Program Name: M.

com

Punjab College (Gojra Campus)

Course Name Advance cost and management accounting

Program M.com

Exam Mid Term

Semester F-15

Total Points 40

Time Allowed 120 Minutes

Instructor Asif Iqbal

Name:……………………………………………………………………………………

Reg.No……………………………………………………………………………………
Q No. 1. Choose the most appropriate word from the options given below. (09)

1. The method of estimation of cost function by making the opinions and analysis about cost and cost
drivers is classified as

a) conference method
b) inference method
c) pricing method
d) manufacturing method

2. The industrial engineering method is used to analyze the relationship between

a) marketing and financing

b) price and costs
c) input and output
d) units and batches

3. The relationship based on unrelated level of activity and past data of cost is measured with the help of

a) cost estimation
b) price estimation
c) unit estimation
d) production estimation

4. The method which allocates the cost of support department to operating and support departments is
classified as

a) indirect method
b) direct method
c) step down method
d) reciprocal method

5.  The approaches to allocate costs of support department does not include

a) sales mix allocation method

b) dual-rate cost-allocation method
c) single rate cost allocation method
d) both b and c
6. In incremental cost allocation method, the cost object user who is ranked second in ranking order is
classified as

a) first incremental user

b) primary user
c) secondary user
d) second incremental user

7. The methods used to allocate costs of reciprocal support departments includes

a) direct method
b) step down
c) reciprocal method
d) all of above

8. The cause and- effect relationship might arise as a result of which of the following:

a) a physical relationship between the level of activity and costs.

b) a contractual arrangement.
c) knowledge of operations.
d) All of the above.

9. What type of cost is the result of an event that results in more than one product or service
simultaneously?

a) byproduct cost
b) joint cost
c) main cost
d) separable cost

10. All costs incurred beyond the split off point that are assignable to one or more individual products are
called:

a) byproduct costs
b) joint costs
c) main costs
d) separable costs

11. When a single manufacturing process yields two products, one of which has a relatively high sales
value compared to the other, the two products are respectively known as:

a) joint products and byproducts

b) joint products and scrap
c) main products and byproducts
d) main products and joint products
12. Which of the following methods of allocating costs use market-based data?

a) Sales value at split off method

b) Estimated net realizable value method
c) The constant gross-margin percentage method
d) All of these answers are correct

13. Costing systems that are used for the costing of like or similar units of products in mass production
are called:

a) inventory-costing systems
b) job-costing systems
c) process-costing systems
d) weighted-average costing systems

14. If there was no beginning work in process and no ending work in process under the weighted-
average process costing method, the number of equivalent units for direct materials, if direct materials
were added at the start of the process, would be:

a) equal to the units started or transferred in

b) equal to the units completed
c) less than the units completed
d) Both A and B are correct.

15. Unacceptable units of production that are discarded or sold for reduced prices are referred to as:

a) reworked units
b) spoilage
c) scrap
d) defective units

16. Material left over when making a product is referred to as:

a) reworked units
b) spoilage
c) scrap
d) defective units

17. Spoilage that is an inherent result of the particular production process and arises under efficient
operating conditions is referred to as:

a) Ordinary spoilage
b) Normal spoilage
c) Abnormal spoilage
d) None of these answers is correct.
18. The analysis and estimation method of cost by classifying cost accounts as fixed or variable with
respect to specific output level is considered as

a) manufacturing analysis method

b) price analysis method
c) unit analysis method
d) account analysis method

19. The work measurement method of cost estimation is also called

a) price engineering method

b) industrial engineering method
c) measuring engineering method
d) unit engineering method

20. Costs incurred in precluding the production of products that do NOT conform to specifications are:

a) prevention costs
b) appraisal costs
c) internal failure costs
d) external failure costs

21. Statistical quality control includes a control chart that:

a) graphs a series of random events of a process

b) plots each observation relative to specified ranges that represent the expected distribution
c) plots control observations over various periods of time
d) plots only those observations outside specified limits

22. Preventive equipment maintenance is an example of:

a) prevention costs
b) appraisal costs
c) internal failure costs
d) external failure costs

23. The costs of preparing, issuing, and paying purchase orders, plus receiving and inspecting the items
included in orders is:

a) purchasing costs
b) ordering costs
c) stockout costs
d) carrying costs
24. The costs that result from theft of inventory are:

a) shrinkage costs
b) external failure costs
c) stockout costs
d) costs of quality

25. The purchase-order lead time is the:

a) difference between the times an order is placed and delivered

b) difference between the products ordered and the products received
c) discrepancies in purchase orders
d) time required to correct errors in the products received

26. Increases in the carrying cost and decreases in the ordering cost per purchase order result in:

a) smaller EOQ amounts

b) larger EOQ amounts
c) larger relevant total costs
d) smaller relevant total costs

27. A costing system that omits recording some or all of the journal entries relating to the cycle from
purchase of direct materials to the sale of finished goods is called:

a) dependent costing
b) synchronous costing
c) sequential costing
d) backflush costing
 Q No. 2. Ali Tool Company manufactures a product in two departments, cutting and Assembly, The
product is cut out of sheet metal, bent to shape, and painted in the cutting Department. Then, it is
transferred to the Assembly Department where components parts purchased from outside vendors are
added to the unit. A process cost system with a FIFO cost flow assumption is used to account for work in
process inventories. Data related to November operations in the Assembly Department are:

Units in beginning inventory (50%material, 40% labor and overhead)…………1,200

Units received from the cutting Department this period…………… 2,800
Units transferred to finished goods inventory this period……... 3,000
Units in ending inventory (90% Material, 80% labor and overhead)… 1,000

Beginning Inventory Added this period

Cost charged to the department:
Cost from the preceding department………… Rs 17,280 Rs. 40,600
Materials…………………………………….. 5,550 30,690
Direct Labor…………………………………. 2,400 16,932
Factory overhead……………………………. 3,600 25,398

Required: prepare a November cost of production report for the Assembly Department.
Ch #17(Process costing) Marks (13)
Q.No.3
Supporting departments Operating departments
Plant Information Maintaining Assembl
maintenance system y
Budgeted overhead cost Total
before
Any interdepartmental Rs 6,300,000 Rs 1,452,150 Rs 4,000,000 2,000,000 13,752,150
cost allocations
Support work
furnished
By plant maintenance
Budgeted labor hours - 4,000 6,000 10,000 20,000
Percentage - 20% 30% 50% 100%
By information system
Budgeted computer 500 - 4,000 500 5,000
hours.
Percentage 10% - 80% 10% 100%

Required: - Allocate the two support departments’ costs to the two operating departments using
the following methods:
1. Direct method
2. Step-down method
3. Reciprocal method
Ch#15(Allocation of support department cost, common cost and revenue) (Marks 10)