Practice Test

Q1) The following data is available for the period.
Opening inventory - 10,000 units
Closing inventory - 8,000 units
Absorption costing profit - Rs. 2,80,000
The profit for the period using marginal costing would be: Show Answer

Q2) The overhead absorption rate for product T is Rs. 4 per machine hour. Each unit of T required 3 machine hours.
Inventories of product T last period were Units.
Opening inventory - 2,400
Closing inventory - 2,700
Compared with the marginal costing profit for the period, the absorption costing profit for product T will be: Show Answer

Q3) In a period where opening inventories were 15,000 units and closing inventories were 20,000 units, a firm had a profit of Rs. 130,000 using absorption costing. If the fixed overhead absorption rate was Rs. 8 per unit, the profit using marginal costing would be: Show Answer

Q4) In a period, a company had opening inventory of 31,000 units and closing inventory of 34,000 units. Profit based on marginal costing were Rs. 8,50,500 and on absorption costing were Rs. 9,55,500. If the budgeted totaMixed costs for the company was Rs. 18,37,500. What was the budgeted level of activity in units? Show Answer

Q5) A company had opening inventory of 48,500 units and closing inventory of 45,500 units. Profit based on Marginal costing were Rs. 3,15,250 and absorption costing were Rs. 2,88,250. What is the fixed overhead Absorption rate per units? Show Answer

Q6) Which of the following are acceptable bases for absorbing production overheads?
(i) Direct labour
(ii) Machine hours
(iii) As a percentage
(iv) Per unit prime cost Show Answer

Q7) Absorption costing is concerned with which of the following? Show Answer

Q8) A company made 17,500 units at a total cost of Rs. 16 each. Three quarters of the costs were variable and one quarter fixed, 15,000 units were sold at Rs. 25 each. There were no opening inventories. By how much will the profit calculated using absorption costing principles differ from the profit if marginal costing principles had been used? Show Answer

Q9) A company has established a marginal costing profit of Rs. 72,300. Opening inventory was 300 units and closing inventory is 750 units. The fixed production overhead absorption rate has been calculated as Rs. 5 unit. What was the profit under absorption costing? Show Answer

Q10) A company produces and sells a single product whose variable cost is Rs. 6 per unit. Fixed costs have been absorbed over the normal level of activity of 2,00,000 units and have been calculated as Rs. 2 per unit. The current selling price is Rs. 10 per unit. How much profit is made under marqinal costing if the company sells 2,50,000 units? Show Answer

Q11) A company wishes to make a profit of Rs. 1,50,000. It has fixed costs of Rs. 75,000 with a C/S ratio of 0.75 and a selling price of Rs. 10 per unit. How many units would the company need to sell in order to achieve the required level of profit? Show Answer

Q12) A company which uses marginal costing has a profit of Rs. 37,500 for a period. Opening inventory was 100 units and closing inventory was 350 units. The fixed production overhead absorption rate is Rs. 4 per unit. What is the profit under absorption costing? Show Answer

Q13) A company has the following budgeted information for the coming month: Budgeted sales revenue Rs. 5,00,000, Budgeted contribution Rs. 2,00,000, Budgeted profit Rs. 50,000. What is the budgeted break-even sales revenue? Show Answer

Q14) A company manufactures and sells a single product. For this month the budgeted fixed production overheads are Rs. 48,000, budgeted production is 12,000 units and budgeted sales are 11,720 units. The company currently uses absorption costing. If the company used marginal costing principles instead of absorption costing for this month, what would be the effect on the budgeted profit? Show Answer

Q15) A company operates a standard marginal costing system. Last month its actual fixed overhead expenditure was 10% above budget resulting in a fixed overhead expenditure variance of Rs. 3,60,000. What was the actual expenditure on fixed overheads last month? Show Answer

Q16) Last month, when a company had an opening stock of 16,500 units and a closing stock of 18,000 units, the profit using absorption costing was Rs. 40,000. The fixed production overhead rate was Rs. 10 per unit. What would the profit for last month have been using marginal costing? Show Answer

Q17) Which of the following types of costs are allocated to cost centres? Show Answer

Q18) Which one of the following bases would be most appropriate for apportioning a company's general advertising costs? Show Answer

Q19) A business absorbs overheads on the basis of hours worked on a specific job. If the overhead absorption rate has been calculated at Rs. 30 per hour, and a job is estimated to take 20 hours, what price would be charged to the customer if the company's mark-up is 50% of cost. Show Answer

Q20) Under marginal costing, the break even point is found by the following formula: Show Answer

Q21) A retail company sells computers, each of which is sold for Rs. 250 and bought from the manufacturer for Rs. 100. The retailer's fixed costs are Rs. 1,50,000. Maximum possible sales are 3,000. How many computers must be sold to break-even? Show Answer

Q22) A retail company sells computers, each of which is sold for Rs. 250 and bought from the manufacturer for Rs. 100. The retailer's fixed costs are Rs. 1,50,000. Maximum possible sales are 3,000. How much profit or loss would be made if 2,700 computers were sold? Show Answer

Q23) A retail company sells computers, each of which is sold for Rs. 250 and bought from the manufacturer for Rs. 100. The retailer's fixed costs are Rs. 1,50,000. Maximum possible sales are 3,000. How many computers would have to be sold for the company to earn a profit of Rs. 1,80,000? Show Answer

Q24) On a break-even chart, which of the following indicates the point where a business breaks even? Show Answer

Q25) Contribution is known as Show Answer

Q26) ................ costing reduce the possibility of under pricing: Show Answer

Q27) A company's approach to a make or buy decision Show Answer

Q28) Which one of the following is a limitation of a break-even chart? Show Answer

Q29) Which one of the following would be shown on a break-even chart, but not a profit/volume chart? Show Answer

Q30) The y-axis (vertical axis) on a break-even chart has which one of the following labels? Show Answer

Q31) On a break-even chart, if total costs increased and sales decreased, the break-even point would change in which one of the following ways? Show Answer

Q32) On a break even chart, if fixed costs increased at a particular level of activity, what would happen to the fixed costs line on the chart? Show Answer

Q33) A company has a very small margin of safety on a specific product. Which one of the following events would be likely to result in a loss on that product? Show Answer

Q34) Consider the following types of cost:
1. Sunk costs
2. Committed costs
3. Opportunity costs
4. Outlay costs
Which of the above will always be irrelevant when considering a particular course of action? Show Answer

Q35) A Company's fixed cost amounts to Rs. 120 lakhs p.a. and its overall PA/ratio is 0.4. The annual sales of the company should be ................ lakhs to have a Margin of Safety of 25%. Show Answer

Q36) The variable cost of a product increases by 10% and the management raises the Unit selling price by 10%. The fixed cost remain unchanged. Then BEP of the firm ................ . Show Answer

Q37) A company with a contribution/sales ratio of 33% and fixed cost of Rs. 3 lakhs per month should have a monthly sales of ................ lakhs to maintain a margin of safety of 10%. Show Answer

Q38) A company maintains a margin of safety of 25% on its current sales and earns a profit of Rs. 30 lakhs per annum. If the company has a profit volume (P/V) ratio of 40%, its current sales amount to. Show Answer

Q39) A company has margin of safety of Rs. 40 lakhs and earns an annual profit of Rs. 10 lakhs. If the fixed costs amount to Rs. 20 lakhs, annual sales will be ................ Show Answer

Q40) In two consecutive periods, sales and profit were Rs. 1,60,000 and Rs. 8,000 respectively in the first period and Rs. 1,80,000 and Rs. 14,000 respectively during the second period. If there is no change in fixed cost between the two periods then PA/ ratio must be ................ Show Answer

Q41) Which of the following is true at break even point? Show Answer

Q42) The variable cost of product increases by 10% and the management raise the unit selling price by equal amount. The fixed costs remain unchanged. The BEP of the firm ................ Show Answer

Q43) Sales of two consecutive months of a company are Rs. 3,80,000 and Rs. 4,20,000 the company's net profit for these months amounted to Rs. 24,000 and the Rs. 40,000 respectively. The P/V ratio of the company is. Show Answer

Q44) A company has fixed costs of Rs. 6,00,000 per annum. It manufactures a single product which it sells for Rs. 200 per unit. Its contribution to sales ratio is 40%. Its break-even in units is Show Answer

Q45) Total Sales - Total Variable Cost = ................ Show Answer

Q46) Cost Volume Profit (CVP) analysis is a behavior of how many variables? Show Answer

Q47) Selling price per unit Rs. 10; Variable cost Rs. 8 per unit; Fixed cost Rs. 20,000; Break even production in units? Show Answer

Q48) Actual sales Rs. 4,00,000; Break even sales Rs. 2,50,000; Margin of safety in percentage is ................ Show Answer

Q49) A retail company sells computer parts, each of which is sold for Rs. 250 and bought from the manufacturer for Rs. 100. The retailer's fixed costs are Rs. 1,50,000. Maximum possible sales are 3,000. How many computers must be sold to break-even? Show Answer

Q50) Break - even point occurs at 40% of total capacity, margin of safety will be ................ Show Answer

Q51) Calculate value of closing stock from the following: Opening stock of finished goods (500 units): Rs. 2,000 Cost of production (10,000 units): Rs. 50,000 Closing stock (1,000 units): ? Show Answer

Q52) Profit as per cost account Rs. 548.
-Bad debts written off Rs. 9,000
-Overvaluation closing stock in financial books Rs. 4,500
Profit/Loss as per financial account = ? Show Answer

Q53) A lorry capable of carrying 5 tonnes of goods normally carries 80% of the load on the outward journey and 40% of the load on inward journey. The journey is 300 km. For one side. It takes two days to complete the return trip. In a year of 300 days compute the tonnes km. Show Answer

Q54) Which of the following represents a CVP equation? Show Answer

Q55) Sales Rs. 25,000; Variable cost Rs. 15,000; Fixed cost Rs. 4,000; PA/ ratio is... ................ Show Answer

Q56) P/V ratio is 25% and margin of safety is Rs. 3,00,000; the amount of profit is.. ................ Show Answer

Q57) If the P/V ratio of a product is 25% and selling price is Rs. 25 per unit, the marginal cost of the product would be ................ Show Answer

Q58) Write the most appropriate answer from the given options in respect of the following:
Product cost under marginal include -
Show Answer

Q59) The costing method in which fixed factory overheads are added to the inventory is-
Show Answer

Q60) Which of the following is known as full costing -
Show Answer

Q61) When margin of safety is 20% and P/V ratio is 60%, the profit will be- Show Answer

Q62) Which of the following formula cannot be used for calculating contribution-
Show Answer

Q63) A product is sold at a price of Rs 120 per unit and its variable cost is Rs 80 per unit. The fixed expenses of the business are Rs 8,000 per year. Break-even point is -

Show Answer

Q64) The following information relates to a product:
Direct materials: 10 kg @ 0.50 per kg.
Direct labour: 1 hour 30 minutes @ 4 per hour
Variable overheads: 1 hour 30 minutes @ Rs 1 per hour.
Fixed overheads @2 per hour (based on a budgeted production volume of 90,000 direct labour hours for the year)
Selling price per unit: 17
The break-even point is - Show Answer

Q65) A company sells its product at Rs 15 per unit. In a period, if it produces and sells 8,000 units, it incurs a loss of Rs 5 per unit. If the volume is raised to 20,000 units, it earns a profit of Rs 4 per unit. The break-even point of the company in rupee terms will be - Show Answer

Q66) A company which has a margin of safety of Rs 4,00,000 makes a profit of Rs 1,00,000. If its fixed cost is Rs 5,00,000, then break - even sales is - Show Answer

Q67) What is the margin of safety, if profit is equal to Rs 40,000 and P/V ratio is 25% - Show Answer

Q68) Which of the following formula cannot be used for calculating
P/V ratio
Show Answer

Q69) For a given product, the sales of a company @ 200 per unit is 20,00,000. Variable cost is 12,00,000 and fixed cost is 6,00,000. The capacity of the factory is 15,000 units. Capacity utilisation at break-even point level is- Show Answer

Q70) For a given product, selling price per unit is Rs 15, variable cost per unit is Rs 10, total fixed cost is Rs 1,50,000 and units sold during the period are 35,000. The margin of safety is - Show Answer

Q71) When the volume is 3,000 units, the average cost is 4 per unit. When the volume is 4,000 units, the average cost is 3.50 per unit. The break-even point is 5,000 units. What is the P/V ratio of the firm - Show Answer

Q72) Selling price of a product is Rs 550 per unit, variable cost Rs 50 per unit and fixed cost Rs 10,000. The number of units required to be sold to earn a profit of Rs 10,000 will be - Show Answer

Q73) Make or buy decisions are made by comparing _______ cost with outside purchase price.


Show Answer

Q74) Selling price of a product -X is Rs 50 per unit, variable cost Rs 20 per unit and 2 Kgs. of raw material is needed to produce a unit of product-X. The contribution per Kg. of raw material will be - Show Answer

Q75) In a break-even chart, which of the following pair of lines make the angle of incidence -
Show Answer

Q76) The costing method in which fixed factory overheads are added to inventory is - Show Answer

Q77) A company has annual fixed cost of Rs 1,68,000. In the year 2013-14, sales amounted to Rs 6,00,000 as compared to Rs 4,50,000 in the preceding year 2012-13. The profit in the year 2013-14 was Rs 42,000 more than that in year 2012-13. The break-even sales of the company is Show Answer

Q78) Sunny Ltd. makes product-A which sells at Rs 80 per unit. Total fixed costs are Rs 28,000 and marginal cost Rs 42 per unit. The sales level (in units) that will provide a profit of Rs 10,000 is -
Show Answer

Q79) When the sales increase from Rs 45,000 to Rs 60,000, the profit increases by Rs 5,000. P/V Ratio would be - Show Answer

Q80) Margin of safety can be calculated using the formula-

Show Answer

Q81) A product is sold at 150 per unit and its variable cost is 70 per unit. The fixed expenses of the business are 8,000 per year. Break-even point (in units) is -
Show Answer

Q82) Profit-Volume ratio can be improved by -
Show Answer

Q83) Manoj Ltd. manufactures three products P, Q and R. The unit selling price of these products are Rs 100, Rs 160 and Rs 75 respectively. The corresponding unit variable costs are Rs 50
Rs 80 and Rs 30. The proportions (quantity-wise) in which these products are manufactured and sold are 20%, 30% and 50% respectively. Total fixed costs are Rs 14,80,000. Overall break -even quantity is - Show Answer

Q84) Profits in a company can be increased by:
(1) Decreasing the selling price per unit.
(2) Increasing the selling price per unit.
(3) Decreasing the volume of sales.
(4) Increasing the volume of sales.
(5) Decreasing the fixed or variable expenses
(6) Increasing the fixed or variable expenses
(7) Giving more weightage for products having higher P/V ratio (8) Giving less weightage for products having higher P/V ratio Select the correct answer from the options given below -
Show Answer

Q85) Assertion (A):
(1 mark)
The business earns a surplus of sale revenue over variable costs, which is called contribution:
Reason (R):
Once fixed costs are fully recovered such excess contribution is termed as profit. Select the correct answer from the options given below - Show Answer

Q86) A manufacturer produces 2,00,000 units of a product at a cost of Rs 3.25 per unit. Later on, he produces 2,75,000 units at a cost of Rs 3.20 per unit, when its fixed overheads have increased by 10%. Marginal cost per unit and original fixed overheads will be- Show Answer

Q87) Assertion (A):
Profit volume ratio is considered to be the best indicator of the profitability of the business.
Reason (R):
If profit volume ratio is improved, it will result in better profits. Select the correct answer from the options given below - Show Answer

Q88) Which of the following are advantages of marginal costing:
(1) Pricing decision
(2) True profit
(3) Difficulty to classify
(4) Ignores time value
(5) Break - even analysis
(6) Contribution is not final
(7) Control over expenditure
Select the correct answer from the options given below - Show Answer

Q89) If sales revenue at 60% capacity is Rs 4,50,000, sales revenue at 70% capacity on a fall in selling price by 5% would be - Show Answer

Q90) Statement - I :
Segregation of expenses as fixed and variable helps the management to exercise control over expenditure.
Statement - II :
The management can compare the actual variable expenses with the budgeted variable expenses and take corrective action through variance analysis.
Select the correct answer from the following-
Show Answer

Q91) Statement - I :
Margin of safety represents the difference between sales at break-even point and total sales.
Statement - II:
Margin of safety can be expressed as a percentage of total sales or in value or in terms of quantity.
Select the correct answer from the options given below-
Show Answer

Q92) The sales and profit during the two periods were as follows:
Period I : sales 20,00,000, profit= 2,00,000.
Period II : sales 30,00,000, profit = 4,00,000.
Sales required to earn a profit of 5,00,000 is- Show Answer

Q93) X Ltd. has forecast its sales for the next three months as follows:
May =12,000 units
June=20,000 units
July=25,000 units.
Opening stock as on 1st April is expected to be 5,000 units. Closing stock should equal 20% of the coming month's sales needs. How many units should be produced in June-
Show Answer

Q94) Cost-Volume-Profit (CVP) analysis is based on several assumptions. Which one of the following is not relevant for such an analysis- Show Answer

Q95) The fixed expenses are Rs 4,000 and break-even point is Rs 10,000. New break-even point, if selling price is reduced by 20% is- Show Answer

Q96) Z Ltd. recorded sales of Rs 60 lakh in 2014 as compared to Rs 45 lakh in 2013. Profit for 2014 was Rs 5 lakh higher than that in 2013. If the annual fixed costs amount to Rs 12 lakh, the profit on projected sales of Rs 90 lakh will be - Show Answer

Q97) Statement-l:
The contribution concept is based on the theory that the fixed expenses of a business is not a joint cost.
Statement - II :
Fixed expenses can be equitably apportioned to different segments of business.
Choose the correct option - Show Answer

Q98) The following information is given about Zac Ltd. dealing
in musical instruments:
P/V ratio = 50%
Margin of safety=40%
If the sales volume is Rs 50,00,000 the net profit will be -
Show Answer

Q99) Profit : 50,000
Contribution : 70,000
Sales : 7,00,000
The amount of margin of safety will be:
Show Answer

Q100) Which of the following statements is/are false:
(i) Product can be sold below marginal cost in certain special circumstances
(ii) Cost per unit of key factor is the basis of ranking products on profitability
(iii) When there are no inventories, profit figures under marginal and
absorption costing are identical.
Select the correct answer from the options given below: Show Answer

Q101) Margin of safety is Rs 8,000 which represents 40% of sales. P/V ratio is 50%. Fixed cost will be: Show Answer

Q102) Cost - Volume - Profit analysis is based on several assumptions. Which one of the following is not one of these assumptions - Show Answer

Q103) Under marginal costing, unit product cost would most likely be increased by:
Show Answer

Q104) A company producing three products, viz., X, Y and Z has sales mix in the ratio of 2:1:3. The profit volume ratio of the products X,Y and Z are 15%, 30% and 20% respectively. The total fixed cost of the company Rs 3,50,000.
The break-even point of the company will be: Show Answer

Q105) Identify the cost which is not relevant or useful for decision making:
Show Answer

Q106) From the following particulars, calculate the selling price per unit, if the break-even point is brought down to 10,000 units:
Selling price per unit = Rs 20
Variable cost per unit = Rs 16
Fixed expenses = Rs 60,000
Choose the correct option: Show Answer

Q107) Aman Ltd. sells its products at Rs 16 per unit. In a period, if it produces and sells 20,000 units, it incurs a loss of Rs 2 per unit. If the volume is doubled, it earns a profit of Rs 2.20 per unit. The amount of fixed cost and break even point (in units) will be: Show Answer

Q108) The P/V ratio of Akhil & Co. is 50% and margin of safety is 40%. The company sold 500 units for Rs 5,00,000.
The break-even point sales will be: Show Answer

Q109) Raj Ltd. furnishes the following information:
Production = 10000 units.
Sales = 5000 units
Selling price = Rs 12 per unit.
Variable cost = Rs 6 per unit.
Fixed costs = Rs 40,000 per annum.
Profit/loss under marginal costing method will be: Show Answer

Q110) A radio manufacturer finds that while it costs Rs 6.25 per unit to make a component, the same is available in the market at Rs 5.75 each. Continuous supply is also fully assured. The break-up of costs per unit is as follows:
Materials = Rs 2.75.
Labour = Rs 1.75.
Other variable expenses = Rs 0.50.
Depreciation and other fixed costs = Rs 1.25.
The best option for the manufacturer will be: Show Answer

Q111) Following information is related to Product-A:
A 2015, variable cost was Rs 200 per unit and fixed cost Rs 40 per unit. Production was 1,20,000 units. It is expected that production in 2016 will increase to 1,60,000 units. The variable cost will increase by 25% and fixed cost by 10% in 2016.
The amount of fixed cost in 2016 will be Show Answer

Q112) Margin of safety in a company can be improved by:
(1) Reducing the fixed cost and variable cost
(2) Increasing sales volume and price of sales
(3) Increasing stock of material in the expectation of price rise
(4) Expanding business to fulfill the demand of market
(5) Changing the product mix to increase contribution.
Select the correct answer from the options given below - Show Answer

Q113) Statement- I
When there are no inventories, profit figure under marginal costing and absorption costing is identical.
Statement - II
Inventories are valued at cost of production in absorption and marginal costing systems.
Select the correct answer from the options given below - Show Answer

Q114) Ramya Ltd. furnishes the following information: Production 10,000 units, Sales 10,000 units, Selling price Rs 12 per unit, Variable cost Rs 6 per unit, Fixed costs Rs 40,000 per annum (normal capacity of 10,000 units) Profit/Loss under marginal costing method will be: Show Answer

Q115) Mr. Mahesh has a sum of Rs 3,00,000 which invested in a business. He wishes 15% return on his fund. It is revealed from the present cost data analysis that variable cost of operation are 60% of sales and fixed costs are Rs 1,50,000 p.a. On the basis of this information, you are required to find out the sales volume to earn 15% return. Show Answer

Q116) A radio manufacturer finds the while it costs Rs 6.25 per unit to make component M-140 and the same is available in the market at Rs 5.75 each. Continuous supply is also fully assured. The break-down cost per unit as follows:
Materials Rs 2.75, Labour Rs 1.75 other variable expenses Rs 0.50, Depreciation and other fixed cost Rs 1.25. What would be your decision, if the supplier offered the component at Rs 4.85 per unit? Show Answer

Q117) In a purely competitive market, 10,000 pocket transistors can be manufactured and sold and certain profit is generated. It is estimated that 2,000 pocket transistors need to be manufactured and sold in a monopoly market to earn the same profit. Profit under both the conditions is targeted at Rs 2,00,000. The variable cost per transistor is Rs 100 and the total fixed costs are Rs 37,000. You are required to find out unit selling price per transistor under competitive condition.
Show Answer

Q118) A firm has given the following data:
Fixed expenses at 50% Rs 15,000, Fixed expenses when factory is close down Rs 10,000, Additional expenses in closing down Rs 1,000, Production at 50% capacity Rs 5,000 units, contribution per unit Rs 1. Advise whether to run the factory or close it down:
Show Answer

Q119) You are requested to report to top management of Eastern India Engineering Company the point of sales in terms of rupee to break- even. For the purpose, you obtain that:
Fixed overheads remain constant at Rs 12,000
Variable costs will rise zero to Rs 12,000
Selling price is Rs 600 per ton
The tonnage produced and sold is 30 tons. Show Answer

Q120) In a period sales amount Rs 2,00,000 , net profit Rs 20,000 and fixed overheads are Rs 30,000. If sales Rs 3,00,000 profit will be: Show Answer

Q121) A factory engaged in manufacturing plastic buckets is working at 40% capacity and produces 10,000 buckets per annum. The present cost-break up for one bucket is as under:
Materials = Rs 10.
Labour = Rs 3.
Overheads = Rs 5 (60% fixed).
The selling price per bucket Rs 20. If factory operates 90% of capacity the profit will be: Show Answer

Q122) A company has fixed costs of Rs 90,000 with sales of Rs 3,00,000 and profit of Rs 60,000. Margin of safety will be: Show Answer

Q123) A company sells its product at Rs 15 per unit. In a period if it produces and sells 8,000 units, it incurs a loss of Rs 5 per unit. If the volume is raised to 20,000 units, it earns a profit of Rs 4 per unit. Break-even point in units will be: Show Answer

Q124) The cost accountant of M Ltd. has ascertained the selling price of a product is Rs 20 per unit. Variable cost is Rs 15 per unit and break- even point is 21,600 units. Management has decided to treat 12,000 units of B.E.P. because production department cannot produce more than this at the moment. The selling price for 12,000 units B.E.P. will be:
Show Answer

Q125) Yadhav Co. has annual fixed cost of Rs 1,20,000. In 2015 sales amounted to Rs 6,00,000 as compared to Rs 4,50,000 in 2014 and profit in 2015 was Rs 50,000 higher than in 2014. If there is not need to expand the company's capacity. The profit or loss in 2016 on a forecasted sales of Rs 9,00,000 will be: Show Answer

Q126) A company manufactures and sells three types of product namely A, B and C. Total sales per month is Rs 80,000 in which the share of these three products are 50%, 30% and 20% respectively. Variable cost of these products are 60%, 50% and 40% respectively.
The combined P/V Ratio will be:
Show Answer

Q127) A plant produces a product in the quantity of 10,000 units at a cost of Rs 3 per unit. If 20,000 units are produced, the cost per unit will be Rs 2.50. Selling price per unit is Rs 4. The variable cost per unit will be: Show Answer

Q128) A plant is operating at 60% capacity. The fixed costs are 30,000, the variable costs are 1,00,000 and the sales amount to 1,50,000. The percentage of capacity at which the plant should operate to earn a profit of 40,000 will be: Show Answer

Q129) When margin of safety is 20% and P/V ratio is 60%, the profit will be: Show Answer

Q130) If the total cost of producing 20,000 units of a product is 90,000 and if 25,000 units will be produced, then the total cost will be 1,05,000 and the selling price is ₹ 8 per unit. The break-even point will be:
Show Answer

Q131) P/V ratio 25%, Sales Rs 1,20,000 and Fixed costs Rs 17,500, Profit will be:
Show Answer

Q132) Under marginal costing system, product costs are:
Show Answer

Q133) In differential cost analysis, managerial decisions are based on:
Show Answer

Q134) Which of the following is not true? Show Answer

Q135) Assertion (A):
Profit volume ratio is considered to be the best indicator of the profitability on the business.
Reason (R):
If profit volume ratio improved, it will result in better profits.
Show Answer

Q136) Statement I:
Margin of safety represents the difference between the sales at break-even point and the total sales.
Statement II:
Margin safety can be expressed as a percentage of total sales or in value or in terms of quantity. Show Answer

Q137) Consider the following statements:
(1) Marginal costing and absorption costing are the same.
(2) For decision-making, absorption costing is more suitable than marginal costing.
(3) Cost-volume-profit relationship also denote break-even point.
(4) Marginal costing is based on the distribution between fixed and variable costs.
Which of the statements given above are correct?. Show Answer

Q138) Which of the following are advantages of marginal costing?
(1) Pricing decision
(2) True profit
(3) Difficulty to classify
(4) Ignores time value
(5) Break-even analysis
(6) Contribution is not final
(7) Control over expenditure
Show Answer

Q139) Marginal Costing in America is called as:
Show Answer

Q140) Statement-I:
Break-even analysis has gradually become a popular service tool for modern financial management.
Statement-II:
No concrete limitations have been raised any where against the utility of break-even analysis.
Select the correct answer from the option given below:
Show Answer

Q141) When fixed costs are Rs 90,000 ratio of variable cost to sales is 75% and the break even point occurs at 60% of the capacity sales, the capacity sales is: Show Answer

Q142) The P/V ratio of a company is 40%. If the company reduces its selling price by 20%, the required percentage of increase in sales value to maintain the same profit is: Show Answer

Q143) Mr. R's sales and profit in 2015 were respectively Rs 1,20,000 and Rs 8,000. His sales and profit in 2016 were Rs 1,40,000 and Rs 13,000 respectively. In this case his margin of safety in 2016 was:
Show Answer

Q144) Z Ltd., has a margin of safety of 4,000 units and break- even sales at 1,000 units. If its margin of safety sales is Rs 2,00,000, total sales shall be:
Show Answer

Q145) R.V. Ltd., made a sale for ₹ 4,50,000 in the first half and for ₹ 5,00,000 in the second half of 2016. In this year the total cost for the first and the second half of the year were respectively ₹ 4,00,000 and ₹ 4,30,000. If there is no change in selling price and variable cost and that the fixed expenses are incurred equally, the break-even sales for the whole year is: Show Answer

Q146) If the P/V ratio of a product is 25% and selling price is Rs 25 per unit, the marginal cost of the product would be: Show Answer

Q147) Contribution is the difference between:
Show Answer

Q148) Which of the statement is not true in respect of cost- volume-profit analysis?
Show Answer

Q149) A manufacturing company provides you the following information for the coming month:
Budgeted sales revenue = Rs 7,50,000.
Budgeted contribution = Rs 3,00,000.
Budgeted profit = Rs 75,000.
What will be the budgeted break-even sales volume?
Show Answer

Q150) A company, which has a margin of safety of Rs 2,00,000 makes profit of Rs 40,000. If the fixed cost is Rs 2,50,000, break-even sales of the company would be:
Show Answer

Q151) In 'make or buy' decision, it is profitable to buy from outside only when the supplier's price is below the firm's own _______ .
Show Answer

Q152) The P/V ratio of a company is 50% and margin of safety is 40%. If present sales is Rs 30,00,000 then Break Even Point will be:
Show Answer

Q153) When the sales increase from 40,000 to 60,000 and profit increases by 5,000, the P/V ratio is:
Show Answer

Q154) Assertion (A):
Marginal costing furnishes a better and more logical basis for fixation of sales prices as well as tendering for contracts. Reason (R):
Marginal cost provides management with the information regarding the behavior of costs and incidence of such cost on the profitability of an undertaking.
Select the correct answer from the options given below: Show Answer

Q155) _____ is relevant for price fixation during recession or when make or buy decision is to be made.
Show Answer

Q156) ABC Ltd. shows break even sales 40,500 and budgeted sales 50,000. Compute the margin of safety ratio? Show Answer

Q157) A low margin of safety usually indicates:
Show Answer

Q158) Which of the following is not a method of transfer pricing considered in normal course?
Show Answer

Q159) Which of the following are examples of key factors?
(1) Sales value/quantity
(2) Raw material quantity
(3) Raw material quality
(4) Labour hours availability
(5) Plant capacity
(6) No. of plants used in manufacturing process
(7) Cost of production
Select the correct answer from the options given below:
Show Answer

Q160) Information provided by S Ltd. are given below:
Fixed Cost = Rs 24 lakh.
Profit = Rs 12 lakh.
Break-even point = Rs 60 lakh.
When sales are Rs 120 Lakh, then calculate the profit:
Show Answer

Q161) In an Activity Based Costing System, the allocation basis that are used for applying costs to services or procedures are called: Show Answer

Q162) Inspection of products is an example of:
Show Answer

Q163) A company has Profit/Volume (P/V) Ratio 40 percent. By what percentage must variable cost be decreased to offset 25% reduction in selling price, so as to maintain the same P/L Ratio ? Show Answer

Q164) XYZ Ltd. manufactures three products X, Y and Z. The Sales Value Mix Ratio of these products are 20%, 30% and 50% respectively. The corresponding Variable Cost to Sales Ratio is 50%, 30% and 20%. The total fixed costs are Rs 35,500. Calculate Overall Break Even Point (in Value):



Show Answer

Q165) Which of the following is not a method of Transfer Pricing? Show Answer

Q166) A company sells two products, J and K. The sales mix is 4 units of J and 3 units of K. The contribution margin per unit are Rs 40 for J and Rs 20 for K. Fixed costs are Rs 3,08,000 per month. Compute the individual break-even point of product J and product K: Show Answer

Q167) Which of the following is not an objective of Activity Based Costing?
Show Answer

Q168) Selling price of a product is Rs 32/unit. Variable cost ratio is 50%. Fixed cost is Rs 96,000. Units sold are 10,000. Calculate Margin of Safety in percentage:
Show Answer

Q169) Margin of Safety may be improved by: Show Answer

Q170) If sales in an organisation is 1,00,000, fixed cost is 12,000 and profit is 8,000, Profit/Volume ratio is ___ Show Answer

Q171) S Ltd. has fixed cost of 60,000 P.A. It manufactures a single product which it sells for 20 per unit. Its P/V ratio is 40%. S. Ltd. Break-even Point in Units is:
Show Answer

Q172) Activity based cost system would probably provide the greatest benefits for organization that use....
Show Answer

Q173) In marginal costing, stock is valued at ______
Show Answer

Q174) An increase in selling price...........
Show Answer

Q175) Fixed Cost = Rs 2,00,000 Sales = Rs 8,00,000, P/V Ratio =30% the amount of profit is...
Show Answer

Q176) XYZ. Ltd. books of accounts show profit from operation (EBDIT) at Rs 500 Lakh. It paid 12% on a debt of Rs 1,000 Lakh. Depreciation is Rs 100 Lakh and Tax is 35% PAT will be: Show Answer

Q177) Gas oil and company has two divisions: Transportation and Refining. Transportation division sales crude oil to Refining division. The cost of one barrel of crude is Rs 50, direct labour is Rs 15, variable overheads Rs 3 and fixed overheads Rs 35. Transportation division sets its profit margin 20% of the variable cost. If Transporting division operating at full capacity, the transfer price will be: Show Answer

Q178) Achieve goal congruence, Realistic performance evaluation and Maintain autonomy of the divisions are the objectives meet by which method of transfer pricing?
Show Answer

Q179) If profit is Rs 20,000, BEP is Rs 2,00,000 and P/V Ratio is 40%. What will be margin of safety? Show Answer

Q180) Which of the following is a method of transfer pricing considered when the supplier division is a monopoly producer?
Show Answer

Q181) If Break Even Sales is 60% of current sales and profit is Rs 4,000, then what is the amount of contribution? Show Answer

Q182) From the following information, calculate the amount of profit :
Sales Rs 16,00,000; Fixed cost Rs 4,00,000; P/V Ratio 30% Show Answer

Q183) P/V Ratio of A Ltd. is 50% and Margin of Safety is 40%. What is the amount of Break Even Point and Net Profit if the sales volume is 50 lakh ? Show Answer

Q184) If total cost is Rs 30,000 for the sales of Rs 50,000 and Rs 22,000 for the sales of Rs 30,000, then the Profit Volume (P/V) Ratio is: Show Answer

Q185) The following data is available for the period.
Opening inventory = 10,000 units.
Closing inventory = 8,000 units.
Absorption costing profit = Rs 2,80,000.
The profit for the period using marginal costing would be: Show Answer

Q186) The marginal costing profit for the month is:
Show Answer

Q187) The absorption costing profit for the month is:
Show Answer

Q188) Which of the following are acceptable bases for absorbing production overheads?
(i) Direct labour
(ii) As a percentage of the prime cost
(ii) Machine hours
(iv) Per unit Show Answer

Q189) Absorption costing is concerned with which of the following? Show Answer

Q190) If the P/V ratio of a product is 25% and selling price is Rs 25 per unit, the marginal cost of the product would be Show Answer

Q191) Which of the following is not a objectives of Transfer Pricing?
Show Answer

Q192) Transfer Pricing is needs to monitor -
Show Answer

Q193) Transfer pricing is the process of determining the price at which - Show Answer

Q194) Which of the following is not an objective of Activity Based Costing?

Show Answer

Q195) Example of cost driver is:
Show Answer

Q196) Activity cost driver rate is: Show Answer

Q197) Which of the following is not terminology of Activity based costing:
Show Answer

Q198) Which of the following is not terminology of ABC?
Show Answer

Q199) Assign costs to the cost object is:
Show Answer

Q200) Which of the following is not an Importance of Activity Based Costing (ABC)?
Show Answer

Q201) Which of the following is not an uses of Activity Based Costing (ABC)?
Show Answer

Q202) Which of the following is not a limitation of Activity Based Costing? Show Answer

Q203) ABC assigns cost to products by tracing expenses to
Show Answer

Q204) ABC are first trace to ________ and then to ________ .
Show Answer

Q205) Transfer Price could be set by negotiation between the
Show Answer

Q206) A company sells its product at 15 per unit. In a period, it produces and sells 8,000 units and incurs a loss of 5 per unit. If the sales volume were to be raised to 20,000 units, it could earn a profit of 4 per unit. Break-even point (in units) will be-
Show Answer

Q207) Statement-I:
At the time of replacement of plant, according to marginal cost technique, the proposal which yields lowest contribution is to be selected.
Statement-II:
According to total cost technique, the proposal which involves the highest costs is to be selected.
Select the correct answer from the following-
Show Answer

Q208) Choose the correct statements from the following:
(1) Marginal costing and absorption costing are the same
(2) For decision making, absorption costing is more suitable than marginal costing
(3) Cost-volume-profit relationship also denotes break-even point
(4) Marginal costing is based on the distinction between fixed and variable costs.
Correct answer option is- Show Answer