Costing MCQs

Question 1

The margin of safety may be defined as

Accepted Answer

the difference between planned sales and break-even point sales

Answer

the point at which break-even point sales are achieved

Answer

the excess of planned sales over the current actual sales

Answer

the extent to which sales revenue exceeds fixed costs

Question 2

. . . . . . . . is a budget which is updated continuously by adding a further period (a month/quarter) and deducting a corresponding earlier period.

Accepted Answer

Both A and B

Answer

Rolling budget

Answer

Continuous budget

Answer

Annual budget

Question 3

Which of the following is not an activity listed in the statement of cash flows?

Accepted Answer

Funding activities

Answer

Financing activities

Answer

Operating activities

Answer

Investing activities

Question 4

EOQ is computed by:

Accepted Answer

$$\sqrt {\frac{{2D{C_0}}}{{Ci}}} $$

Answer

$$\frac{{2D}}{{Ci}}$$

Answer

$$\frac{{Ci}}{{100}}$$

Answer

$$\frac{D}{{100}}$$

Question 5

Maintenance charges are in the nature of . . . . . . . . expenses.

Accepted Answer

Semi-variable

Answer

Fixed

Answer

Variable

Answer

None of these

Question 6

When is the net present value negative,

Accepted Answer

the present value of cash outflows is greater than the present value of cash inflows

Answer

the present value of cash outflows is greater than the future value of cash outflows

Answer

the future value of cash inflows is greater than the present value of cash outflows

Answer

the present value of cash inflows is greater than the present value of cash outflows

Question 7

The use of LIFO method is suitable when prices are:

Accepted Answer

Rising

Answer

Falling

Answer

Constant

Answer

In all of the above conditions

Question 8

Match the following. List-I List-II a. Marginal cost 1. . . . . . . . . = Contribution ÷ Sales b. P/V ratio 2. Contribution = Selling price - . . . . . . . . c. Profit 3. . . . . . . . . = Sales (1 - P/V ratio) d. Variable costs 4. Margin of safety = . . . . . . . . ÷ P/V ratio

Accepted Answer

a-2, b-1, c-4, d-3

Answer

a-4, b-3, c-2, d-1

Answer

a-3, b-1, c-4, d-2

Answer

a-2, b-3, c-4, d-1

Question 9

Assertion (A) Cash flow statement as per the financial statements as well is incapable in revealing the overall financial position of a firm. Reason (R) Cash is an important constituent of the working capital based on the recorded facts only.

Accepted Answer

Both (A) and (R) are true and (R) is the correct explanation of (A)

Answer

(A) is true, but (R) is not true

Answer

(A) is not true, but (R) is true

Answer

Both (A) and (R) are false