Inter PN-8 Cost Accounting Quiz 11

1. A company makes a single product and incurs fixed costs of Rs. 30,000 per annum. Variable cost per unit is Rs. 5 and each unit sells for Rs. 15. Annual sales demand is 7,000 units. The breakeven point is :

2. S produces and sells one product, P, for which the data are as follows: Selling price Rs. 28

Variable cost          Rs. 16

Fixed cost              Rs. 4

The fixed costs are based on a budgeted production and sales level of 25,000 units for the next period.

Due to market changes both the selling price and the variable cost are expected to increase above the budgeted level in the next period. If the selling price and variable cost per unit increase by 10% and 8% respectively, by how much must sales volume change, compared with the original budgeted level, in order to achieve the original budgeted profit for the period?

3. A ltd is a manufacturing company that has no production resource limitations for the foreseeable future. The Managing Director has asked the company mangers to coordinate the preparation of their budgets for the next financial year. In what order should the following budgets be prepared?

1. Sales budget
2. Cash budget
3. Production budget
4. Purchase budget
5. Finished goods inventory budget

4. The actual output of 162,500 units and actual fixed costs of Rs. 87000 were exactly as budgeted. However, the actual expenditure of Rs. 300,000 was Rs. 18,000 over budget. What was the budget variable cost per unit?

5. A Local Authority is preparing cash Budget for its refuse disposal department. Which of the following items would not be included in the cash budget?

6. CG Co manufactures a single product T. Budgeted production output of product T during June is 200 units. Each unit of product T requires 6 labour hours for completion and CG Co anticipates 20 per cent idle time. Labour is paid at a rate of Rs.7 per hour. The direct labour cost budget for March is

7. Budgeted sales of X for March are 18000 units. At the end of the production process for X, 10% of production units are scrapped as defective. Opening inventories of X for March are budgeted to be 15000 units and closing inventories will be 11,400 units. All inventories of finished goods must have successfully passed the quality control check. The production budget for X for March, in units is:

8. Which of the following would explain an adverse variable production overhead efficiency variance?

1. Employees were of a lower skill level than specified in the standard
2. Unexpected idle time resulted from a series of machine breakdown
3. Poor Quality material was difficult to process

9. During September, 300 labour hours were worked for a total cost of Rs. 4800. The variable overhead expenditure variance was Rs. 600 (A). Overheads are assumed to be related to direct labour hours of active working.

What was the standard cost per labour hour?

10. Which of the following is not a reason for an idle time variance?

11. The basic difference between a fixed budget and flexible budget is that a fixed budget             .

12. A flexible budget requires a careful study of

13. The entire budget organisation is controlled and headed by a senior executive known as:

14. Which of the following budgets facilitates classification of fixed and variable costs:

15. When a company wants to prepare a factory overhead budget in which the estimated costs are directly derived from the estimates of activity levels, which of the following budget should be prepared by the company?

16. Sales budget is a      .

17. The budget that is prepared first of all is    .

18. The difference between fixed cost and variable cost assumes significance in the preparation of the following budget:

19. Materials become key factor, if

20. Which of the following is a long-term budget?

21. Which of the following is not a potential benefit of using a budget?

22. Which of the following is not an element of master budget?

23. Budgets are shown in-Terms:

24. What is an attainable standard?

25. Which of the following would not be used to estimate standard direct material prices?