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Cost & Management Accounting V4

Assignment A
1. Batla Ltd. is currently preparing its cash budget for the year to 31 March 20
14. An extract from its sales budget for the same year shows the following sales
values. Rs
March 60,000
April 70,000
May 55,000
June 65,000
40% of its sales are expected to be for cash. Of its credit sales, 70% are expec
ted to pay in month after sale and take a 2% discount. 27% are expected to pay i
n the second month after the sale, and the remaining 3% are expected to be bad d
ebts. The value of sales budget to be shown in the cash budget for May 2013 woul
d be how much?
2. A company manufactures 5,000 units of a product per month. The cost of placin
g an order is 100. Purchase price of the raw material is 10 per kg. Average cons
umption of raw material is 275 kgs. per week. The carrying cost of inventory is
20% per annum. Calculate economic order quantity?
3. What is a cost plus contract ? What are its disadvantages?
4. What remedial measures would you suggest to minimize the labour turnover?
5. Explain ABC analysis and Economic Order Quantity (EOQ) techniques of inventor
y control?
6. Why the flexible budgets are considered superior to the fixed budgets?
7. Distinguish between job costing and contract costing ?
Assignment B

Case Study
Accounting Adds Up to a Challenging and Rewarding Career
What factor do many of the nation s top CEOs, government leaders and most influent
ial business advisers have in common? Many of them launched their careers with a
degree in accounting. That s right accounting.
The popular stereotype of the accountant is the solitary bean counter who quietly
works behind the scenes recording financial transactions and balancing the books
. The reality is that accountants are on the front lines helping businesses succ
eed, keeping cities and states running, and protecting the financial health and
security of organizations and individuals.
Accountants are responsible for maintaining an organization s financial records an
d protecting its assets which requires strict adherence to accounting rules, tax
codes and regulations as well as the ability to analyze data, question assumpti
ons and resolve discrepancies. In addition to being comfortable working with num
bers, accountants must be good with words; they must be able to read business do
cuments critically and make compelling presentations. Given the sensitive nature
of the financial information being handled, personal integrity, honesty and the
highest standard of ethics are essential.
The accounting profession offers a variety of career paths. Many accountants wor
k within public accounting firms, which can range from large, multinational firm
s to local accounting practices. Within the firm, accountants can specialize in
areas such as audit, tax and management consulting as well as serve a range of i
ndustries and clients. On the corporate side, careers are available in businesse
s of all sizes, working in areas including financial accounting and reporting, f
inancial management and information systems. Accountants, especially those certi
fied in Forensic Accounting, are also in demand at the FBI and the Treasury Depa
rtment where they work with investigators to track down accounting fraud.
Pursuing a college degree in accounting requires a strong personal commitment, p
ersistence, and hard work. All states require students to complete 150 credit ho
urs to obtain a state license for the CPA, which is 30 hours more than the usual
four-year bachelor s degree.
Q1. What s the issue in the case?
Q2. What are the responsibilities of accountants?
Q3. What are the essentials to become a good accountant?

Assignment C

Question No. 1: ABC technique refers to .. based costing.

a. Average
b. Abnormal
c. Activity
d. Absorption
Question No. 2: The fixed cost which cannot be avoided during the temporary clos
ure of a plant is known as cost.
a. Closure
b. Shutdown
c. Break down
d. Stoppage
Question No. 3: Any factor that causes a change in the cost of an activity or ou
tput. For example, the quality of parts received by an activity, or the degree o
f complexity of tax returns to be reviewed.
a. Cost Absorption
b. Cost Verification
c. Cost allocation
d. Cost Driver
Question No. 4: The cost which varies with the level of production is called .. Cost.
a. Moving
b. unstable
c. Variable
d. Fixed
Question No. 5: Profit centres whose expenditure are reported on a marginal cost
basis, are called .. centres.
a. Contributors
b. Average
c. Deposit
d. Subsidised
Question No. 6: ICWA stands for The Institute of Cost and .. Accountants.
a. Waste
b. Works
c. Weightage
d. Weblink
Question No. 7: It is the process of absorbing the overhead costs (indirect cost
s)allocated to or apportioned over a particular cost centre.
a. Cost Consumprion
b. Cost Absorption
c. Cost Verification
d. Cost allocation
Question No. 8: . cost represents the indirect cost which is incurred for seeking to c
reate and stimulate demand and securing orders.
a. Buying
b. Procurement
c. Selling
d. Opportunity Cost
Question No. 9: It is the cost incurred for converting the raw material into fin
ished product
a. Average
b. Deposit
c. Subsidised
d. Conversion
Question No. 10: Sales minus total cost is called . .
a. Margin
b. Profit
c. Contribution
d. EBIT
Question No. 11: They have the capacity of contributing to the production of the
revenue in the future.
a. Cost Absorption
b. Cost Verification
c. Unexpired Cost
d. Conversion Cost
Question No. 12: Any segment or element for which cost information is desired is
known as . Object.
a. Cost
b. Margin
c. Profit
d. Contribution
Question No. 13: Committed resources or Resources that generate cost based on th
e amount acquired rather than the amount used such as Buildings and equipment ar
e termed as .. Related resource.
a. Goodwill
b. Capacity
c. Asset
d. Production
Question No. 14: .. Products are a sub-category of joint products that have relative
ly insignificant sales values as a proportion of the value of the entire group f
rom which they are derived.
a. Associated
b. Sub
c. By
d. Subsidised
Question No. 15: Cost of an activity that is required or performed each time a b
atch of products or services is produced is called . Level cost.
a. Original
b. Net
c. Unit
d. Batch
Question No. 16: The cost of testing and inspecting both the materials and finis
hed products is . Cost.
a. Marginal
b. Appraisal
c. Appreciation
d. Unit
Question No. 17: Cost of one more item, unit or customer.
a. Appraisal
b. Appreciation
c. Unit
d. Incremental
Question No. 18: Can be increased or decreased at the discretion of the decision
maker.
a. Appraisal
b. Appreciation
c. Unit
d. Discretionary
Question No. 19: After making deductions.
a. Net
b. Gross
c. Actual
d. Factual
Question No. 20: Unstated and unrecorded cost is also called . Cost.
a. Explicit
b. Implicit
c. Unit
d. Incremental
Question No. 21: Combination of budgeted profit and loss account, cash flow stat
ement and balance sheet, created from detailed budgets brought together within a
finance plan is . Budget.
a. Actual
b. Master
c. Real
d. Combined
Question No. 22: Investment projects that are competing for scarce resources, wh
ere choosing one eliminates another.
a. Explicit
b. Mutually Inclusive
c. Mutually Exclusive
d. Implicit
Question No. 23: FIFO stands for First in out.
a. First
b. Fast
c. Foremost
d. Feasible
Question No. 24: One which is not capable of being regulated by a manager within
a defined boundary of responsibility, although it may be a cost incurred so tha
t the responsibility may be exercised.
a. Controllable
b. Adjustable
c. Fixed
d. Non-controllable
Question No. 25: The cost difference expected if one course of action is adopted
instead of others is called . Cost.
a. Differential
b. Common
c. Unit
d. Motivated
Question No. 26: In the month of January, 300 labour hours were worked for a tot
al cost of Rs 4800. The variable overhead expenditure variance was Rs 600 (A). O
verheads are assumed to be related to direct labour hours of active working. Wha
t was the standard cost per labour hour?
a. 14
b. 16
c. 18
d. 34
Question No. 27: An activity, output, or item whose cost is to be measured.
a. Cost Budgeting
b. Cost Audit
c. Cost Suspension
d. Cost Object
Question No. 28: It is a fixed cost which results from decisions of prior period
and is not subject to managerial control in the present.
a. Absolute
b. Absorption
c. Administratrive
d. Committed
Question No. 29: A liability that is expected to be repaid within a short period
of time say 9 or 12 months.
a. Capital Liability
b. Net Liability
c. Current Liability
d. Fixed Liability
Question No. 30: The way of describing and analysing the sequence of activities
that bring on product/service from initial stage of production to final stage of
delivery.
a. Task determination
b. Rationing
c. Value Chain
d. budgeting
Question No. 31: .. Cost is associated with an activity that would not be incurred i
f the activity were not performed.
a. Rejected
b. Accepted
c. Avoidable
d. Suspended
Question No. 32: activity is performed each time a product is produced.
a. Marginal
b. Unit
c. Fixed
d. Variable
Question No. 33: It is the indirect cost pertaining to the administrative functi
on which involves formulation of policies, directing the organisation and contro
lling the operations of an undertaking is . Cost.
a. Abnormal
b. Absolute
c. Absorption
d. Administratrive
Question No. 34: The sales of a business or other form of revenue from operation
s of the business.
a. Profit
b. Contribution
c. Turnover
d. Margin
Question No. 35: Any materials that have no value.
a. Waste
b. Junk
c. Both
d. None
Question No. 36: An agenda, layout, blue print or a plan setting out the actions
and resources needed to achieve a stated objective of the long-term plan.
a. Consideration
b. Strategy
c. Thinktank
d. Planning
Question No. 37: It is the total cost of any product or process. For e.g.: in a
costsheet, both absolute cost and cost per unit are depicted.
a. Average
b. Abnormal
c. Absolute
d. Absorption
Question No. 38: A fixed cost which increases in steps over a period of several
years.
a. Absolute
b. Absorption Cost
c. Budgeted
d. Step Cost
Question No. 39: The amount of work achievable, at standard efficiency levels, i
n one hour.
a. Standard Hour
b. Non-Standard Hour
c. Fixed Hour
d. Incremental Hour
Question No. 40: Those future costs which will be affected by a decision to be t
aken are .. Costs.
a. Relevant
b. Irrelevant
c. Incremental
d. Judgemental
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