Management Accounting- II MCQ & Short Answer Question
VIVEKANAND COLLEGE
KOLHAPUR
(AN EMPOWERED
AUTONOMOUS INSTITUTE)
B.Com- III
Sem- VI (Group- B)
ACCOUNTANCY- VI
(MANAGEMENT ACCOUNTING PAPER- II
MULTIPLE CHOICE QUESTIONS AND TRUE OR FALSE
MODULE- I MANAGEMENT CONTROL SYSTEM
A) Choose Correct Alternatives:
1. Management control is
quite essential at ………………… levels to make the business successful.
a) Top b) Middle c) Lower d) All levels
2. According to Lyndall
Urwic there are ……………… principles of management control.
a) One b) Two c)
Three d) Four
3. …………………Control is useful
for capital formation.
a) Financial b) Budget c)
Cost d) Market
4. Control should be …………….
looking.
a) Backward b)
Forward c) Financial d) All of the above
5. …………….. involves the
preparation of plans and record the deviation from plans if any.
a) Management b)
Planning c) Control d) Production
6. …………… is the basis of
controlling.
a) Planning b) Organizing c)
Controlling d) ) Staffing
7. Control is exercised at
…………………levels of management.
a) Top b)
Middle c) Lower d) All levels
8. …………….. are established
criteria against which actual results can be measured.
a) Budgets b)
Standards c) Objectives d) All of the above
9. The control system must
be ………………. to suit the changing conditions.
a) Fixed b) Standard c) Flexible d) Unique
10. The
execution of plans and policies is the responsibility of …………….
a)
Top Management b)
Middle Management
c)
Lower Management d) All of the
above
11. The reports to the top
management should be …………..
a)
Lengthy b) Detailed c) Summarized d) All of the above
12. To carry out its various
functions the management needs ……………. from time to time.
a)
Details b) Report c) Summary d) Information
13. …………… is data evaluated
for a specific purpose.
a)
Details b) Report c) Summary d) Information
14. ………….. is the factual
information, either in the narrative or descriptive form or in the form of
statistical tables, graphs, charts etc.
a)
Details b)
Report c) Summary d) Information
15. …………… is a system that
aids management in carrying out its functions successfully.
a)
Internal control system b)
Manageemnt control system
c) Management information system d) All of the above
B) State True or False:
1. Management control is
essential only at top level management. False
2. A budget serves as most
effective means of control. True
3. Standard costing is helpful
in controlling costs. True
4. A good control system is
required to be rigid. False
5. There is no necessity of
highly competent staff for an effective control. False
6. Reporting is conveying the
factual information to the higher authorities for a specific purpose. True
7. Reporting is necessary to
exercise control. True
8. Report is generally in
downward direction from top to bottom. False
9. Communication of
information is a one-way process from top to bottom. False
A) Choose Correct Alternatives:
1. Marginal costing takes
into consideration only……………… expenses.
a) Fixed b) Variable c) Direct d)
Indirect
2. Break-even point is the
point at which there is ……………..
a) No
Profit b)
No Loss c) No Profit No Loss d) All of the above
3. Contribution = ………………….
a) Sales -Variable cost b) Sales - Fixed Cost
c) Sales
- Profit d) Sales -
Purchases
4. Marginal costing shows
the state of ……………. at a given level of activity.
a) Cost b)
Production c) Sales d) Profitability
5. The excess of selling
price over the marginal cost is termed as ……………….
a) Profit b) Loss c) Contribution d) All of the above
6. …………… ratio establishes a
relationship between the contribution and the sales value.
a)
Liquidity b) Solvency c) P/V Ratio d)
Profitability
7. …………. is that factor,
which is the most important one for taking decisions about profitability of a
product.
a) Key Factor b)
Sales c)
Contribution d) All of the
above
8. ……………. is the difference
between actual sales and sales at the break-even point.
a) Break-even
point b) Contribution c) Profit d) Margin of Safety
9. ………….. is the additional
cost of producing an additional unit of product.
a) Marginal cost b)
Fixed Cost c) Production cost d) All of the above
10. In marginal costing
which cost is treated as period costs and charged to costing profit and loss
account of the period in which they are incurred.
a)
Marginal cost b)
Fixed Cost c) Production cost d) All of the above
a)
Help in managerial decisions b)
Cost control
c)
Realistic valuation of stocks d)
All of the above
12. To obtain the break-even point in rupee sales
value, total fixed are divided by………
a) Variable cost per unit b) Contribution margin per
unit
c) Fixed cost per unit d) Profit/volume
ratio
13. CVP analysis is based on several assumption. Which
one of the following is not one of these assumptions.
a) The sales mix of the
products is constant
b) Inventory quantities change
during the year
c) Material prices and labour
rates do not change
d) The behaviour of both sales
and variable cost is linear throughout the relevant range.
14. Which of the following is not an assumption of
break-even analysis.
a) Total fixed cost does not
change b) Total variable
cost does not change
c) General price level does
not change d) Product mix does
not change
15. When sales volume increases
a) Break-even point increases b) Total profit increases
c) Total loss increases d) All of these
16. An increase in fixed cost results in
a) Increase in margin of
safety b) Increase in
profit/volume ratio
c) Increase in break-even
point d) Increase in variable cost
17. When there is no opening or closing stocks, profit
under marginal costing will be
a) Greater than in absorption
costing b) Less than in
absorption costing
c) Equal to absorption costing d)
Greater, lower or equal
18. Product cost under variable costing includes
a) Prime cost only b) Prime cost
and variable overhead
c) Prime cost and fixed
overhead d) Prome cost plus fixed as
well as variable overheads
a) P = S - V- F b) S
– V = F – P
c) F – L = S + V d)
S = V + F - P
B) State True or False:
1. There
is no difference between marginal costing and absorption costing. False
2.
Marginal cost means the amount at any given volume of output by which the
aggregate costs are changed, if the volume of output is increased or decreased
by a unit. True
3.
If contribution is equal to fixed cost there is no profit or loss. True
4.
Under marginal costing cost per unit changes according to volume of production.
False
5.
There can be under or over absorption of overhead in marginal costing. False
6.
Variable costing is more widely used than absorption costing for external
reporting. False
7.
For calculating taxable income marginal costing is acceptable. False
8. Variable
costing show higher profit when production is more than sales. False
9.
When opening stock is more than closing stock, marginal costing shows higher
profit than absorption costing. True
10.
Variable costing is used mainly for internal reporting. True
11.
Selling and distribution costs are treated as period cost under marginal
costing. True
MODULE- III BUDGETARY CONTROL
A) Choose Correct Alternatives:
1. If the period of the
budget is one year or more it is termed as …………… budget.
a) Long term b)
Short Term c) Current d)
Fixed
2. Expenditure incurred to
increase revenue earning capacity is termed as …………. expenditure.
a) Revenue b) Deferred revenue c) Capital d) None of these
3. The budget committee
prepares ………………… budget.
a) Production b) Cash c)
Sales d) Master
4. Budgeting is done mainly
by …………….. management.
a) Lower b) Middle c) Top d)
All of the above
5. …………… is considered as
management instrument of planning, organizing, coordinating and control.
a) Marginal
costing b) Standard costing c)
Budget d) MIS
6. …………..budget is a
forecast of sales in a budgeted period.
a) Production b)
Sales c) Purchase d) Flexible
7. Budgets are classified as
fixed budget and ………… budget
a)
Production b) Sales c) Purchase d) Flexible
8. ………….. budget shows the
position of cash i.e. receipts, payments and cash balance during the budget
period.
a)
Production b) Sales c) Cash d)
Flexible
9. Investment in fixed
assets is a ……………. expenditure.
a)
Revenue b) Deferred
revenue c) Capital d) None of these
10. Of little or no
relevance in evaluating the performance of an activity would be
a)
Flexible budget b)
Fixed budget
c)
Difference between planned and actual d)
Planning and control of future activities
11. A budget that gives a
summary of all the functional budgets and projected profit and loss A/c is
known as
a)
Capital budget b) Flexible budget c) Master budget d) Discretionary budget
12. The difference between a
fixed budget and a flexible budget is that a fixed budget
a)
Includes only fixed costs, and a flexible budget only variable cost
b)
is a budget for a single level of some measures of activity, while a flexible
budget consist of several budgets based on different activity levels.
c)
is concerned with future acquisition of fixed assets, while a flexible budget
is concerned with expenses that vary with sales.
d)
cannot be changed after a fiscal period begins.
13. ………….. is the detailed
planning for the allocation of funds in a business.
a)
Management control system b)
Budgeting
c)
Marginal costing d)
CVP analysis
14. A budget is prepared for a …………
a) Three months b) Six months c) Yea d)
Definite future period
15. ……………… is the analysis of actual performance
against the planned performance so that corrective action may be taken.
a) Budget b) Budgeting c) Budgetary control d) All of the above
16. The act of preparing budgets is called …………….
a) Budget b) Budgeting c) Budgetary control d)
All of the above
17. ……………. Refers to a plan relating to a definite
future period of time expressed in monetary/quantitative terms.
a) Budget b)
Budgeting c) Budgetary control d) All of the above
18. ………….. is a plan of action which is prepared on
the basis of forecast.
a) Budget b) Budgeting c) Budgetary control d)
All of the above
19. Basic objective of budgeting is………………
a) Planning b) Coordination c) Control d)
All of the above
20. …………… is only a tool of management and not a
substitute of management.
a) Budget b)
Budgeting c) Budgetary control d) All of the above
21. Budget committee is generally headed by ……………..
a) Directors b) Shareholders c) Financial controllers d) All of the above
22. ………………. is a statement of budget policies and
procedures.
a) Budget b) Budgeting c) Budgetary
control d)
Budget manual
23. Budget period varies according to ……………
a) Type of budget b) Need of budget
c) Nature of budget d)
All of the above
24. ………………. budget is a plan of production for the
budget period.
a) Production b) Sales c) Purchase d) Flexible
25. ……………. budget is an effective tool of labour cost
control.
a)
Production b) Sales c) Purchase d) Labour
26. ……………. budget is a long-term budget prepared for
five to ten years.
a) Cash b)
Production overhead c) Capital
expenditure d) Master
27. …………… budget is summary of company’s plans that
sets specific targets for sales, production, cash and other functions.
a) Cash b) Production overhead c)
Capital expenditure d)
Master
28. ………… budget is a static
budget that is based on the projected level of output prior to the start of the
period.
a) Cash b) Fixed c)
Flexible d) Master
29. ………………. budget adjusts the
static budget for the actual level of output.
a) Cash b) Fixed c)
Flexible d)
Master
30. …………. Should show the
reasons for variations from budget figures.
a) Budget b) Budgeting c) Budget manual d)
Budget report
B) State True or False:
1. A
master budget is a summary of all functional budgets. True
2.
Fixed budgets are most suited for fixed expenses. True
3.
All functional budgets should be coordinated with the sales budget which is
always prepared first. False
4.
The budget that is prepared first and all other budgets are subordinate to it
is cash budget. False
5. A
system of budgetary control can be used even when standard costing is in use in
a concern. True
6. A
budget is a forecast of future expenditure. False
7.
Principal budget factor is the same as key factor. True
8. A
budget coordinates the activities of various departments. True
9. A
budget center is a part of the organization for which a separate budget is
prepared. True
10.
In a fixed budget, figures are adjusted according to actual level of activity. False
11.
A principal budget factor is one which limits the volume of production. True
12.
Control exercised for execution of budget is termed as budgetary control. True
13.
Budget is an exact science. False
14.
A period covered by the budget is one year or so it is termed as current
budget. False
A) Choose Correct Alternatives:
1. Standard cost is the
…………… cost based on a technical estimate for the elements of cost for a
selected period.
a) Fixed b)
Variable
c) Predetermined d) All of the above
2. ………… cost is compared
with standard cost to determine the variance and the cases thereof.
a) Actual b) Variable
c) Fixed d) All of the
above
3. …………. is the deviation of
actual cost and standard cost.
a) Sales b)
Profit c) Variance d)
All of the above
4. If variance results in
increase in actual profit, it is a …………… variance.
a) Unfavorable b) Favourable
c) Negative d) All of the
above
5. ………………= (Standard price ×
Standard Quantity) – (Actual price × Actual Quantity)
a) Material
Price Variance b) Material
Usage Variance
c) Material
Yield Variance d) Material
Cost Variance
6. ………………is an hypothetical
hour which represents the amount of work which should be performed in one hour
under stated conditions.
a)
Standard cost b) Standard labour c) Standard hour d) Standard price
7. Labour mix variance is a
sub-variance of ………………. Variance.
a)
Labour rate b) labour mix c) Labour cost d) Labour efficiency
8………………. variance arises due
to reasons like change in market price, inefficient purchases.
a)
Material cost b)
Material price c) Material mix d) Material usage
a) Variable overhead cost b) Fixed overhead cost
c)
Fixed overhead volume variance d)
All of the above
10. When standard cost is
more than actual cost it is called a ……………..variance.
a) Favourable b) Unfavorable c)
Negative d) Adverse
11. The most important
purpose of standard costing is………………
a)
Control price b)
Control cost c) Control sales d) Control production
12. ……………. variance arises
only when more than one type of material is used in the manufacture of a
product.
a)
Material cost b) Material price c) Material mix d) Material usage
13. ……………. variance is that
portion of the material cost variance which is due to the difference between
actual quantity consumed and standard quantity specified.
a)
Material cost b) Material price c) Material mix d) Material usage
14. Material price variance
is the responsibility of ……………..
a)
Sales Manager b)
Purchase manager
c)
Human resource manager d)
Production Manager
15. ………… are the
predetermined costs based on past and projected performance.
a) Fixed
cost b) Variable cost c) Standard cost d) Total cost
16. ……………. is best suited to
companies with repetitive production.
a)
Marginal costing b) Variable costing c) Standard costing d) All of the above
17. Use of ……………. Leads to
optimum utilization of men, materials, and other resources.
a)
Marginal costing b) Variable costing c) Standard costing d) All of the above
18. …………… are set for direct
materials, direct labour and overhead costs.
a)
Fixed costs b) Variable costs c) Standard costs d) Total costs
19. Difference between
standard and actual is known as ……………
a)
Difference b)
Variance c) Gap d) Distance
a)
CVP analysis b) Break-even
analysis
c)
Factor analysis d)
Variance analysis
21. ………….. is the difference
between standard cost and actual cost of material.
a) Material cost variance b)
Material price variance
c)
Material mix variance d) Material
usage variance
22. ……………… = Standard cost
of actual output – Actual cost.
a) Material cost variance b)
Material price variance
c)
Material mix variance d) Material
usage variance
23. …………. is the difference
between the standard price specified and the actual price paid.
a)
Material cost variance b)
Material price variance
c)
Material mix variance d) Material
usage variance
24. ……………. = (Standard price
– Actual price)
a)
Material cost variance b)
Material price variance
c)
Material mix variance d) Material
usage variance
25. …………… is that portion of
the material cost variance which is due to the difference between the standard
quantity specified and the actual quantity used.
a)
Material cost variance b) Material
price variance
c)
Material mix variance d)
Material usage variance
26. …………….. = Standard
quantity for actual output – Actual quantity
a)
Material cost variance b) Material
price variance
c)
Material mix variance d)
Material usage variance
27. …………… is that portion of
material usage variance which is due to the difference between standard and
actual composition of materials.
a)
Material cost variance b) Material
price variance
c) Material mix variance d)
Material usage variance
28. ……………= (Revised standard
quantity – Actual quantity)
a)
Material cost variance b) Material
price variance
c) Material mix variance d)
Material usage variance
29.
……………… is that portion of the material usage variance which is due to the
difference between standard yield specified and actual yield obtained.
a)
Material cost variance b)
Material yield variance
c)
Material mix variance d) Material
usage variance
30.
…………….= Actual yield – Standard yield × Standard output price
a)
Material cost variance b)
Material yield variance
c)
Material mix variance d) Material
usage variance
B) State True or False:
1. Standard
costing is a technique of profit planning. False
2.
Labour mix variance is a sub variance of labour rate variance. False
3.
Idle time variance is always unfavorable. True
4. Overhead
volume variance is always favourable. False
5. Overhead
expenditure variance plus overhead efficiency variance is qual to overhead
budget variance for variable overhead. False
6. Calendar
variance arises only in case of fixed overheads. True
7. Gang
composition variance is a sub variance of labour time variance. True
8.
Consumption of high value materials in larger proportion results is adverse
material mix variance. True
9. Revision
variance is the difference between actual cost and revised standard cost. False
Important Short Answer Questions:
Module- I Management Control System
1. State the need of management control system
2. Explain management control process
3. Difference between strategic planning and management control
4. State the types of report
5. Explain the characteristics of good report
Module- II Marginal
Costing and CVP Analysis
1. State the characteristics of marginal costing
2. State the advantages of marginal costing
3. State the disadvantages of marginal costing
4. What is break even analysis? State the uses of break-even analysis?
5. What is profit volume ratio? States its uses
6. What is break even analysis? State the limitations of break-even
analysis?
Module- III Budgetary Control
1. What is budgetary control? State the objectives of budgetary control?
2. What is budgetary control? State the advantages of budgetary control?
3. What is budgetary control? State the Limitations of budgetary control?
4. What is budget? State the types of budgets?
Module- IV Fund Flow Statement
1. What is standard costing? State the advantages of standard costing
2. What is standard costing? State the limitations of standard costing
3. What is variance analysis? State the types of material cost variance
4. What is variance analysis? State the types of labour cost variance
5. What is variance analysis? State the types of overhead cost variance
Comments
Post a Comment