Net Pay is obtained when (i) deductions are added in gross pay (i) bonuses and premiums are included in gross pay. deductions are subtracted from gross pay none of the above Option (i) iS correct Option (i) is correct ® Option (ii)is correct Option (iv) is correct Labours may not be retained even after promotions, good working environment and. lear potential due to () relocation (ii) family problem (iil) retirement (iv) allof the above Option (i) is correct Option (i) is correct Option (ty s correct, ® Option (wv) is correct ‘Which of the following costs is not included while computing unit product cost under variable costing? Direct materials cost Direct labor cost Variable manufacturing overttead cost © Fixed manufacturing overheadProcess costing is most suitable in industries where. diferent products are being produced Indirect cost percentage is higher ® single product is produced on continuous basis diferent types of indirect cost are incurred Acompany manufactures 1,000 units of product X per year. The cost data is given below: Direct materials: Rs.5 per unit Direct labor: Rs.4 per unit Variable manufacturing overhead: Rs.3 por unit Fixed manufacturing overhead: Rs.6,000 per year Based on the above information, th variable cost to manufacture one unit of product X ie: Rs 18 Rs9 Rs13 ® Rs12 XYZ Company produces a product which has no WIP inventory. Material cost Rs. 4,500 (450 units), labour cost Rs. 4,500 and other costs amount to Rs. 6,000. The cost per unit of output would be © Fs.33 Rs. 20 Rs. 30 Rs.10Output of shoe making factory was finished goods of 4,000 units and closing inventory of 600 units which ara 40% completed, Equivalent units of output would be 240 @ 4240 400 1840 Marginal costing technique helps the management in deciding i. Pricing ii. To accept fresh orders at low price iii. To make or buy iv. All of the above Option (i) is correct Option (ll) is correct Option (ii) Is correct © Option (v) ts correct In process-2, Rs. 1,000,000 were incurred for further processing of 20,000 units which were transferred from pracess-1,, taking the total cost of both processes to Rs. 90/unit The total cost of process-1 was Rs. 1800,000 Rs. 1900,000 @ Rs. 800,000 Rs. 1,000,000Bilal enterprises have calculated price of their Job-C as follows: item Rupees Direct material 5,000 Direct labour 10,000 overhead 5,000 Total cost 20,000 profit- 25% of cost 5,000 | selling price 25,000 ‘What % they are earning on sales amount? 25% © 20% 15% 18% Sultan Limited's monthly fixed spending is Rs.-2 milion and the Product is sold at Rs. 110 per unit. Betch input quantity is §,000 at variable cost of Rs. 20/unit. Find the amount of profit if 6 batches are produce ina month? ()_-Rs700,000 (WR .450,000 (li) Rs 370,000 (iv) None of the above ® Option (') is correct Option (i) is correct ‘Option (ji) is correct Option (iv) is correctProcess costing is a form of (i) specific order costing (ii) batch costing (iii) continuous operation costing (iv) none of the above Option (is correct Option (ll is correct ® Option (i) is correct Option (Iv) Is correct Process costing may not be suitable for (i) petroleum products (ii) paintindustry (ii) food products (iv)... alllofthe above Option (i) is correct Option (i is correct Option (i) is correct Option (iv) is correctContinuous operation costing includes jod/batch costing © service costing periodic costing ‘throughput costing Service industries includes all except hospital high school airlines ® cement costing system can easily identity costs related to specified and customized orders Process Balch Service © Job Indirect costs are main component of. costing. process @ service batch pd\Miftah Company produces ‘wo products, 'X’ and ‘Yin a single joint process. Last month the joint costs were Rs.75,000 when 10,000 units of Product 'X’ and 15,000 units of Product "Y’ were pro- duced. Additional processing costs were Rs.15,000 for Product 'X” and Rs.10,000 for Product ‘Y’. Product °X’ sells for Rs. 10, and Product 'Y’ sells for Rs.5 ‘The joint cost allocations to Products X and Y using the net realizable value method would be: % Y i Rs.30,000 — Rs.45,000 li, Rs.42,500 — Rs.32,500 lil, Rs.42.857 — Rs.32.143 Rs.49,000__Rs.30,000 Option () is comect © Option (i) is correct Option (i) is correct Option (v) is correct, Standard costing is the preparation of standard costs and their comparison with _ and the analysis of ‘Marginal costs, Vatlanes Variances, Marginal costs © Actual costs, Variances Variances, Actual costsStandard costs are useful in (i) Establishing budgets (ii) Supporting cost reduction measures (iii) Simplifying cost procedures and expediting cost reports (iv) All ofthe above Option (i) is correct Option (i is correct ‘Option (i) is correct © Option (Iv) Is correct costs are transferred to Work-in-process. Indirect labour ® Direct labour Overtime Shift allowance Ifthere is @ favourable materials price variance then this could be due to: ‘More wastage of materials incurred Exchange rate depreciation if materials are imported Higher wage costs ® Inferior quality materials being usedA tavorable labor variance combined with an adverse wage rate variance could be caused by: Higher unemployment in local economy © Introduction of performance related pay Cost cutting exercises implement by management Cheaper raw materials imported due to exchange rate depreciation Following data is related to Job-3: Job-3: Standard hours worked 80 Actual hours worked 75 Standard wage rate per hour (Rs.) 100 Actual wage rate per hour (Rs.) 105 The total labour variance for Job-3 is: Rs. 125 unfavorable ® Rs. 126 favorable Rs. 900 unfavorable Rs. $00 favorableMain purpose of inventory control is to assist in internal audit © minimize inventory costs avoid abnormal loss Increase in market share Which of the following would not explain a favorable wage rate variance? Reduction in power of trade unions Higher unemployment in industrial sector New technotogy ® Introduction of minimum wage legislation In a manufacturing firm, the standard quantity of material was set at 10 kg and standard price was fixed at Rs. 2 per kg. The actual quantity consumed was 12 kg and the actual price paid was Rs. 1.90 per kg. Determine material usage variance Rs 4 favorable @ Rs 4 unfavorable RS 2.80 unfavorable Rs 1.20 favorableThe following data is related to Production of one unit of product ‘T" Material x Y Standard Quantity (Kas) 40 50 Actual Quantity (Kgs) 55 35 Standard Rate per Kg 410 5 Actual Rate per Kg 9 7 Determine material usage variance. Rs 75 favorable ® Rs 75 unfavorable Rs 90 untavorable Rs 90 favorable Distribution expenses would be included in prime cost manufacturing overhead ® non-production ovemeads fixed cost Which of the following statements are true about labour idle time? (i) Labour idle time variance is not caused by non-availability of raw material (i) Labour idle time variance is measured as: Abnormal idle hours x Actual hourly rate (ii) Labour idle time variance is alvays unfavorable or adverse (iv) Allof the above Option ()is correct Option (i) is correct © Option (it) is correct Option (iv) is correct‘Standard time to produce a unit is 80 hours and standard time per hour is Rs 100 per hour. Actual time spent to produce a unit is 90 hours and actual rate per hour is RS 110 per hour Determine labour cost variance Rs 1,100 unfavorable Rs 1,900 favorable © Rs 1,900 unfavorable Rs 4,100 favorable When actual price is higher or lower than the standard price, then itis ® Sales price variance Sales volume variance Sales mix variance Sales quantity variance The allocates joint production costs based on each product's share of reve nue at the split-off point. sales-to-production-ratio method physical units metnod @ salas-value-ai-spli-ot method net realizable value metiod The secondary product recovered in the course of manufacturing a primary product during joint process is: ® a by-product a pint product. a replacement product. a splitoff productWhich statement is correct regarding management accounting? Information is widely distributed ® Information is customized for decision makers Legal requirements have to be followed Information regarding specific unit cannot be obtained The joint cost allocation method that assigns joint production costs based on the proportionate share of eventual revenues less further processing costs is the: © net realizable value method sales-to-production-ratio method physical units method. constant gross margin percentage method. aro closest to policy and decision makars Extemal Auditors Financial accountants ® Management accountants Intermal Auarors ‘The joint cost allocation method that yields the same gross margin percentage for each product is the: net realizable value method. sales-to-production-ratio method, physical units method @ constant gross margin percentage methodCost accounting can be used to assist in (i) Planning (ii) Decision making (iii) Controlling (iv) Allofthe above Option (i) is correct Option (iis correct Option (iis correct © Option (1v) Is correct A courier of a mail company is paid a salary of Rs.10,000 per month plus an extra Rs.2 per mail article delivered. This labour cost is best described as a variable cost a step cost © asemi-vatiatle cost a fixed cost Labour turnover for the period is calculated as: ® number of employees left + average workforce number of employees left + workiorce at the beginning of the perioa number of employees lent = workiorce at tne end or the period None of the abovecompany manufactures a single product. The total cost of producing 6,000 units is Rs.24,000 and the total cost of producing 20,000 units is Rs.60,000. Within this range of activity level, the total fixed costs remain unchanged. What is the variable cost per unit of the product? @ Rs29r Rs309 Rs323 Rs.400 Which one of the following statement concerning the difference between management accounts and financial accounts is incorrect? Financial accounts are governed by stnct accounting rules and regulations, management accounts) are not © There Is a legal requirement for management accounts, Management accounts are often required for individual dvisions andor procucts whereas financial accounts usually cover the whole company Management accounts are mainty for intemal purposes whereas financial accounts are mainly tor extemal purposes Which of the following costs of a joint process would be allocated to the joint products? © materials, labor, and overhead labor and overhead only materials and labor only conversion costs less by-product valuesWhich of the following is a true statement regarding joint costs? Joint costs are easily traced to individual products. ‘The primary reason for allocating joint costs is to determine whether a product should be sold immediately or processed further. © The primary reason for allocating joint costs is for inventory valuation for financial reporting, Joint costs consist only of overnead, never of materiais or direct labor. Job number B-10 requires 380 active labour hours to complete. It is expected that there will be 5% idle time. The wage rate is Rs.60 per hour. The labour cost af Job number 8-10 is Rs.21,660 Rs.22,800 RS.23,940 @ s.24,000 Which of the following is not an acceptable method of accounting for by-products? (i) The revenue from the sale of by-products is credited to “Other Income.” (ii) The by-products valued at its opportunity costs of purchasing or replacing the product. (il The revenue from the sale of by-products 's deducted from the costs of the main products. (iv) All of the above methods are acceptable approaches to accounting for by-products. Option (i) fs correct Option {i is comect (Option (i) is correct ® Option (iv) is correctProcess B had no opening inventory. 13,500 units of raw material were transferred in at Rs 5.00 per unit. Additional material at Rs.2.00 per unit was added in process. Labour and overheads were Rs.6.00 per completed unit and Rs.2.50 per incomplete unit. if 11,750 completed units were transferred out, what was the closing inventory in Process B Rs.12.250 25.13.15 @ 25.16.65 28.17.15 Whats an equivalent unit? unit of output which is identical to all others manutactured in the same process © Notional whole units used to represent uncompleted work. Aunit of product in relation to which costs are ascertained. ‘The amount of work achievable, at standard efficiency levels, in an hour. Aproducer of. would not use a process costing system gasoline potato chips blank videotapes ® stained glass windows Process costing may be used in companies that engage in road and bridge construction Produce sailboats made to customer specifications ® produce bricks for sale to the public construct nouses according to customer piansIf sale price of a product ‘B’ is Rs. 50 per unit, direct material cost is Rs. 20 per unit, direct labor cost is Rs 5 per unit, variable manufacturing cost is Rs. 5 per unit, and variable marketing and administrative cost is Rs. 3 per unit, then what would be the contribution per Unit of product ‘5? @ 23.17 RS 25 Rs. 20 RS 13 Management accountants are usually not responsible for ® treasury budgeting costing product decisions Semi-fixed costs: increase in steps as the amount of the cost driver volume increases remain the same within the relevant range of output ® have both fixed and variable components in them, remain the same regardless of total output Direct material cost should always be classified as ® variable cost semi-variable cost semifixed cost period costManagement accounting is basically for owners all external parties creditors © internal management Following is a product cost? ‘Management salaries Advertisement cost Insurance premium ® Direct labour cost Prime cost means. © sum of direct material and difect labour cost ‘sum ofiindiréct material and factory overhead cost sum of indirect material and direct labour um of direct material and marketing cost The information presentod in various report is termed as’ ® processed information primary information quantitative information qualitative informationWhich statement best describes primary date? Data which is very important Data derived from statistical reports, Data pertaining to immaterial matter © Data derived from statistical survey Whatis the base rate of taxi, if the fare of taxi is Rs. 210 for 10 km and Rs. 450 for 40 km. Rs.80 ® Rs.130 Rs. 120 Rs. 210 Prime cost refers to conversion cost overneaas overheads + labour cost © direct cost conversion cost, Cost object does not include a product a sales region any depanment ® raw material‘Standard time to produce a unit is 80 hours and standard time per hour is Rs 100 per hour. Actual time spent to produce a unit is 90 hours and actual rate per hour is Rs 110 per hour. Determine labour efficiency variance Rs 100 unravorable Rs 1,000 favorable @ Rs 7,000 untavoraple RS 100 favorable ‘Standard time to produce a unit is 80 hours and standard time per hour is Rs 100 per hour. Actual time spent to produce a unit is 90 hours and actual rate per hour is Rs 110 per hour. Determine labour rate variance. Rs 2,200 unfavorable Rs 900 favorable ® Rs 900 unfavorable Rs 2,200 favorable A standard cost card reveals that one unit of Product 'A’ needs 2 Kg of material x’ at Rs. 10 per Kg. During February 800 unis of Product ‘A produced. Actual price paid for material 'X' is Rs. 9 per Kg and total cost Rs. 15,300. Determine material cost variance. ® Rs. 700 favorable Rs. 700 unfavorable RS. 1.700 favorable Rs. 1,700 unfavorable‘Which of the following would be included in service industry? Textile ‘Sugar mills Garments factory © Private hospital Acompany operates an integrated aeccunting system. The accounting entries for the factory cost of production would be 0 (i) (ii) (iv) 0 ® @ a w Dea ‘Cost of sales account Finished goods control account Costing ncore statement Workin process cortral account Credit Finished goods control account Work in process account Finished goods control account Finished goods control accountThe following cost data is available for Beta company: Rupees Direct materials used 10,000 Factory overhead 20.000 Work-in-process beginning 0 Work-in-process ending 6,000 Cost of goods manufactured 32,500 ‘What was the amount of direct labour? Rs, 24,000 Rs. 2,900 Rs, 38,500 @ Rs. 8500 Total fixed cost at production level of 100,000 units were Rs.300,000. At production level of 150,000 units the fixed cost would be: Rs.450,000 in total Rs.400,000 in total @ Rs2-perunit Rs.3 per unit. A management consultancy recovers overhead on chargeable consulting hours. Budgeted overhead were Rs.615,000 and actual consulting hours were 32,150. Overheads were under recovered by Rs.35,000. If actual overheads were Rs.694,075 what was the budgeted overhead absorption rate per hour? Rs.19 10 @ Rs.20.50 Rs.21.69 Rs.2268Chishti Manufacturing provided the following information for last month: Rupees Sales 10,000 Variable costs 3,000 Fixed costs 5,000 Operating income 2,000 If sales double next month, what is the projected operating income? ® Rs. 9.000 Rs. 7,000 Rs. 4,000 Rs.12,000 Sales for a sports goods company were Rs 960,000, cost of goods available for sales was Rs 800,000, gross profit was Rs.25% of sales. The amount of ending inventory was Rs 40,000 ® 30,000 120,000 16,000The following information is available regarding three production and one service department of AKSubk Company: Production Departments Services Machinery Finishing Packing Depariment Number of direct 8 # 3 - employees Number of indirect 4 3 2 4 employees Overhead allocated and apportioned (Rs.) 30,000 20.000 12,000 _ 10,800 The overhead cost of the service department is to be re-apportionad to the production departments on the basis of the number of employees in each production departments. After the re-apportionment, the total overhead cost of the packing department will be Rs.1,200 Rs.1,800 ® Rs.14,000 Rs.2,400 The process of cost apportionment is carried out so that Costs may be controlled Cost units gather overheads as they pass through cost centres Whole Items of cost can be charged to cost centres © Common costs are shared among cost centresVariable costs are conventionally deemed to ® be constant per unit of output vary per unit of output as production volume changes: be constant in total when production volume changes vary, in total, from period to period when production’ is constant ‘The wages analysis shows the following summary breakdown of the gross pay incurred in Department A for the month of August 2016: Rupees Direct labour Indirect labour Ordinary time 25,185 11,900 Overtime: basic pay 5,440 3,500 premium 1,360 875 Shif allowance 1,360 Sick pay 300 17,935 What is the direct wages cost for department A in August? Rs.25,185 © Rs.30,625 Rs.24,685 Rs.36,065Which of the following are direct expenses? (The cost of special designs, drawing or layouts Gi) The hire of tools or equipment for a particular job ii) Salesmen's wages (iv) Rent, rates and insurance of a factory ® @and (ii) @and (ii) @and (iv) ‘(uy ana qw) Under a job-order costing system, the dollar amount transferred from work-in-process to finished goods is the sum of the costs charged to all jobs started in process during the period In process during the period. completed and sold during the periog. ®@ completed during the period. Eman & Company uses direct labour cost as a basis for computing its predetermined overhead rate. In computing the predetermined overhead rate for last year, the company misclassified 2 portion of direct labour cost as indirect labour. The effect of this misclassification will “uncersiae the predetermined ovemead rate” © ‘overstate the predetermined overmead rate’ “have no effect on the predetermined overhead rate”. cannot be determined from the information given.A process cost system is employed in those situations where: ‘many alfferent products. Jobs, or batches of production are being produced in each penod. @ manufacturing involves a single, homogeneous product that flows evenly through the production process on a continuous bass a service is performed such as in a law firm or an accounting firm, full oF absorption cost approach is not employed. Lathe operators at KF Manufacturing are hourly employees who are paid time and a half for hours worked in excess of 40 hours per week. Maroof is a lathe operator who worked 45 hours during the current week and had no idle time. The correct accounting for the amounts paid to Maroof would be to: charge only the overtime premium earned to the direct labour cost for the project Marcof was working on when the overtime was incurred, charge he hourly wage earned plus the overtime premium earned to Ine overhead account, ® charge only the overtime premium earned to the overhead account. charge the hourly wage eared plus the overtime premium eamed to the direct labour cost for the project. Maroof was working on when the overtime was incurred A company absorbs overhead on machine hours which were budgeted at 11,250 hours with overheads of RS 258 750. Actual results ware 10,980 hours with overheads of Rs.254,692 Overhead costs wore, @ Under absorbed by Rs. 2,152 Over absorbed by Rs. 4,058 Under absorbed by Rs. 4.058 Over absorbed by Rs. 2.152A Company sells its products at the selling price of cost plus 25%. What is its profit on sale? 25% 15% 18% © 20% The salary of supervisor is treated as direct labour cos © indirect labour cost admin overhead expense aumin expense A factory produces a product with a variable cost of Re.0.60 per unit. Fixed costs per quarter are Rs.15,000 including rent of Rs 6,000. If more than 20,000 units are produced per quarter, additional space is required which increases the rent by 50%. What is the total cost per unit of producing 30,000 units in a quarter? Re 060 Re 090 Rs. 1.10 © Rs. 120 Abusiness started and completed 10,000 units in a month. It a'so has 5,000 units at the end of the month which are 20% complete. The equivalent production units are 10,000 units ® 11,000 units 15,000 units 14,000 unitsAbusiness makes shirts. Each machinist is paid Rs.30 a day and each supervisor Rs.40 a day Each supervisor work with upto 10 machinists and each machinist can produce one shirt a day. if 100 shirts a day are produced, what is the daily labour cost? Rs. 1.000 Rs. 4.000 Rs. 3.000 @ Rs. 3.400 ABC company bases its overhead absorption rate on labor hour. The following information is available for 2012. Budgeted overheads Rs. 600,000 Actual overheads: Rs. 680,000 Budgeted labor hours 120,000 Actual labor hours. 110,000, Calculate the over or under absorption af overheads for 20 12: Rs. 60,000 over-absorhed. Rs. 60,000 under-absorbed Rs. 110,000 Over-absorbed ® Rs. 110,000 under-2bsorbed The cost unit is used for electricity cost ascertainment. ampere vott ‘thermal units ® kilowatt-hoursIn a job order cost system, the use of Indirect materials would usually be reflected in the general ledger as an increase in ® factory overnead control finished goods control ‘work in process control cost of goods sold Which of the following are characteristics of services costing? High levels of indirect costs as a proportion of total cost, Cost units are often intangible. Use of composite cost unts. ® Allor ine above. Which of the following would be classified as indirect labor? ‘Assembly workers in a company manufacturing television © Astores assistant in a ractory store. Piasters in a constructions company. AN aucit clerk in a firm of auditors Costs incurred on job no. 1 during the month of January are as follows: Direct material consumed 10 pounds @ Rs. 50 per pound, Direct labor used 4 hours @ Rs. 100 per hour. Factory overhead is charged to this job @ 60% of direct labor cost. If job is completed during the month, then what would be the total cost of job no. 17 @ Rs. 4,140 Rs. S00 Rs. 740 Rs. 640If sale price of a product ‘8’ is Rs. 25 per unit, direct matenal cost is Rs. 10 per unit, direct, labor cost is Rs. 6 per unit, variable manufacturing cost is Rs. 4 per unit, and variable marketing and administrative cost is Rs. 2 per unit, then what would be the contribution per unit of product ‘8’? Rs. 13 Rs.9 RS.5 @ Rs.3 The variable factory overhead rate under practical capacity, expected actual capacity and normal capacity levels would be same except for nermal capacity. except for practical capacity. except for expected actual capacity. @ forall three levels. Indicate which one of the following statements is more descriptive of management accounting than of financial accounting? Recognized standards are used for presentation. ® Information is tailored to the ends of individual decision maker. Information is more widely distributed. Emphasis is on past resultIn a manufacturing company, the cost dabited to work-in-process inventory account represents: ® direct material used, direct labour and manufacturing overhead cost of finished goods manufactured, period cost and product cost. none of the above. Which one of the following would be the most appropriate basis for allocating the cost of plant insurance that covers equipment theft and damage? Machine hours ‘square teet ot pant space Direct labour hours © Vaive of equipment While recording labour costs, the total amount eamed by workers is credited to Account. Payroll ® Accrued payroll Revenue Expense