Final PN-16 Strategic Cost Management Quiz 9

1. In calculating the life cycle costs of a product, which of the following items would be included? A. Planning and concept design costs B. Preliminary and detailed design costs C. Testing costs D. Production costs E. Distribution costs

2. The particular task performance in CPM is known as

3. What is the opportunity cost of making a component part in a factory given no alternative use of the capacity?

4. In a PERT network, the optimistic time for a particular activity is 9 weeks and the pessimistic time is 21 weeks. Which one of the following is the best estimate of the standard deviation for the activity?

5. A factory of ABC Ltd. has a key resource (bottleneck) of a facility D which is available for 48000 minutes per week. The time taken per unit of product P in facility A is 6 minutes. Last week's actual output was 5000 units of product P and actual factory cost (excluding material cost) was Rs. 1,20,000. What is throughput cost per week?

6. Nulook Ltd. Uses a JIT system and back flush accounting. It does not use a raw material stock control account During May, 8000 units were produced and sold. The standard cost per unit is Rs. 100; this includes materials of Rs. 45. During May, Rs. 4,80,000 of conversion costs were incurred. The debit balance on cost of goods sold account for May was

7. A company produces two joint products, P and V. In a year, further processing costs beyond split-off point spent were Rs. 8,000 and

Rs. 12,000 for 800 units of P and 400 units of V respectively. P sells at Rs. 25 and V sells at Rs. 50 per unit. A sum of Rs. 9,000 of joint cost were allocated to product P based on the net realization method. What were the total joint cost in the year?

8. Which of the following is a Forecasting technique

9. Which of the following would decrease unit contribution margin the most?

10. A company has forecast sales and cost of sales for the coming year as Rs. 25 lakhs and Rs. 18 lakhs respectively. The inventory turnover has been taken as 9 times per year. In case the inventory turnover increases to 12 times and the short term interest rate on working capital is taken as 10%, what will be saving in cost?

11. The following tasks are associated with ABC system: (I). Allocation of costs to products (II). Identification of cost pools (III). Identification of cost drivers (IV). Calculation of pool rates. The proper order of the preceding tasks is:

12. A company makes a single product which it sells at Rs. 10 per unit. Fixed costs are Rs. 48,000 per month and the product has a contribution to sales ratio of 40%. In a period when actual sales were Rs. 1,40,000, the company's margin of safety in units was:

13. If the time taken to produce the first unit of a product is 4000 hrs, what will be the total time taken to produce the 5th to 8th unit of the product, when a 90% learning curve applies?

14. XYZ Ltd., a manufacturing company has developed a new product and just completed the manufacture of first 16 units of the product. If the first unit took 6 hours to manufacture and the first 16 units together took 62.9856 hours to produce, the Learning Curve (LC) rate would be

15. The normal duration and normal cost of an activity of project XYZ are 12 days and Rs. 400 respectively. The cost slope is Rs. 80 per day, if the crash cost of the activity is Rs. 560, what will be the crash duration of the activity?

16. A Ltd. Has earned net profit of Rs. 1 lakh, and its overall P/V ratio and margin of safety are 25% and 50% respectively. Find the total fixed cost of the company?

17. A company determines its selling price by marking up variable costs 60%. In addition, the company uses frequent selling price mark down to stimulate sales. If the mark down average 10%, what is the company’s contribution margin ratio?

18. Preparation and use of standard cost, their comparison with actual costs and the measurement and analysis of variances to originating causes is defined as:

19. Optimistic and pessimistic time of an activity respectively are 4 days and 16 days. Variance of the duration of the activity will be:

20. When Backflush costing is most likely to be used?

21. Children's Park in a city with various signals and crossing is the simulated model of city traffic. This is a type of

22. In Simple Exponential Smoothing forecast to give higher weightage to recent demand information, the smoothing constant must be close to

23. A company has the capacity of production of 80,000 units and presently sells 20,000 units at Rs. 100 each. The demand is sensitive to selling price and it has been observed that with every reduction of Rs. 10 in selling price the demand is doubled. What should be the target cost at full capacity if profit margin on sale is taken as 25%?

24. A company uses traditional standard costing system. The inspection and set- up costs are actually Rs. 1,760 against a budget of Rs. 2,000. ABC system is being implemented and accordingly the number of batches is identified as the cost driver for inspection and set up. The budgeted production is 10,000 units in batches of 1,000 units whereas actually 9,000 units were produced in 11 batches. The cost per batch under ABC system will be

25. Assignment Problem can obtain a optimal solution only if -