Available Answers

1. 1.

   MULTIPLE CHOICE QUESTIONS.

   1. The term "variable costs" refers to
      1. All costs that are likely to respond to the amount of attention devoted to them by a specific manager.
      2. All costs associated with marketing, shipping, warehousing, and billing activities.
      3. All costs that do not change in total for a given period of time and relevant range but become progressively smaller on a per unit basis as volume increases.
      4. All manufacturing costs incurred to produce units of output.
   2. What consist of indirect material, indirect labour, and indirect expenses?
      1. Labour
      2. Expenses
      3. Overheads
      4. Amount
   3. Overheads are often related to accounting concepts such as fixed cost and _________________ cost.
      1. Direct
      2. Indirect
      3. Primary
      4. Money
   4. Variable cost is a cost that
      1. Changes with the level of output
      2. Remains same at all levels of output
      3. Either (A) or (B)
      4. None of these
   5. Total variable cost per unit increases _________________.
      1. When production grows
      2. When demand decreases
      3. Change in government rules
      4. Change in availability of raw material
   6. 'The product has some value which can be measured in terms of money' it is called
      1. Historical value
      2. Exchange value
      3. Zero value
      4. Positive value
   7. A typical factory overhead cost is _________________.
      1. Audit
      2. Compensation of plant manager
      3. Design distribution
      4. Internal
   8. Overhead refers to
      1. Direct or prime cost
      2. All indirect costs
      3. Only factory indirect costs
      4. Only indirect expenses
   9. In element-wise classification of overheads, which one of the following is not included in?
      1. Fixed overheads
      2. Indirect labour
      3. Indirect materials
      4. Indirect expenditure
   10. Fixed cost is a cost which
       1. Changes in total in proportion to changes in output
       2. Is partly fixed and partly variable in relation to output
       3. Does not change during a given period of time
       4. Remains same for each unit of output
   11. Fixed cost per unit decreases when _________________.
       1. Production volume increases
       2. Production volume decreases
       3. Variable cost per unit decreases
       4. Variable cost per unit increases
   12. _________________ means amount spent on production or to provide services.
       1. Cost
       2. Profit
       3. Revenue
       4. Expenditure
   13. The cost remains same at all levels of output is called _________________ cost.
       1. Variable
       2. Fixed
       3. Flexible
       4. Urgent
   14. Which cost decreases with increase in the volume of output?
       1. Variable cost
       2. Fixed cost
       3. Revenue cost
       4. Smart cost
   15. Which of the following cost is time based?
       1. Fixed cost
       2. Variable cost
       3. Implicit cost
       4. None of these
   16. All indirect expenses are counted under the head of
       1. Overheads
       2. Total cost
       3. Revenue
       4. None of these
   17. It refers to the expenses incurred on those items which are not directly chargeable to production. Salaries of timekeeper, foremen and watchmen are examples of this cost. This cost is incurred for the concern as a whole rather than a particular product.
       1. Direct cost
       2. Indirect cost
       3. Selling cost
       4. Advertising cost
   18. Which definition best describes indirect costs?
       1. Indirect costs are those costs which are not controlled directly by a manager.
       2. Indirect costs are those costs which cannot be directly associated with a product or service.
       3. Indirect costs are always fixed.
       4. Indirect costs are always manufacturing overhead cost
   19. To control costs, it is essential to keep control on:
       1. Prime cost
       2. Overheads
       3. Indirect materials and tools cost
       4. All of these
   20. Wages paid to a labour who was engaged in the production activities can be termed as
       1. Direct cost
       2. Indirect cost
       3. Sunk cost
       4. Implicit cost
   21. Which of the following best describes a fixed cost?
       1. A cost that remains at the same level up to a particular level of output.
       2. The cost changes with levels of output.
       3. A cost that remains at the same level when output increases.
       4. None of these
   22. Which of the following is best suited meaning of overhead?
       1. Overhead is the cost incurred in the course of buying a product, providing a service or running a department, but which cannot be traced directly and in full to the product, service or department.
       2. Overhead is the cost incurred in the course of making a product, providing a service or running a department, but which cannot be traced directly and in full to the product, service or department.
       3. Overhead is the cost incurred in the course of selling a product, providing a service or running a department, but which cannot be traced directly and in full to the product, service or department.
       4. Overhead is the cost incurred in the course of advertising a product, providing a service or running a department, but which cannot be traced directly and in full to the product, service or department.
   23. Amount spent to purchase a machinery is the example of _________________ cost.
       1. Variable
       2. Fixed
       3. Prime
       4. None of these
   24. Which of the following is overhead cost?
       1. Amount spent on raw material
       2. Salary of the finishing cost centre supervisor
       3. Wages paid to labour
       4. None of these
   25. Variable cost per unit increases when
       1. Volume of production decreases
       2. Volume of production increases
       3. Cost of raw material decreases
       4. Tax decreases
   26. An example of a production overhead would be
       1. Material
       2. Rent
       3. Labour cost
       4. Supervisory cost
   27. A cost that is easily traceable to a cost object is known as
       1. Direct cost
       2. Indirect cost
       3. Variable cost
       4. Fixed cost
   28. Overhead is actually the total of
       1. Indirect materials
       2. Indirect expenses
       3. Indirect labour
       4. All of these
   29. Fixed cost is a cost which remains same at
       1. All levels of output
       2. Even zero level of output
       3. Both (A) and (B)
       4. Neither (A) nor (B)
   30. Direct cost increases when
       1. Sales price of product increases
       2. Cost of raw material increases
       3. Tax increases
       4. Subsidy increases
   31. Cost means:
       1. Revenue paid for something
       2. Price paid for something
       3. To generate expenses
       4. Depreciation earned
2. 2.

   Abnormal costs are not recorded as part of production cost. Justify for or against.
3. 3.

   Give one difference between money cost and real cost.
4. 4.

   Distinguish betwen implicit costs and explicit costs.
5. 5.

   "Some costs are semi-variable in nature." Comment.
6. 6.

   Give one difference between normal cost and abnormal cost.