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Accounting, Banking and Finance MCQs

Cost & Management Accounting

Quiz # 3, MCQs

NOTE: Attempt all Questions to see the Result at the bottom of this page.

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1)

If, Sales = $ 800,000 applied Markup = 25% of cost What would be the value of Gross profit? Select correct option:
- A) $ 200,000
- B) $ 160,000
- C) $ 480,000
- D) $ 640,000
Right Answer is the option "B".
Gross profit = Sales x (25%/125%)
= 800,000 x (25%/125%) = 1,60,000

2)

The supervisor salary is treated as:
- A) Direct labor cost
- B) Indirect labor cost
- C) Conversion cost
- D) None of the given options
Right Answer is the option "B"

3)

Which of the following is considered as basic systems of remunerating labor? Select correct option:
- A) Time rate system
- B) Piece rate system
- C) Halsey Premium plan
- D) Both time rate and piece rate system
Right Answer is the option "D". There are two basic systems of remunerating labor. One is related to the time and the other relates to the quantum of work

4)

While calculating the EOQ, number of orders is calculated by:
- A) Multiplying the required units with cost per order
- B) Dividing required unit by ordered quantity
- C) Multiplying the required units with ordered quantity
- D) Multiplying the ordered quantity with cost per order
Right Answer is the option "B" Number of orders = Require units / Order Quantity

5)

An organistation sold units 4000 and have closing finished goods 3500 units and opening finished goods units were 1000.The quantity of unit produced would be:
- A) 7500 units
- B) 6500 units
- C) 4500 units
- D) 8500 units
Right Answer is the option "B". Units produced = Units sold + Closing finished goods units - Opening finished goods units

6)

Under/Over applied FOH cost can be adjusted in which of the following:
- A) Entire Production
- B) Cost of Good sold
- C) Net Profit
- D) All of given options
Right Answer is the option "D" Under/Over applied FOH cost can be adjusted in following costs/profit figures: 1. Entire Production 2. Cost of Goods Sold 3. Net profit

7)

In furniture manufacturing use of nail, pins, glue, and polish which use to increase its esteem value that cost is treated as:
- A) Direct material cost
- B) Indirect material cost
- C) FOH cost
- D) Prime cost
Right Answer is the option "B". Indirect Material/Factory Supplies is the cost that is incurred in producing product but which can not traced in full in the cost unit. For example: polishing material in production of furniture

8)

If, Gross profit = $ 40,000 GP Margin = 25% of sales what will be the value of cost of goods sold?
- A) $ 160,000
- B) $ 120,000
- C) $ 40,000
- D) Can not be determined
Right Answer is the option "B". Cost of goods sold = Gross profit (absolute amount) x 75%/25%

9)

A cost unit is
- A) The cost per hour of operating a machine
- B) The cost per unit of electricity consumed
- C) A unit of product or services in relation to which costs are ascertained
- D) A measure of work output in a standard
Right Answer is the option "C". It is a unit of a product or service in relation to which the cost is ascertained, i.e. it is the unit of the out put or product of the business. In simple words the unit for which cost of producing the units is identified /allocated

10)

The cost of electricity bill of the factory is treated
- A) Fixed cost
- B) Variable cost
- C) Step cost
- D) Semi variable cost
Right Answer is the option "D"