Today Finalterm Solved Paper of MGT402

 FINALTERM EXAMINATION

Fall 2012

MGT402- Cost  Management Accounting (Session - 3)

Time: 120 min

Marks: 84

 

 

 

    

Question No: 1    ( Marks: 1 )    - Please choose one

[You must be registered and logged in to see this image.]The contribution margin ratio is 30% for the Spice Co. and the breakeven point in sales is Rs. 150,000. If the company desires a target net income of Rs. 60,000, what would have to be the amount of actual sales?

       ► Rs. 200,000

       ► Rs. 350,000

       ► Rs. 250,000

       ► Rs. 210,000

   

Question No: 2    ( Marks: 1 )    - Please choose one

Cost of finished goods inventory is calculated by:

       ► Deducting total cost from finished goods inventory

       ► Multiplying units of finished goods inventory with the cost per unit

       ► Dividing units of finished goods inventory with the cost per unit

       ► Multiplying  total cost with finished goods inventory

   

Question No: 3    ( Marks: 1 )    - Please choose one

[You must be registered and logged in to see this image.]All of the following are characteristics of Group Bonus Scheme EXCEPT:

       ► A standard time is set for the completion of a job

       ► If the time taken is greater than the time allowed, the workers in the group receive time wages

       ► If the time taken is less than the time allowed, the group receives a bonus on time saved

       ► If the time taken is greater than the time allowed, the workers in the group receive time deductions for extra hours

   

Question No: 4    ( Marks: 1 )    - Please choose one

Superior started 80,000 gallons of paint. During the month the company completed 92,000 gallons and transferred them to the mixing department. Superior had 38,000 gallons in beginning inventory and 26,000 gallons in ending inventory.

Material is added at the beginning of the process and conversion costs are added evenly throughout the process.

Beginning WIP was 30% complete as to conversion costs and ending WIP was 20% complete as to conversion costs. The company uses a FIFO costing

 

The company uses a FIFO costing. The cost data for February follow:

 

Beginning inventory:

Direct materials Rs.22, 200

Conversion costs Rs. 44,000

Costs added this period:

Direct materials Rs. 150,000

Conversion costs Rs. 343,200

Required:

What was the cost of direct materials in ending inventory?

 

       ► Rs. 37,560

       ► Rs. 42,600

       ► Rs. 45,550

       ► Rs. 48,750

   

Question No: 5    ( Marks: 1 )    - Please choose one

Jones, Industries uses process costing system. In October, the finishing department had 30,000 (20% as to conversion) units in beginning work-in-process, 45,000 (40% as to conversion) units in ending inventory and had 95,000 units transferred in from the previous department. Material is added at the end of the process and conversion costs are added uniformly throughout the process.

Required: If Jones uses weighted average, what are the equivalent units of production for direct material and conversion costs?

 

       ► Material 125,000 units Conversion cost 45,000 units

       ► Material 125,000 units Conversion cost 98,000 units

       ► Material 125,000 units Conversion cost 18,000 units

       ► Material 125,000 units Conversion cost 80,000 units

   

Question No: 6    ( Marks: 1 )    - Please choose one

An average cost is also known as:

       ► Variable cost

       ► Unit cost

       ► Total cost

       ► Fixed cost

   

Question No: 7    ( Marks: 1 )    - Please choose one

Period costs are:

       ► Expensed when the product is sold

       ► Included in the cost of goods sold

       ► Related to specific period

       ► Not expensed

   

Question No: 8    ( Marks: 1 )    - Please choose one

The net profit or loss for a particular period of time is reported on which of the following?

       ► Statement of cash flows

       ► Statement of changes in owner's equity

       ► Income statement

       ► Balance sheet

   

Question No: 9    ( Marks: 1 )    - Please choose one

Which of the following is correct?

       ► Units sold= Opening finished goods units + Units produced – Closing finished goods units

       ► Units Sold = Units produced + Closing finished goods units - Opening finished goods units

       ► Units sold = Sales + Average units of finished goods inventory

       ► Units sold = Sales - Average units of finished goods inventory

   

Question No: 10    ( Marks: 1 )    - Please choose one

Which of the following is important requirement of the effective material control?

       ► There are proper storage facilities

       ► There is a proper authority that will regulate the supply of material

       ► The accounts should provide a running balance of the value of the materials on hand

       ► All of the given options

   

[You must be registered and logged in to see this image.]Material requisition is a document that supports the requirement of the material. This document is sent to store incharge and approved by:

       ► Store manager

       ► Production manager

       ► Supplier manager

       ► Purchase manager

   

Question No: 12    ( Marks: 1 )    - Please choose one

The Process of cost apportionment is carried out so that:

 

       ► Cost may be controlled

       ► Cost unit gather overheads as they pass through cost centers

       ► Whole items of cost can be charged to cost centers

       ► Common costs are shared among cost centers

   

Question No: 13    ( Marks: 1 )    - Please choose one

Which of the following is characteristic of a job order cost accounting system?

       ► It records manufacturing activities using a perpetual inventory system

       ► It tracks cost by job

       ► It is best suited for customized products

       ► All of the given options

   

Question No: 14    ( Marks: 1 )    - Please choose one

A by product:

       ► Is produced from material that would otherwise be of no value

       ► Has a lower selling price than the main product

       ► Is created along with the main product, but its sales value does not cover its production cost

       ► Always produces a large amount of revenue than the main product

   

Question No: 15    ( Marks: 1 )    - Please choose one

According to marginal costing concept, all fixed costs are considered as:

       ► Period cost

       ► Production cost

       ► Mixed cost

       ► Sunk cost

   

Question No: 16    ( Marks: 1 )    - Please choose one

Variable costing is also known as:

       ► Direct Costing

       ► Marginal Costing

       ► Both Direct Costing & Marginal Costing

       ► Indirect Costing

   

Question No: 17    ( Marks: 1 )    - Please choose one

Blackhat Chimney Builders constructed 80 units during 1901.  The total sales value for these 80 units was Rs. 460,000.  Variable costs associated with each unit were Rs. 4,000 and the company's fixed costs for 1901 amounted to Rs. 50,000.  How much was the per-unit contribution margin?

       ► Rs. 750

       ► Rs. 1,125

       ► Rs. 1,750

       ► Rs. 5,125

   

Question No: 18    ( Marks: 1 )    - Please choose one

Which of the following represents the calculation of contribution margin ratio?

       ► (Sales - Total Expenses) / Sales

       ► (Sales - Fixed Expenses) / Sales

       ► (Sales - Cost of Goods Sold) / Sales

       ► (Sales - Variable Expenses) / Sales

   

Question No: 19    ( Marks: 1 )    - Please choose one

The by-product of oil and fuel is:

 

       ► Mobil oil and lubricating oils

       ► Kerosene oil and Asphalt and Tar

       ► Gasoline and Petroleum coke

       ► All of the given

   

Question No: 20    ( Marks: 1 )    - Please choose one

Information concerning Label Corporation’s Product A is as follows:

 

 

Assuming that Label increased sales of Product A by 20%, the profit of the product A would be which of the following?

 

       ► Rs. 20,000

       ► Rs. 24,000

       ► Rs. 32,000

       ► Rs. 80,000

   

[You must be registered and logged in to see this image.]While constructing a Break even chart, the gap between sales line and variable cost line shows which of the following?

       ► Fixed cost

       ► Break even point

       ► Contribution margin

       ► Variable cost

   

Question No: 22    ( Marks: 1 )    - Please choose one

If one would prepare a graph with a horizontal axis representing units of production and a vertical axis representing per-unit production cost, how would a line representing fixed production cost is drawn?

       ► As a horizontal line

       ► As a vertical line

       ► As a straight line sloping upward to the right

       ► As a straight line sloping downward to the right

   

Question No: 23    ( Marks: 1 )    - Please choose one

All of the following are the objectives of budgeting EXCEPT:

       ► Maximization of sales

       ► Profit maximization

       ► Compete with competitors

       ► Increased cost

   

Question No: 24    ( Marks: 1 )    - Please choose one

Production budget is an example of which of the following budget?

       ► Functional budget

       ► Master budget

       ► Cost of goods sold budget

       ► Sales budget

   

Question No: 25    ( Marks: 1 )    - Please choose one

Consider the following data for the month of April:

Closing stock 80 units

Production 280 units

Sales 330 units

Based on the data, the opening stock for April will have to be:

       ► 50 units

       ► 410 units

       ► 70 units

       ► 130 units

   

Question No: 26    ( Marks: 1 )    - Please choose one

Which of the following is a reason of main difference between production budget and Production cost budget?

       ► Production budget is constructed in units

       ► Production budget is constructed in Rs.

       ► Production cost budget is constructed in units

       ► Both are same budgets

   

Question No: 27    ( Marks: 1 )    - Please choose one

Which of the following factor would determine the importance of direct labor cost budget in human resource department?

       ► Provide guidance about the requirements of number of work force

       ► Provide feed back about the working of workforce

       ► How much payroll will have been paid?

       ► How the cost units will be produced?

   

Question No: 28    ( Marks: 1 )    - Please choose one

Usually the first step in the production of the master budget is the:

       ► Sales forecast

       ► Sales budget

       ► Cash budget

       ► Production budget

   

Question No: 29    ( Marks: 1 )    - Please choose one

The master budget usually begins with a:

 

       ► Production budget

       ► Direct materials budget

       ► Direct labor budget

       ► Sales budget

   

Question No: 30    ( Marks: 1 )    - Please choose one

Which of the following is NOT example of a cash outflow?

 

       ► Cash drawings

       ► Purchase of new equipment

       ► Commission paid

       ► Depreciation

   

[You must be registered and logged in to see this image.]Which of the following is true about flexible budget?

       ► A budget that always based on actual capacity

       ► A budget that is prepared using spreadsheet model

       ► A budget in which total variable cost remains unchanged

       ► Variable costs per unit will remain unchanged

   

Question No: 32    ( Marks: 1 )    - Please choose one

Smith & Company estimate its overheads to produce 80,000 units are Rs. 1,000,000 (60 percent is variable). What would be the budgeted overhead at a capacity level of 100,000 units?

       ► Rs. 1,050,000

       ► Rs. 1,150,000

       ► Rs. 1,250,000

       ► Rs. 1,450,000

   

Question No: 33    ( Marks: 1 )    - Please choose one

Which of the following is a process by which managers analyze options available to set courses of action by the organization?

       ► Heuristics method

       ► Decision making

       ► The Delphi technique

       ► Systematic error

   

Question No: 34    ( Marks: 1 )    - Please choose one

The following monthly data are available for the Boarder, Inc. and its only product: Unit sales price = Rs. 36 Unit variable expenses = Rs. 28 Total fixed expenses = Rs. 50,000 Actual sales for the month of May = 7,000 units. The margin of safety for the company for May was:

       ► Rs. 6,000

 

       ► Rs. 27,000

 

       ► Rs. 56,000

 

       ► Rs. 106,000

 

   

Question No: 35    ( Marks: 1 )    - Please choose one

Perpetual inventory system is:

 

       ► A stock control system designed to ensure that the level of stock never falls to zero

       ► A system of counting and valuing selected stock items at different times on a perpetually rationing basis

       ► A system of recording receipts and issues of stock as they occur, showing the resulting balance of each stock item at all times

       ► A system of stock recording which remains unchanged over time,in rder to monitor trends

   

Question No: 36    ( Marks: 1 )    - Please choose one

D Corporation uses process costing to calculate the cost of manufacturing Crunchies. During the month 12,500 units were completed, 1,500 units remained in work in process at 25 percent completed. How many equivalent units are produced?

 

       ► 12,500 units

       ► 12,875 units

       ► 14,250 units

       ► 12,125 units

   

Question No: 37    ( Marks: 1 )    - Please choose one

A cost that has been incurred but cannot be changed by present or future decisions is called:

       ► Sunk cost

       ► Differential cost

       ► Opportunity cost

       ► Marginal cost

   

Question No: 38    ( Marks: 1 )    - Please choose one

All of the following are deducted from Gross Profit to calculate Operating income EXCEPT:

       ► Selling expenses

       ► Advertising expenses

       ► Administrative expenses

       ► Financial expenses

   

Question No: 39    ( Marks: 1 )    - Please choose one

A company produces two chemicals in a joint process. Chemical A can be sold at split off while chemical B currently cost Rs. 12 per gallon for disposal. If chemical B is further processed, it would cost Rs. 17 per gallon. At what sale price would the company be in different between disposing of chemical B at split off and further processing the chemical?

       ► Rs. 5

       ► Rs. 17

       ► Rs. 29

       ► Rs. 7

   

Question No: 40    ( Marks: 1 )    - Please choose one

Which of the following is(are) base(is) of cost allocation under joint products?

 

 

       ► Physical quantity ratio

       ► Selling price ratio

       ► Hypothetical market value ratio

       ► All of given options

   

[You must be registered and logged in to see this image.]What is the starting point of variable cost line on a break even chart at zero production level?

 

 

       ► It must start from origin

       ► It might start from origin

       ► It does not start from origin

       ► Non of the given options

   

Question No: 42    ( Marks: 1 )    - Please choose one

Which of the following is NOT the type of a functional budget?

       ► budget

       ► Raw material budget

       ► Direct labour budget

       ► Cash budget

   

Question No: 43    ( Marks: 1 )    - Please choose one

Which of the following must be required for the preparation of Production cost budget?

       ► Sales in rupees

       ► Cash budget

       ► Flexible budget

       ► Functional budget

   

Question No: 44    ( Marks: 1 )    - Please choose one

Which of the following budget includes an item of indirect material cost?

       ► FOH cost budget

       ► Direct labor cost budget

       ► Direct material cost budget

       ► None of the given options

   

Question No: 45    ( Marks: 1 )    - Please choose one

The following information is available for Atlas Corporation to prepare a cash budget for the month of September:

·     Cash on hand beginning of September Rs. 16,000

·     Expected receipts in September Rs. 272,000

·     Sales salaries paid Rs. 62,000

·     Material purchases (all in cash) Rs. 190,000

·     Depreciation Rs. 44,000

What is the ending cash balance in September?

       ► Rs. (8,000)

       ► Rs. 22,000

       ► Rs. 36,000

       ► Rs. 45,000

   

Question No: 46    ( Marks: 1 )    - Please choose one

Which of the following cost (‘s) will be considered as controllable cost (‘s)?

       ► Direct material

       ► Direct labor

       ► Variable overhead

       ► All of the given options

   

Question No: 47    ( Marks: 1 )    - Please choose one

All of the following costs are irrelevant to decision making EXCEPT:

       ► Incremental cost

       ► Sunk cost

       ► Fixed cost

       ► Supervisor’s routine salary

   

Question No: 48    ( Marks: 1 )    - Please choose one

Which of the following statement is TRUE about opportunity cost?

       ► It is irrelevant to decision making

       ► It is always a sunk cost

       ► It is always a historical cost

       ► It is relevant to decision making

   

Question No: 49    ( Marks: 3 )

The Midnight Corporation budget department gathered the following data for the third quarter:

 

 

 

 

           

 

 

Net Income before tax is as follows

 

All sales and purchase are for cash and all expenses are paid in the month incurred. Assuming that the opening cash balance on July 01 is Rs. 40,000 and tax rate is 35%,

 

Requirement:

Prepare cash budget for the month of July.

                                                                        1900                                      

   

Question No: 50    ( Marks: 3 )

[You must be registered and logged in to see this image.]Why is the selection of an appropriate cost allocation method in Joint Products important?

 

 

 

   

Question No: 51    ( Marks: 5 )

The following information is available for the month of June from the Alpha department of the Greek Corporation:

 

 

Materials are added at the beginning of the process in the Alpha department.

Required: Using the average cost method, what are the equivalent units of production for the month of June?

   

Question No: 52    ( Marks: 5 )

[You must be registered and logged in to see this image.]The Carter Manufacturing Company estimates its production requirements to be 30,000 units for October, 38,000 units for November and 41,000 units for December. It takes 3 direct labor hours at a rate of Rs. 3 per hour to complete one unit.

 Prepare direct Labor budget cost for the last quarter of the year.

   

Question No: 53    ( Marks: 10 )

Consider the following data:

Required:

·     Income statement under variable costing

·     Break Even point in rupees

·     Margin of safety ratio at the given sales level

·     MOS

 

 

Question No: 54    ( Marks: 10 )

[You must be registered and logged in to see this image.]Ahmed manufacturing company’s projected sales of Rs. 850,000 for the next year. The budgeted data proposed by Cost Accountants are as follows:

 

Material:                       Rs. 115,000

Labor:                                   95,000

FOH:                                    65,000

 

The company’s opening finished goods inventory are Rs. 35,000 and ending finished goods inventory are Rs. 55,000. The fixed portion of administrative and selling expenses is estimated as 7% and 12% of sales respectively and variable portion of administrative and selling expenses is estimated as 6% and 14% of sales respectively.

The financial charges are estimated Rs. 5,500 and the tax rate is 30%.

 

Required: Prepare the projected income statement for the period?