 12 C. 15 D. None of above
PRIME COST = ADDITION OF ALL DIRECT,
WORKS COST = DIRECT + FACTORY COST OF PRODUCTION – WC + ADMIN EXP.,
TOTAL COST = COP + SELLING & DISTRIBUTION

Q7 Direct material cost 5lakhs Direct labour cost 6 lack direct expenses 4 laks factory overhead 7 lakhs, Admin OH is 3L
and Selling and distribution Oh is 4L from given example find out Works cost
A. 11 B. 12 C. 15 D. None of above

Q8. Direct material cost 5 lakhs Direct labour cost 6 lack direct expenses 4 laks factory overhead 7 lakhs, Admin OH is 3L
and Selling and distribution Oh is 4L from given example find out cost of Production
A. 11 B. 12 C. 25 D. None of above

Q9. Direct material cost 5 lakhs Direct labour cost 6 lack direct expenses 4 laks factory overhead 7 lakhs, Admin OH is 3L
and Selling and distribution Oh is 4L from given example find out Total Cost
A. 11 B. 12 C. 25 D. 29L

Q10. The cost of production of 10000 units is under - Direct Material - 80,000 Direct Labor - 40,000 Variable OH - 60,000
Fixed Cost - 90,000 Total Cost - 2,70,000 Calculate total cost for 22000 units
A) 5,94,000 B) 4,86,000 C) 5,28,000 D) None of the above
Answer: 10000 units cost = 80000+ 40000+ 60000 = 180000 Than cost of 1 item = 180000/10000 = 18
22000 units cost - 18 X 22000 = 396000 + 90000 = 486000

Q11. The cost of Production for 5000 unit is as under DM - 20,000 Direct Labor - 10,000 Semi-variable OH - 50,000
(10,000 Fixed) Total Cost is 80,000 Find the total cost for 8000 units
A) 1,28,000 B) 1,22,000 C) 1,20,000 D) None of the above
Cost of 5000 units: 20000+10000+40000 (50000-10000)= 70000 So variable per unit cost: 70000/5000 = 14 Hence 8000
units: 14*8000= 112000+10000=122000

Q12. The Total Cost of Production is 24,00,000 Selling OH is 10% of the sales Profit is 30% of the sales Find the Total
Sales Amount and selling OHs Amount.
A) 50,00,000 and 5,00,000 B) 45,00,000 and 4.5,00,000 C) 30,00,000 and 3,00,000 D) 40,00,000 and 4,00,000
Cost + SOH + Profit =sales
Cost of Prodn 60% 2400000 + selling Oh 10% + Profit 30 % Sales 100% ? Cost + SOH + Profit =sales If sales is 100, then
SOH is 10, profit is 30 hence cost is 60 So Sales = 24lacs*100/60 = 40lacs SOH will be 10% of 40lacs= 4lacs

Q.13) Akshay Ltd pre determined the overheads as 15/- per hour, the actual o/h cost is 85000/- and the actual labour hour
is 5750. So whether the exp is under absorbed or over absorbed? A. 1000 over B. 1000 under C. 1250 over D. 1250
under Answer ? OH = 15 x 5750 = 86250 Actual OH = 85000 Over Absorption =1250

Budget > actual = over absorbed whereas if Budget < actual, under absorbed
Q14. Opening stock 400 uts @5, purchases during the period 600 uts@6, 350 uts@7, 450 uts@8, out of which 1200 uts
were issued for production, find the cost of material issued for production by FIFO method A. 7000 /- B. 8450/- C. 7800/-
D.7767/-
Answer: by FIFO method: 400*5=2000 , 600*6= 3600 and 200*7=1400 Cost of issue: 2000+3600+1400=7000

Q15. Opening stock 400 uts @5, purchases during the period 600 uts@6, 350 uts@7, 450 uts@8, out of which 1200 uts
were issued for production, find the cost of material issued for production by LIFO A. 7000 /- B. 8450/- C. 7800/- D.7767/-
450*8 + 350*7 + 400*6

Q16. Opening stock 400 uts @5, purchases during the period 600 uts@6, 350 uts@7, 450 uts@8, out of which 1200 uts
were issued for production, find the cost of material issued for production by WAM A. 7000 /- B. 8450/- C. 7800/- D.7767/-
=((400*5)+(600*6)+(350*7)+(450*8)) /(400+600+350+450) = ANS X 1200 ... ANS - 7767 OPTION D

Q17. Opening stock 400 uts @5, purchases during the period 600 uts@6, 350 uts@7, 450 uts@8, out of which 1200 uts
were issued for production, find the cost of material issued for production by Simple Avg method A. 7000 /- B. 8450/- C.
7800/- D.7767/-
Answer by simple average method: Total rate: 5+6+7+8=26/4=6.5 Hence 1200*6.5=7800

Q18 Half yearly consumption for production is 5000 units(raw material) , cost per unit of raw material is 80/- Cost of
placing order is 400/- and the storage cost is 20% of the cost of raw material . Find EOQ- economic order quantity a.
500 b. 507 c. 700 d. 707
Answer: EOQ = SQRT (2*U*P/S) Economic Ordering Quantity = SQRT ( 2X Annual Unit consumption X Cost of placing
order/Storage cost) = SQRT OF 2*10000*400/(0.2*80)

Q.19) Raw material purchased 240000/-, op stock 50000/-, closing stock 60000/-, Admin exp 10000/-, Carriage inward
20000/-, freight outward 32000/-, Direct Labour 140000 and Direct Expense 60000 prime cost during the year is? A.
512000/- B. 482000/- C. 450000/- D. 460000/-
Prime cost = Raw material consume( DM) + Direct Labour + Direct Expense
DM= Opg stock+material purchased+freight inward-clg stock= 50000+240000+20000-60000
=250000+140000+60000=450000
NORMAL USAGE = MIN + MAX / 2

Q.20) Material A is used as follows: Minimum usage 500/ week Maximum usage 1500/week Normal usage 1000/week Re-
ordering quantity- 5000 units. Delivery Period- 4 to 6 weeks. Calculate A) Reordering level A. 2000 B. 3000 C. 6000 D.
9000 Reordering level = Max Period x Max consumption = 1500*6

Q.21) Material A is used as follows: Minimum usage 500/ week Maximum usage 1500/week Normal usage 1000/week Re-
ordering quantity- 5000 units. Delivery Period- 4 to 6 weeks. Calculate A) Minimum level of stock A. 2000 B. 7000 C.
9000 D. 4000
Min level = Reordering level - ( Avg Cosumption x Avg period) = 9000 – ( 1000 * (4+6)/2

Q.22) Material A is used as follows: Minimum usage 500/ week Maximum usage 1500/week Normal usage 1000/week Re-
ordering quantity- 5000 units. Delivery Period- 4 to 6 weeks. Calculate A) Maximum level of stock A. 12000 B. 17000 C.
19000 D. 4000
Max Level = Reorder level+ reordering quantity - ( min. consumption * min. delivery period)

Q23. Company produces 8000 units of A and 10000 units of B. The storage dept cost is 25lacs and the total number of
material deals is 10000 of which 3000 is used for A and 7000 is used for B. Find the Storage cost per unit to be charged of
storage to each product by ABC costing Method a. 138.88 for each A and B b. 93.75 for A and 175 For B c. 93.75 for B
and 175 For A
Answer: Cost driver: number of material deal 2500000/10000= 250 per material handling charges Total Cost
A=3000*250=750000 Total Cost B=7000*250=1750000 Cost per unit A: 750000/8000=93.75 Cost per unit B:
1750000/10000= 175
Q24. Purchase Deptt Cost 24L. Company produces 2 products – P & Q. Number of units produced are 10000 for P &
10000 for Q. Total number of times purchased by departments is 20000 out of which 6000 times is for P & 14000 is for Q.
What is the cost per unit charged for P & Q as per ABC: A. 8.2 for P & 178 for Q B. 10.2 for P & 168 for Q C. 72 for P &
168 for Q D. 168 for P & 7.2 for Q
Total Cost P=6000*120=720000 Total Cost Q=14000*120=1680000 Cost per unit P: 720000/10000=72 Cost per unit B:
1680000/10000= 168 ---------End--------------