Costing MCQ Questions and Solutions with Explanations

81

Match the following.

List-I	List-II
a. Leverage ratio	1. Short-term solvency
b. Liquidity ratio	2. Earning capacity
c. Turnover ratio	3. Relationship between debt and equity
d. Profitability ratio	4. Efficiency of asset management

A) a-2, b-1, c-4, d-3 B) a-3, b-2, c-1, d-4 C) a-4, b-3, c-1, d-2 D) a-3, b-1, c-4, d-2

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Answer & Solution

Answer: Option D

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82

Service costing is used in industries producing . . . . . . . .

A) products B) service C) Both A and B D) None of these

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Answer & Solution

Answer: Option B

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83

A company buys 8000 units of an item for its annual requirement. Each unit costs Rs. 10, the ordering cost per order is Rs. 30 and the carrying cost is 7.5% of the average inventory per year. The economic order quantity will be

A) 566 units B) 800 units C) 2530 units D) 900 units

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Answer & Solution

Answer: Option B

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84

Calendar Ratio =

A) $$\frac{{{\text{Number of actual working days in a period}}}}{{{\text{Number of working days in the budget period}}}} \times 100$$ B) $$\frac{{{\text{Actual hours worked}}}}{{{\text{Budgeted hours}}}} \times 100$$ C) $$\frac{{{\text{Standard hours for actual production}}}}{{{\text{Actual hours worked}}}} \times 100$$ D) $$\frac{{{\text{Standard hours for actual production}}}}{{{\text{Budgeted standard hours}}}} \times 100$$

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Answer & Solution

Answer: Option A

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85

Inventory turnover ratio is known as:

A) Cash ratio B) Cost ratio C) Stock velocity D) Profit ratio

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Answer & Solution

Answer: Option C

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86

Life cycle costing

A) is sometimes used as a basis for cost planning and product pricing B) includes only manufacturing costs incurred over the life of the product C) includes only manufacturing cost, selling expenses and distribution expense D) emphasises cost savings opportunities during the manufacturing cycle

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Answer & Solution

Answer: Option A

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87

Contribution less fixed cost is

A) Profit B) Sales C) Price D) MOS

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Answer & Solution

Answer: Option A

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88

If the prime cost is Rs. 50,000 and factory cost will Rs. 70,000 and office overhead is 50% of factory overhead, then the production cost will be

A) 155,000 B) 105,000 C) 85,000 D) 80,000

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Answer & Solution

Answer: Option D

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89

. . . . . . . . determines the priorities of functional budget.

A) Principal Budget Factor B) Limiting Factor C) Both A and B D) None of the above

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Answer & Solution

Answer: Option C

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90

When actual loss is less than the estimated loss, the difference between the two is considered to be . . . . . . . .

A) abnormal gain B) abnormal loss C) normal loss D) income

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Answer & Solution

Answer: Option A

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Costing MCQ Questions and Solutions with Explanations | Commerce