Fill in the blanks

Select the most appropriate option and rewrite the sentence

1. If actual cost is more than standard cost, Variance is ________.

• Favourable
• Adverse
• Nil
• All of the above

2. Abnormal Loss Units are equal to ________.

• Output Units
• Input Units − Normal Loss Units
• Input Units − (Normal Loss Units & Output Units)
• All of the above

3. Stores Ledger contains a Separate Account of ________.

• Each item of Stores
• Receipt of Stores
• Issue of Stores
• None of the above

4. Marginal Costing is ________.

• Method of Costing
• A technique of Costing
• Issue of Stores
• None of the above

5. Abnormal gain arises if ________.

• Output quantity is more than input quantity
• There is reduction in normal loss.
• Abnormal loss is avoided
• None of the above

6. Cost of rectification of defective work is ________.

• Debited to P & L account
• Ignored from contract account
• Credited to Contract Account
• Debited to Contract Account

7. The product which has a lower sale value than the main product is a ________.

• Economic Product
• Consumer Product
• By-Product
• Joint Product

8. Standard Cost is decided for ________.

• Labour
• Overheads
• Materials
• All the elements.

9. Contribution is equal to ________.

• Sales - Variable Cost
• Fixed + Profit
• Sales x P/v Ratio
• All of the above

10. Retention money is equal to ________.

• Work certified − Work uncertified
• Contract price − Work certified
• Work certified − Payment received by contractor
• All of the above.

11. Stores Ledger Control Account, accounts for ________.

• All Overhead incurred in process
• All Wages incurred in process
• All Purchases of materials for the stores and all issue of materials
• None of these

12. The objective of Standard Costing is to control cost through ________.

• Estimated Cost
• Standard cost
• Variance analysis
• None of these

13. In Contract Costing, loss of material by fire is debited to ________.

• Costing P & L A/c.
• Financial P & L A/c.
• Contract A/c.
• Contractee’s A/c.

14. At Break Even Point, the Contribution is equal to ________.

• Variable Cost
• Administrative Cost
• Sales revenue
• Fixed Cost

15. If the input is 8,400 units, Normal loss 15% and Output 7,500 units, then Abnormal gain is ________ units.

• 700
• 300
• 360
• 400

16. Cost allocation bases in Activity-Based Costing, should be ________.

• Cost drivers
• Cost pools
• Activity centres
• Resources

17. The Standard Cost Card contains quantities and cost for ________.

• Direct material only
• Direct material and Direct labour only
• Direct labour only
• Direct material, Direct labour and Overheads

18. In Contract Costing, Payment of Cash to the Contractor is made on the basis of ________.

• Uncertified work
• Work-in-progress
• Certified work
• Retention money

19. Actual output is 25,000 units, Normal loss is 3,000 units, Abnormal loss is 2,000 units, the input is ________.

• 20,000 units
• 15,000 units
• 30,000 units
• 18,000 units

20. WI P Ledger balance shows ________.

• Cost of Finished work
• Cost of Unfinished work
• Cost of Materials
• None of the above

21. ________ is a person for whom contract job is undertaken.

• Contractee
• Contractor
• Sub contractor
• Job worker

22. Cost driver for personnel are ________.

• Recruitment Activity
• Industrial Relations climate
• Training requirements
• All of the above

23. A company has a sales of Rs 4,00,000, P/V ratio is 20% and Fixed cost is Rs 30,000 the profit will be ________.

• Rs 50,000
• Rs 40,000
• Rs 70,000
• Rs 80,000

24. Cost ledger contains ________.

• 24. Factory overhead control account
• Wages control account
• Stores ledger control account
• All the above

25. When a contract work is completed to the extent of 20% of the contract price, profit to be credited to P & L A/c. is ________.

• Nil
• Full amount
• 1/3 of profit
• 2/3 of profit

26. An interlocking book keeping system is a ________.

• A single combined system containing both cost accounting and financial accounting records
• A system combining cost accounting and Management accounting
• A system with high secured access
• A system where separate accounts are kept for cost accounting and financial accounting.

27. Cost of a contract is determined by preparing ________.

• Cost sheet
• Profit and Loss Account
• Balance Sheet
• Separate Ledger Account

28. Total cost incurred is Rs 69,920, scrap value of Normal loss Rs 1,520 input 1,900 units, Normal loss 190 units, Abnormal loss is 30 units. Cost of Abnormal loss is ________.

• Rs 1,900
• Rs 1,200
• Rs1,500
• Rs 2,000

29. The Standard hourly rate was Rs 4. The actual rate was Rs 3.50. The labour rate variance was Rs 24,000 favourable. The actual labour hours were ________.

• 48,000
• 49,000
• 46,000
• 52,000

30. Abnormal Gain is equal to ________.

• Actual output - Normal output
• Normal output − Actual output
• Actual output - input
• Input − Actual output

1. Adverse 2. Input Units − (Normal Loss Units & Output Units) 3. Each item of Stores 4. A technique of Costing 5. There is reduction in normal loss. 6. Debited to Contract Account 7. By-Product 8. All the elements. 9. All of the above 10.Work certified − Payment received by contractor

11. All Purchases of materials for the stores and all issue of materials 12. Variance analysis 13. Costing P & L A/c 14. Fixed Cost 15. 360 16. Cost drivers 17. Direct material, Direct labour and Overheads 18. Certified work 19. 30,000 units 20. Cost of Unfinished work

21. Contractee 22. All of the above 23. Rs 50,000 24. All the above 25. Nil 26. A system where separate accounts are kept for cost accounting and financial accounting. 27. Separate Ledger Account 28. Rs 1,200 29. 48,000 30. Actual output - Normal output

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True or False

Q.1

(i) BEP is the point at which total revenue is equal to total cost.
(ii) In Contract Costing, each contract is a Cost Unit.
(iii) Process cost system is applicable to Paper mills.
(iv) Non-integrated accounting is also called Interlocking accounting system.
(v) Actual rate is not used while computing Labour Efficiency Variance.
(vi) Uncertified work is valued at cost.
(vii) Activity Cost Pools are cost accumulation associated with a given activity.
(viii) The main purpose of Standard Costing is Cost Control.
(ix) Invisible waste has no sale value.
(x) Direct labour hour is a Cost pool that is regularly used in the activity-based costing method.

Answers- 1 ,2, 3, 4, 5, 6, 7,8,9, 10 – All True.

Q.2

(i) Marginal costing is a method of costing.
(ii) Abnormal loss in process is valued at scrap value.
(iii) Units produced at a process are not homogeneous.
(iv) The term ‘Cost Driver’ is used under traditional costing system.
(v) The degree of completion of work is determined by comparing the work certified with cash received.
(vi) Selling & distribution overheads recovered are debited to Cost of Sales Account.
(vii) There is difference between notional profit and estimated profit, in relation to Contract.
(viii) The causal relationship is considered under Activity Bases Costing System.
(ix) Standard Hour is not used while computing Labour Rate Variance.
(x) Non-integrated accounts are based on Double Entry System of Book-keeping.

Answer – True – 1,3,4,6,7,8,10 False- 2,5,9

Q.3

(i) P/V Ratio is improved by decreasing variable cost.
(ii) In Target Costing, wasteful activities are eliminated.
(iii) If cash received from contractee is 80% of work certified, then the retention money will be 25%.
(iv) Direct wages are debited to Cost ledger control account.
(v) Normal loss in process costing is controllable.
(vi) Standard costing is method of costing.
(vii) Activities form the basis of ABC System. (viii) Standard costs are expressed on a per unit basis.
(ix) When selling price is at cost, then contribution = Fixed cost.
(x) Sales value of Joint product is significant.

Answer – True – 1,2,6,7,8,9,10 False- 3,4,5.