MGT402 - Cost & Management Accounting Quiz 3

Q1: Cost of finished goods inventory is calculated by:

a) Multiplying units of finished goods inventory with the cost per unit
b) Dividing units of finished goods inventory with the cost per unit
c) Dividing per unit cost with finished goods inventory
d) Deducting total cost from finished goods inventory

Q2: All Indirect cost is charged/record in the head of

a) Prime cost
b) FOH cost
c) Direct labor cost
d) None of the given options

Q3: “Taking steps for the fresh purchase of those stocks which have been exhausted and for which requisitions are to be honored in future” is an easy explanation of:

a) Overstocking
b) Under stocking
c) Replenishment of stock
d) Acquisition of stock



Q4: Which of the following costing method provide the added benefit of usefulness for external reporting purpose?

a) Absorption costing
b) Marginal costing
c) Variable costing
d) Neither absorption nor marginal costing

Q5: 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

Q6: Increase in material Inventory means:

a) The ending inventory is greater than opening inventory
b) The ending inventory is less than opening inventory
c) Both ending and opening inventories are equal
d) Can not be determined

Q7: FOH absorption rate is calculated by the way of

a) Estimated FOH Cost/Direct labor hours
b) Estimated FOH Cost/No of units produced
c) Estimated FOH Cost/Prime Cost
d) All of the given options

Q8: The Process of cost apportionment is carried out so that:

a) Cost may be controlled
b) Cost unit gather overheads as they pass through cost centers
c) Whole items of cost can be charged to cost centers
d) Common costs are shared among cost centers

Q9: Cost of Goods Manufactured can be calculated as follow

a) Total factory Cost Add Opening Work in process inventory Less Closing Work in process inventory
b) Total factory Cost Less Opening Work in process inventory Add Closing Work in process inventory
c) Total factory Cost Less Opening Work in process inventory Less Closing Work in process inventory
d) Total factory Cost Add Opening Work in process inventory Add Closing Work in process inventory

Q10: 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

Q11: If, Gross profit = Rs. 40,000 GP Margin = 20% of sales What will be the value of cost of goods sold?

a) Rs. 160,000
b) Rs. 120,000
c) Rs. 40,000
d) Rs. 90,000

Q12: The Economic order quantity can be calculated by:

a) Formula Method
b) Table Method
c) Graph Method
d) All of the given

Q13: Contribution margin is the result of which of the following two variables?

a) Sales and variable costs
b) Variable and fixed costs
c) Sales and Fixed cost
d) Sales and operating profit

Q14: The appropriate journal entry to transfer the cost of completed units from the Work in Process account would involve a credit to Work in Process and a debit to which of the following accounts?

a) Income Summary
b) Raw Materials Inventory
c) Finished Goods
d) Manufacturing Summary

Q15: According to marginal costing concept, all fixed costs are considered as:

a) Period cost
b) Production cost
c) Mixed cost
d) Sunk cost

Q16: 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

Q17: Amount of net purchase can be calculated as follow

a) Purchase of direct material add trade discount less purchase return add carriage inward less other material handling cost
b) Purchase of direct material less trade discount l add purchase return add carriage inward less other material handling cost
c) Purchase of direct material less trade discount less purchase return less carriage inward add other material handling cost
d) Purchase of direct material less trade discount less purchase return add carriage inward add other material handling cost


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