Deck 6: Budgeting and Costing

Question 1

The most important budget having primary importance is called

A)Sales budget
B)Cash budget
C)Master budget
D)Fixed budget

Answer 1

Sales budget

Question 2

……………..is a forecast of the total output of the whole organization

A)Sales budget
B)Production budget
C)Master budget
D)Material budget

Answer 2

Production budget

Question 3

……………..budget provides information about the materials to be acquired from the market

A)Material budget
B)Production budget
C)Cash budget
D)Purchase budget

Answer 3

Purchase budget

Question 4

……………..budget gives different budgeted cost for different levels of activity

A)Flexible budget
B)Fixed budget
C)Master budget
D)Production budget

Question 5

In contract costing payment of cash to the contractor is made on the basis of

A)Estimated work
B)Standard work
C)Certified work
D)Uncertified work

Question 6

In job costing each job is a ……………..to which all cost are assigned

A)Profit unit
B)Cost unit
C)Expenses
D)Variable

Question 7

In contract costing credit is taken only for a part of the profit on

A)Incomplete contract
B)Complete contract
C)Estimated contract
D)Initial contract

Question 8

If the contract is almost complete, the amount of profit generally transferred to profit and loss account is equal to

A)Estimated profit*(Contract price/Work certified)
B)National profit*(Cash Received/Work certified)
C)Estimated profit*(Work certified/Contract price)
D)Work certified*(Contract price/Estimated price)

Question 9

Job costing can be done in conjunction with

A)Standard costing
B)Process costing
C)Multiple costing
D)Marginal costing

Question 10

In contract costing most of the items of cost are

A)Direct
B)Indirect
C)Variable
D)Semivariable

Question 11

When the completion stage of a contract is less than ¼ of the total expenditure on the contract is transferred to

A)Profit & Loss account
B)Work certified account
C)Work in progress account
D)Contract account

Question 12

Contract testing is a basic method of

A)Specific costing
B)Specific order costing
C)Economic batch costing
D)Economic order costing

Question 13

At break even point, the

A)Fixed cost equal to the total sales value
B)Variable cost equal to the total sales value
C)Total cost equal to the total sales value
D)Variable cost equal to fixed cost

Question 14

At break even point, the contribution equal to

A)Fixed cost
B)Variable cost
C)Total cost
D)Zero

Question 15

Break even chart depicts

A)Cost volume profit relationship
B)Relationship between fixed and variable cost only
C)Relationship between price and quantity demanded
D)Relationship between price and quantity supplied

Question 16

Period costs means

A)Variable cost
B)Fixed cost
C)Prime cost
D)Direct cost

Question 17

The valuation of stock, in marginal costing, as compared to absorption costing is

A)Higher
B)Lower
C)Same
D)Difficult to say

Question 18

Contribution margin is also known as

A)Gross profit
B)Net profit
C)Earning before interest and tax
D)Marginal income

Question 19

Contribution is the difference in

A)Sales and fixed cost
B)Sales and variable cost
C)Sales and total cost
D)Variable cost and fixed cost

Question 20

Contribution is the sum of

A)Fixed cost and profit
B)Variable cost and profit
C)Total cost and profit
D)Factory cost and profit

Question 21

The angle formed at the intersection of sales line and variable cost line is called

A)Angle of incidence
B)Acute angle
C)Loss area
D)Profit area

Question 22

Profit-volume ratio is a relationship between

A)Profit earned to sales volume
B)Target profit to target sales volume
C)Contribution to sales
D)All of the above

Question 23

During the boom period, the profits of a firm will increase at a much faster rate whose P/V ratio is,

A)Very high
B)Moderate
C)Low
D)Very low

Question 24

During the recession period, the profits of a firm will decrease at a much slower rate whose P/V ratio is,

A)Very high
B)Moderate
C)Low
D)Very low

Question 25

When variable cost per unit increases break even point ……………….

A)Increase
B)Decreases
C)Does not change
D)Difficult to say