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MGT402 Midterm 2010 Solved Paper - Cost and Management Accounting

MGT402 Midterm 2010 Solved Paper - Cost and Management Accounting

Spring 2010 (Session - 5)

Shared by Zeeshan Arshad

Solved version shared by Afaaq

http://groups.google.com/group/vuZs

Time: 60 min

M - 47

 

   

MGT402 - Cost & Management Accounting - Question No. 1        .

 Which of the following cost is linked with the calculation of cost of inventories?

       ► Product cost

       ► Period cost

       ► Both product and period cost

       ► Historical cost

   

MGT402 - Cost & Management Accounting - Question No. 2        .

 You made Rs. 10,000 loan to your cousin's company. At the end of one year, the company returned to you Rs. 10,850. The Rs. 850 is called which one of the following?

       ► Increases in loan

       ► Increases in dividends

       ► An 8.5% return on investment

       ► All of the given options

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MGT402 - Cost & Management Accounting - Question No. 3        .

 Machine lubricant used on processing equipment in a manufacturing plant would be classified as a:

 

       ► Period cost (manufacturing overhead)

       ► Period cost (Selling, General & Admin)

       ► Product cost (manufacturing overhead)

       ► Product cost (Selling, General & Admin)             

   

MGT402 - Cost & Management Accounting - Question No. 4        .

 An average cost is also known as:

       ► Variable cost

       ► Unit cost

       ► Total cost

       ► Fixed cost

   

MGT402 - Cost & Management Accounting - Question No. 5        .

 Finished goods inventory costs represent the costs of goods that are:

       ► Currently being worked on

       ► Waiting to be worked on

       ► Waiting to be sold

       ► Already delivered to customers

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MGT402 - Cost & Management Accounting - Question No. 6        .

 Which of the following is deducted from purchases in order to get the value of Net purchases?

       ► Purchases returns

       ► Carriage inward

       ► Custom duty

       ► All of the given options

   

MGT402 - Cost & Management Accounting - Question No. 7        .

 Which of the following is correct?

       ► Units sold= Opening finished goods units + Units produced – Closing finished goods units

       ► Units Sold = Units produced + Closing finished goods units - Opening finished goods units

       ► Units sold = Sales + Average units of finished goods inventory

       ► Units sold = Sales - Average units of finished goods inventory

 

Reference and Explanation:

Units produced = Units sold + Closing finished goods units - Opening finished goods units (Page no. 38)

 

   

MGT402 - Cost & Management Accounting - Question No. 8        .

 In cost Accounting, normal loss is/are charged to:

       ► Factory overhead control account

       ► Work in process account

       ► Income Statement

       ► All of the given options

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MGT402 - Cost & Management Accounting - Question No. 9        .

 Material requisition is a document that supports the requirement of the material. This document is sent to store incharge and approved by:

       ► Store manager

       ► Production manager

       ► Supplier manager

       ► Purchase manager

   

MGT402 - Cost & Management Accounting - Question No. 10        .

 Over applied FOH will always result when a predetermined FOH rate is applied and:

       ► Production is greater than defined capacity

       ► Actual overhead costs are less than budgeted

       ► Budgeted capacity is less than normal capacity

       ► Actual overhead incurred is less than applied Overhead

   

MGT402 - Cost & Management Accounting - Question No. 11        .

 Which of the following would be considered as factory overhead using a job order cost system?

       ► Direct materials

       ► Direct labor

       ► Depreciation on factory buildings

       ► Salesperson's salary

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MGT402 - Cost & Management Accounting - Question No. 12        .

 At the end of the accounting period, a production department manager submits a production report that shows all of the following EXCEPT:

       ► Number of units in the beginning work in process 

       ► Number of units sold 

       ► Number of units in the ending work in process and their estimated stage of completion

       ► Number of units completed

   

MGT402 - Cost & Management Accounting - Question No. 13        .

 In order to compute equivalent units of production, which of the following must be reasonably estimated?

       ► Units

       ► The percentage of completion

       ► Direct material cost

       ► Units started and completed

   

MGT402 - Cost & Management Accounting - Question No. 14        .

 When 10,000 ending units of work-in-process are 30% completed as to conversion, it means:

       ► 30% of the units are completed

       ► 70% of the units are completed

       ► Each unit has been completed to 70% of its final stage

       ► Each of the units is 30% completed

   

MGT402 - Cost & Management Accounting - Question No. 15        .

 LG has incurred cost of Rs. 60,000 for material. Further it incurred Rs. 35,000 for labor and Rs. 70,000 for factory overhead. There was no beginning and ending work in process. 7,500 units were completed and transferred out. What would be the unit cost for material?

       ► Rs. 22

       ► Rs. 16

       ► Rs. 14

       ► Rs. 8

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MGT402 - Cost & Management Accounting - Question No. 16        .

 A chemical process has normal wastage of 10% of input. In a period, 2,500 Kg of material were input and there was abnormal loss of 75 Kg. What quantity of good production was achieved?

 

 

       ► 2,175 kg

       ► 2,250 kg

       ► 2,425 kg

       ► 2,500 kg

   

MGT402 - Cost & Management Accounting - Question No. 17        .

 If the cost per equivalent unit is Rs. 1.60. The equivalent units of output are 50,000. The WIP closing stock is 10,000 units, 40% completed. What will be the value of closing stock?

       ► Rs. 9,600

       ► Rs. 80,000

       ► Rs. 16,000

       ► Rs. 6,400

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MGT402 - Cost & Management Accounting - Question No. 18        .

 Which of the given cost does not become the part of cost unit?

       ► Advertising expenses

       ► Direct labor cost

       ► Factory overhead cost

       ► Cost of raw material

   

MGT402 - Cost & Management Accounting - Question No. 19        .

 Which of the given cost becomes the part of cost unit?

       ► Direct material cost

       ► Factory overhead

       ► Direct labor cost

       ► All of the given options

   

MGT402 - Cost & Management Accounting - Question No. 20        .

 The main difference between the profit center and investment center is:

       ► Decision making

       ► Revenue generation

       ► Cost incurrence

       ► Investment

   

MGT402 - Cost & Management Accounting - Question No. 21        .

 The Economic Order Quantity is the amount of inventory to be ordered at one time for purpose to minimize:

 

        ► Conversion cost

       ► FOH cost

       ► Inventory cost

       ► Prime cost

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MGT402 - Cost & Management Accounting - Question No. 22        .

 The annual demand for a stock item is 2,500 units. The cost of placing an order is Rs. 80 and the cost holding an item in stock is for one year is Rs. 15.

Required:   What is the EOQ? 

       ► 163 units

       ► 1250 units

       ► 5,000 units

       ► 160 units 

   

MGT402 - Cost & Management Accounting - Question No. 23        .

 TO whom purchase order form is issued to place an order?

       ► Work station incharge

       ► Store incharge

       ► Supplier

       ►  Manager

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MGT402 - Cost & Management Accounting - Question No. 24        .

 What type of information CANNOT get from bin card?

       ► It provides the information for Reorder level

       ► It provides the information for Economic order quantity

       ► It provides the information for Maximum daily consumption

       ► It provides the information for Cost of material consumed

   

MGT402 - Cost & Management Accounting - Question No. 25        .

 Which of the following groups of workers would be classified as indirect labor?

 

 

       ► Machinists in an organization manufacturing clothes

       ► Bricklayers in a house building company

       ► Maintenance workers in a shoe factory

       ► None of the given options

   

MGT402 - Cost & Management Accounting - Question No. 26        .

 Taylor's Differential Piece Rate Plan based on _____________piece rates is fixed.

 

       ► Two

       ► Three

       ► Four

       ► Five

   

MGT402 - Cost & Management Accounting - Question No. 27        .

 Meerick Differential Piece Rate Plan based on _____________piece rates is fixed.

       ► Two

       ► Three

       ► Four

       ► Five

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MGT402 - Cost & Management Accounting - Question No. 28        .

 Depreciation of building expense is an example of factory overhead which is apportioned on the basis of: 

 

       ► Capital value

       ► Departmental payroll

       ► Area in square feet or cubic feet

       ► Number of workers

   

MGT402 - Cost & Management Accounting - Question No. 29        .

 Maintenance and repair of plant and machinery can be apportioned on the basis of:

 

       ► Capital value

       ► Departmental payroll

       ► Area in square feet or cubic feet

       ► Number of workers

   

MGT402 - Cost & Management Accounting - Question No. 30        .

 Calculate predetermined factory overhead absorption rates with the help of given data.

 

Items

Budgeted figure

Actual Figures

Factory overhead (Rs)

1,200,000

----

Machine hours

200,000

28,000

 

       ► Rs. 43.00

       ► Rs. 0.20

       ► Rs. 6.00

       ► Rs. 14

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MGT402 - Cost & Management Accounting - Question No. 31        .

 In which of the situation spending variance will give favorable result?

 

       ► Actual factory overhead is less than absorbed factory overhead

       ► Actual factory overhead is greater than absorbed factory overhead

       ► Budgeted factory overhead for actual volume is greater than actual factory overhead

       ► Absorbed factory overhead less than budgeted factory overhead for actual volume

   

MGT402 - Cost & Management Accounting - Question No. 32        .

 If absorbed factory overhead is Rs.155,000 and Budgeted factory overhead for actual volume is Rs. 110,000 then difference of both will be:

 

       ► Unfavorable Spending variance of Rs. 45,000  (Corrected by Rashid)

       ► Favorable Spending variance of Rs. 45,000

       ► Favorable Volume variance of Rs. 45,000

       ► Favorable Budget variance of Rs. 45,000

   

MGT402 - Cost & Management Accounting - Question No. 33        .

 Which of the given is CORRECT for accounting entry of closing balance of Work In Process (WIP)?

 

       ► WIP a/c Dr and Inventory a/c Cr

       ► Inventory a/c Dr and WIP a/c Cr

       ► WIP a/c Dr and payroll a/c Cr

        There is no accounting entry for closing balance of WIP

   

MGT402 - Cost & Management Accounting - Question No. 34        .

 Greenwood petroleum has the data for the year was as follow:

 

Lost units (Normal Loss)

200

Introduced units during the year

67,00

Units in process

15,00

 

Identify how many units were completed and transferred out during this period?

       ► 1,700  units

       ► 5,000  units

       ► 1,500  units

       ► 6,900 units

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MGT402 - Cost & Management Accounting - Question No. 35    ( M  a  r  k  s: 3 )

 Schlamber Company Factory overhead rate is Rs.2 per hour. Budgeted overhead for 3,000 hours per month is Rs. 8,000 and 7,000 hours is Rs. 12,000. Actual factory overhead for the month was Rs.9, 000 and actual volume was 5,000 hours.

 

Required:

1. Applied overhead

2.  Over-or under applied overhead.

 

   

MGT402 - Cost & Management Accounting - Question No. 36    ( M  a  r  k  s: 5 )

 Irfan Industries Limited has two production departments A and B and two mutually interdependent service departments X and Y. Cost of service departments is apportioned on the basis of following %ages:

 

 

A

B

X

Y

Service department X

50%

30%

-

20%

Service department Y

40%

50%

10%

-

 

Following figures of departmental costs are available after the primary distribution:

 

Department A

15,750

Department B

7,500

Department X

11,750

Department Y

5,000

 

Calculate total factory overhead of production department by preparing a work sheet showing the secondary distribution using Repeated apportionment method.

 

 

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MGT402 - Cost & Management Accounting - Question No. 37    ( M    a   r   k   s: 5 )

 PA limited operates a job costing system. The company standard sale price is predetermined Rs. 505 based on cost plus 20% profit margin. The estimated cost for Job # 141 is as follows:

 

Direct material

5 meters@ Rs.20 per meter

Direct labor     

14 hours@ Rs. 8.00 per hour

 

Production overhead for the year are budgeted to be Rs.200,000 and are to be recovered on the basis of the total 40,000 direct labor hour for the year.

Required:

Calculate Cost of Goods Sold for job # 141

Calculate amount of profit for job #141 

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