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management cost accounting
Cost Accounting 1st Edition K. Alex - Solutions
Explain briefly the procedure of preparing a sales budget.
What are budget ratios?
Discuss the objectives and limitations of budgets.
Discuss the different types of budgets.
Define budget and describe two important budgets.
Operational efficiency is promoted by(a) Cash budget (b) Sales budget(c) Labour budget (d) ZBB
Budgets prepared mainly on past performance and actual cost is known as(a) Conventional budget (b) Long-term budget(c) Short-term budget (d) Sales budget Ans: (a)
Budgets prepared for a period of less than a year is known as(a) Long-term budget (b) Short-term budget(c) Current budget (d) Basic budget Ans: (b)
An example of long-term budget is(a) Capital expenditure budget (b) Research and development budget(c) Both (a) and (b) (d) Cash budget Ans: (b)
Shortcomings of the traditional budget is rectified by(a) Sales budget (b) Labour budget(c) Performance budget (d) Production budget Ans: (c)
Purchase budget is dependent on(a) Production budget (b) Material requirement budget(c) Both (a) and (b) (d) Sales budget Ans: (b)
The chief executive prepares(a) Production budget (b) Sales budget(c) Capital expenditure budget (d) Material budget Ans: (c)
Cash budget is prepared by(a) Sales manager (b) Finance manager(c) Accountant (d) Supervisor
A written document that guides the executive in preparing budgets is termed as(a) Budget manual (b) Cost sheet(c) Variance analysis (d) Statement of profit Ans: (a)
ZBB overcomes the weakness of(a) Cost accounting (b) Financial accounting(c) Management accounting (d) Conventional budgeting Ans: (d)
A fixed budget is useful only when the actual level of activity corresponds to the budgeted level of activity.
Estimate of the sales given in the sales budget is mere guesswork.
For control purposes, long-term budget should be prepared.
The budget relating to the key factor should be prepared last.
Limiting factor is a major constraint on all the operational activities of an organization.
Budgetary control system does not suit small businesses.
A budget manual is a summary of all the functional budgets.
Budgets are blueprints for action.
Budgets are drawn up by the chief accountant.
A budget is nothing but an estimate.
From the following budgeted and actual figures, calculate the variances on sales margin basis:Budget Sales—2,000 units at Rs 15 each Rs 30,000 Cost of sales at Rs 12 each Rs 24,000 Profit Rs 6,000 Actual:Sales—1,900 units at Rs 14 each Rs 26,600 Cost of sales at Rs 10 each Rs 19,000 Profit Rs
The following table shows the budgeted and actual sales for a certain period. Compute (a) price,(b) volume and (c) mix variance of sales from the following data:Product Budget Actual Units Price per unit (Rs) Units Price per unit (Rs)A 3,000 30 3,500 35 B 2,000 20 2,400 25 C 1,000 10 500 5 6,000
From the following data, calculate (a) sales price variance, (b) sales volume variance and (c) sales mix variance:Product Standard Actual Units Price per unit Units Price per unit A 1,500 Rs 30 2,000 Rs 29 B 1,000 Rs 50 700 Rs 50
From the following particulars, calculate (a) SVV, (b) SPV and (c) Sales volume variance. The budgeted and actual sales for a period in respect of two products are as follows:Product Budgeted quantity (units) Price (Rs)Actual quantity(units) Price (Rs)A 1,000 20 1,300 21 B 2,000 15 2,300 14 3,000
The sales manager of a company engaged in the manufacture and sale of three products P, Q and R gives the following information for the month of October 1994:Product Budget sales units sold Selling price per unit Standard contribution margin per unit P 2,000 Rs 12 Rs 6 Q 2,000 Rs 8 Rs 4 R 2,000 Rs
Actual overhead: Rs 1,800 Budgeted overhead: Rs 2,000 Budgeted period: 4,000 labour hours Standard per unit: 10 labour hours Budgeted number of days: 20 Standard overhead per hour: Re 0.50 Actual number of days: 22 Actual hours: 4,300 Actual production: 425 units Calculate (a) expenditure variance,
A manufacturer operating a standard costing system has the following data for a month:Standard Actual Number of working days 25 27 Manhours per month 5,000 5,400 Output in units 500 525 Fixed overheads (Rs) 2,500 2,400 Calculate fixed overhead variances for the month.
Calculate overhead variances from the following data:Standard Actual Fixed overheads (Rs) 8,000 8,500 Variable overheads (Rs) 12,000 11,200 Output in units 4,000 3,800
From the aforementioned data, calculate overhead variances such as (i) overhead cost variance,(ii) overhead efficiency variance, (iii) overhead capacity variance and (iv) overhead calendar variance.Items Budget Actual Number of working days 20 22 Manhours per day 8,000 8,400 Output per manhour in
A factory has estimated its overheads for a year at Rs 96,000. The factory runs for 300 days in a year; it works 8 hours a day. The total budgeted production for the year is 24,000 articles. Actual data are also given as follows for the month of April 1994:Actual overhead Rs 8,500 Output 2,100
Following data are available from a record of a factory:Standard labour rate Rs 2 per hour Standard hours 2 per unit Actual labour rate Rs 2.25 per hour Actual units produced 1,000 units Actual hours worked 1,950 hours Calculate labour variances.
A gang of workers normally consist of 30 men, 15 women and 10 boys. They are paid at standard hourly rates as follows:Re Men 0.80 Women 0.60 Boys 0.40 In a normal working week of 40 hours, the gang is expected to produce 2,000 units of output. During the week ending on 31 December 1997, the gang
Calculate variances from the standard for a particular month as disclosed from the following figures:Standard In a particular month Number of workers employed 600 550 Average wages per worker per month Rs 250 Rs 264 Number of working days in a month 25 24 Output in units 30,000 28,000
In a factory section, there are 80 workers and the average rate of wages per worker is Re 0.50 per hour.Standard working hours per week are 45 hours and the standard performance is 6 units per hour. During the four weeks of February, wages paid for 40 workers were Re 0.50 per hour, for 15 workers
Data relating to a job are as follows:Standard rate of wages per hour Rs 10 Standard hours 300 Actual rate of wages per hour Rs 12 Actual hours 200 You are required to calculate: (i) LCV, (ii) LRV and (iii) LEV.
Calculate LCVs for the following information:Standard hours: 40 at Rs 3 per hour Actual hours: 50 at Rs 4 per hour
From the particulars given, calculate the following material variances and give their relationships:(1) MCV, (2) MUV, , (3) MPV, (4) MMV and (5) material sub-usage variance Material Standard Actual Quantity(kg)Price(Rs)Quantity(kg)Price(Rs)A 10 8 10 7 B 8 6 9 7 Material Standard Actual Quantity
Calculate MPV, MUV and MCV from the following information:Quantity of materials purchased 3,000 units Value of materials purchased Rs 14,000 SQ of material required per tonne of finished product 20 units SP of material Rs 5 per unit Opening stock of materials 100 units Closing stock of materials
Gemini Industries provide the following information from their records: For making 10 kg of GEMCO, the standard requirement is as follows:Quantity (kg) Rate per kilogram (Rs)Material A 8 6.00 Material B 4 4.00 During April, 100 kg of GEMCO were produced. The actual consumption of material is as
The cost accountant’s records, however, reveal that 16,000 kg of material costing Rs 52,000 were used for producing 3,000 units of product A. Calculate the variances.
The standard material required to manufacture one unit of product A is 5 kg and the SP per kilogram of material is Rs
From the following data, calculate MUV:Standard: 10 kg at Rs 4 per kilogram Actual: 12 kg at Rs 4.50 per kilogram
Given that the cost standard for materials consumption is 40 kg at Rs 10 per kilogram, compute the variances when actuals are 48 kg at Rs 12 per kilogram.
From the following data, calculate MPV, MUV and MMV:Raw material Standard Actual A 40 units at Rs 50 per unit 50 units at Rs 50 per units B 60 units at Rs 40 per unit 60 units at Rs 45 per unit
Explain the factors to be kept in mind while determining overhead variance.
Explain the importance of sales variance.
Discuss the possibility of always having variances as favourable.
Discuss the factors involved in setting a standard for a product.
What are the limitations of standard costing?
Distinguish between ideal standard and normal standard.
What is RSQ? When does it arise?
What is variance? When is it called favourable and when is it called unfavourable?
Variance analysis is an integral part of standard costing. Explain.
What is standard costing and how is it different from budgetary control?
Material usage variance = material mix variance +(a) Cost variance (b) Labour variance(c) MYV (d) Fixed cost
The deviation of actual cost or profit or sales from standard cost is known as(a) Labour variance (b) Variance(c) Material variance (d) Cost variance
Standard cost of labour - actual cost of labour =(a) Total cost variance (b) Total labour cost(c) Total material cost (d) Idle time variance
Management by exception is exercising control over(a) Favourable items (b) Unfavourable items(c) Standard times (d) Standard profit
Standard costing was developed because of the limitation of(a) Job costing (b) Marginal costing(c) Labour costing (d) Historical costing
LCV is the difference between standard cost of labour and(a) Variable cost (b) Fixed cost(c) Actual cost of labour (d) Marginal cost of labour
The technique of standard costing may not be applicable in the case of(a) Large concerns (b) Small concerns(c) Transport (d) Education
Standard costing is more widely applied in(a) Process industries (b) Engineering industries(c) Both (a) and (b) (d) None of the above
Idle time variance = idle time ×(a) Standard rate (b) Actual rate(c) Predetermined rate (d) Loss
Standard cost is a(a) Predetermined cost (b) Variable cost(c) Fixed cost (d) Profit
A set of standards provides yardsticks against which actual costs are compared.
Three types of standards are current, basic and normal.
Standard costing is widely applied in process industries.
Standard cost is a historical cost.
Yield variance shows the efficiency of labour.
Standards do not allow any wastage.
Variance means the difference between budget and standard costs.
Standards for material labour and overheads are interconnected.
Standards are arrived at on the basis of past performance.
Standards are fixed for each industry by trade unions.
What are the different applications of marginal costing?
What information does the break-even chart give?
How is break-even chart prepared?
Discuss the role of contribution in marginal costing.
What are the other names of marginal costing?
What do you understand by the term break-even analysis?
Discuss the following terms:(a) BEP (b) Margin of safety(c) Key factor (d) P/V ratio
What is contribution?
Define marginal costing. Discuss its usefulness.
From the following information, calculate (a) P/V ratio, (b) BEP and (c) margin of safety:Rs Total sales 3,60,000 Selling price per unit 100 Variable cost per unit 50 Fixed costs 1,00,000 If the selling price is reduced to Rs 90, by how much is the margin of safety reduced?
From the following data, calculate (a) BEP (in units). (b) If sales are 10% and 15% above the breakeven volume, determine the net profit.Selling price per unit = Rs 10 Direct material per unit = Rs 3 Fixed overheads = Rs 10,000 Variable overhead per unit = Rs 2 Direct labour cost per unit = Rs 2
From the following details, find(a) P/V ratio(b) Break-even sales(c) Margin of safety Sales Rs 1,00,000 Total cost Rs 80,000 Fixed cost Rs 20,000 Net profit Rs 20,000
From the following information find (a) BEP and (b) margin of safety:Rs Total fixed costs 1,80,000 Total variable cost 3,00,000 Selling price is Rs 6 per unit, number of units sold 2,00,000
Calculate the BEP from the following:(a) Sales price = Rs 10 per unit(b) Variable cost = Rs 6 per unit(c) Fixed overheads = Rs 20,000 Calculate the revised BEP if (i) Sales price is increased to Rs 11 per unit (ii) Sales price is reduced to Rs 9 per unit (iii) Variable cost is increased to Rs 7 per
From the following information, find P/V ratio and margin of safety:Rs Sales 10,00,000 Variable cost 4,00,000 Fixed cost 4,00,000
From the following data, find out BEP and break-even sales. If selling price is reduced to Rs 18 per unit, what will be the new BEP and new break-even sales?Budgeted output = 1,00,000 units Fixed expenses = Rs 5,00,000 Variable expenses = Rs 10 per unit Selling price = Rs 20 per unit
From the following data, calculate BEP expressed in terms of units and also the new BEP if selling price is reduced by 10%:Fixed expenses:Depreciation Rs 1,00,000 Salaries Rs 1,00,000 Variable expenses:Materials Rs 3 per unit Labour Rs 2 per unit Selling price Rs 10 per unit
The details of cost per unit at an activity level of 10,000 units of a product are as follows:Rs Raw materials 10 Direct expenses 8 Labour charges 2 Variable overheads 4 Fixed overheads 6 Total cost per unit 30 Rs Profit per unit 2 Selling price per unit 32
In break-even chart, x-axis represents(a) Sales or volume of production (b) Profit(c) Loss (d) Soundness of business
Contribution =(a) Fixed cost − loss (b) Profit + variable cost(c) Sales − fixed cost − profit (d) None of the above Ans: (a)
Margin of safety is the difference between(a) Planned sales and planned profit (b) Actual sales and break-even sales(c) Planned sales and actual sales (d) None of the above Ans: (b)
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