Management Financial And Cost Accounting MCQs With Answers

Costing is used in transport undertakings to determine the cost of providing services. This involves analyzing various factors such as fuel costs, maintenance expenses, labor costs, and other overheads associated with running a transportation service. By accurately calculating the cost of providing services, transport undertakings can set appropriate pricing strategies, make informed decisions regarding resource allocation, and ensure profitability. Therefore, costing is an essential tool for transport undertakings to effectively manage their operations and offer competitive services to customers.

Rent for building is an example of a fixed cost because it remains constant regardless of the level of production or sales. Fixed costs are expenses that do not vary with the quantity of goods or services produced. In the case of rent for a building, the cost remains the same whether the business produces 100 units or 1000 units. This makes it a fixed cost that the business must pay regularly to maintain the use of the building for its operations.

Depreciation of plant can be apportioned on the basis of plant value because the value of a plant is directly related to its useful life and the amount of wear and tear it undergoes. By allocating depreciation based on plant value, it ensures that the depreciation expense is distributed in proportion to the value of each plant, reflecting the actual usage and deterioration of the assets over time. This method is commonly used to accurately reflect the depreciation of plant assets in financial statements.

The correct answer is Rs.501,200. The materials debited to the Contract A/c can be calculated by subtracting the materials returned to the store from the materials direct to the site and then adding the materials received from the store. Therefore, Rs.4,40,000 - Rs.20,000 + Rs.81,200 = Rs.501,200.

EOQ stands for Economic Order Quantity. This is a commonly used inventory management formula that calculates the optimal quantity of goods to be ordered in order to minimize total inventory costs. It takes into account factors such as demand, ordering costs, and holding costs to determine the most cost-effective order quantity. By using EOQ, businesses can ensure that they maintain an optimal level of inventory while minimizing costs associated with ordering and holding inventory.

The correct answer is Stores department. A bin card is a document used to track the quantity of inventory items in a specific location, such as a bin or shelf. It is maintained by the Stores department, as they are responsible for managing and monitoring the inventory levels in the store or warehouse. The bin card helps the Stores department keep track of stock movements, update inventory records, and ensure efficient stock management.

The profit to be taken to the P&L account can be estimated by multiplying the notional profit by the percentage of work certified received in cash. In this case, 75% of the work certified is received in cash. Therefore, the profit to be taken to the P&L account would be 75% of Rs.30,000, which is Rs.22,500. However, since only 2/3 of the contract is complete, we need to further calculate 2/3 of Rs.22,500. This equals Rs.15,000. Therefore, the estimated profit to be taken to the P&L account is Rs.20,000.

The correct answer is "Notional profit." Notional profit refers to the profit that is calculated based on the difference between the value of work-in-progress certified and the cost of such work-in-progress certified. It is a theoretical or hypothetical profit that is recognized before the completion of the project. This term is commonly used in construction contracts or projects where the value of work completed is measured and certified at different stages. It helps in assessing the profitability of the project and making financial projections.

Material requisition is a process used to request and obtain materials from the stores. It is not related to the purchase or sale of materials, but rather the internal supply of materials within an organization. When materials are needed for a specific task or project, a material requisition is submitted to the stores department, which then supplies the requested materials. This ensures that the necessary materials are available for use in various operations and helps maintain an efficient workflow within the organization.

Farm costing is the correct answer because it refers to the cost calculation method used in farming activities. It helps in determining the per unit and total cost of various farming activities such as cultivation, harvesting, irrigation, and maintenance. Farm costing takes into account all the expenses incurred in the farm operations, including labor, machinery, seeds, fertilizers, and other inputs. By accurately calculating the costs, farmers can make informed decisions regarding pricing, budgeting, and profitability analysis.

The number of workers employed is used as a basis for the apportionment of canteen expenses. This means that the cost of running the canteen is divided among the workers based on the number of employees. This method ensures that each worker pays their fair share of the canteen expenses, as the cost is distributed proportionally.

The correct answer is Rs.30,000. This is because the factory cost includes both the prime cost and the factory overheads. Therefore, the factory overheads would be equal to the prime cost, which is Rs.30,000.