Cost and Managerial Accounting
1. Batla Ltd. is currently preparing its cash budget for the year to 31 March 2014. An extract from its sales budget for the same year shows the following sales values.
Rs
March 60,000
April 70,000
May 55,000
June 65,000
40% of its sales are expected to be for cash. Of its credit sales, 70% are expected to pay in month after sale and take a 2% discount. 27% are expected to pay in the second month after the sale, and the remaining 3% are expected to be bad debts. The value of sales budget to be shown in the cash budget for May 2013 would be how much?
2. A company manufactures 5,000 units of a product per month. The cost of placing an order is 100. Purchase price of the raw material is 10 per kg. Average consumption of raw material is 275 kgs. Per week. The carrying cost of inventory is 20% per annum. Calculate economic order quantity?
3. What is a ‘cost plus contract’? What are its disadvantages?
4. What remedial measures would you suggest to minimize the labour turnover?
5. Explain ABC analysis and Economic Order Quantity (EOQ) techniques of inventory control?
6. Why the flexible budgets are considered superior to the fixed budgets?
7. Distinguish between ‘job costing’ and ‘contract costing’?
Assignment B
Case Detail:
Accounting Adds Up to a Challenging and Rewarding Career
What factor do many of the nation’s top CEOs, government leaders and most influential business advisers have in common? Many of them launched their careers with a degree in accounting. That’s right - accounting.
The popular stereotype of the accountant is the solitary “bean counter” who quietly works behind the scenes recording financial transactions and balancing the books. The reality is that accountants are on the front lines helping businesses succeed, keeping cities and states running, and protecting the financial health and security of organizations and individuals.
Accountants are responsible for maintaining an organization’s financial records and protecting its assets which requires strict adherence to accounting rules, tax codes and regulations as well as the ability to analyze data, question assumptions and resolve discrepancies. In addition to being comfortable working with numbers, accountants must be good with words; they must be able to read business documents critically and make compelling presentations. Given the sensitive nature of the financial information being handled, personal integrity, honesty and the highest standard of ethics are essential.
The accounting profession offers a variety of career paths. Many accountants work within public accounting firms, which can range from large, multinational firms to local accounting practices. Within the firm, accountants can specialize in areas such as audit, tax and management consulting as well as serve a range of industries and clients. On the corporate side, careers are available in businesses of all sizes, working in areas including financial accounting and reporting, financial management and information systems. Accountants, especially those certified in Forensic Accounting, are also in demand at the FBI and the Treasury Department where they work with investigators to track down accounting fraud.
Pursuing a college degree in accounting requires a strong personal commitment, persistence, and hard work. All states require students to complete 150 credit hours to obtain a state license for the CPA, which is 30 hours more than the usual four-year bachelor’s degree.
Question
1. What’s the issue in the case?
2. What are the responsibilities of accountants?
3. What are the essentials to become a good accountant?
Assignment C
Question No. 1 Marks - 10
ABC technique refers to ………….. based costing.
Options
- Average
- Abnormal
- Activity
- Absorption
Question No. 2 Marks - 10
The fixed cost which cannot be avoided during the temporary closure of a plant is known as …………… cost.
Options
Closure
Shutdown
Break down
Stoppage
Question No. 3 Marks - 10
Any factor that causes a change in the cost of an activity or output. Forexample, the quality of parts received by an activity, or the degree of complexity of tax returns to be reviewed.
Options
- Cost Absorption
- Cost Verification
- Cost allocation
- Cost Driver
Question No. 4 Marks - 10
The cost which varies with the level of production is called …………….. Cost.
Options
Moving
unstable
Variable
Fixed
Question No. 5 Marks - 10
Profit centres whose expenditure are reported on amarginal cost basis, are called ……………….. centres.
Options
- Contributors
- Average
- Deposit
- Subsidised
Question No. 6 Marks - 10
ICWA stands for The Institute of Cost and …………….. Accountants.
Options
- Waste
- Works
- Weightage
- Weblink
Question No. 7 Marks - 10
It is the process of absorbing the overhead costs (indirect costs)allocated to or apportioned over a particular cost centre.
Options
- Cost Consumprion
- Cost Absorption
- Cost Verification
- Cost allocation
Question No. 8 Marks - 10
………………. cost represents the indirect cost which is incurred for seekingto create and stimulate demand and securing orders.
Options
- Buying
- Procurement
- Selling
- Opportunity Cost
Question No. 9 Marks - 10
It is the cost incurred for converting the raw material into finished product
Options
- Average
- Deposit
- Subsidised
- Conversion
Question No. 10 Marks - 10
Sales minus total cost is called ………………. .
Options
- Margin
- Profit
- Contribution
- EBIT
Question No. 11 Marks - 10
They have the capacity of contributing to the production of therevenue in the future.
Options
- Cost Absorption
- Cost Verification
- Unexpired Cost
- Conversion Cost
Question No. 12 Marks - 10
Any segment or element for which cost information is desired is known as ……………. Object.
Options
- Cost
- Margin
- Profit
- Contribution
Question No. 13 Marks - 10
Committed resources or Resources that generate cost based on the amount acquired rather than the amount used such as Buildings and equipment are termed as ………….. Related resource.
Options
- Goodwill
- Capacity
- Asset
- Production
Question No. 14 Marks - 10
………….. Products are a sub-category of joint products that have relatively insignificant sales values as a proportion of the value of the entire group from which they are derived.
Options
- Associated
- Sub
- By
- Subsidised
Question No. 15 Marks - 10
Cost of an activity that is required or performed each time a batch of products or services is produced is called ……………. Level cost.
Options
- Original
- Net
- Unit
- Batch
Question No. 16 Marks - 10
The cost of testing and inspecting both the materials and finished products is ………………. Cost.
Options
- Marginal
- Appraisal
- Appreciation
- Unit
Question No. 17 Marks - 10
Cost of one more item, unit or customer.
Options
- Appraisal
- Appreciation
- Unit
- Incremental
Question No. 18 Marks - 10
Can be increased or decreased at the discretion of the decision maker.
Options
- Appraisal
- Appreciation
- Unit
- Discretionary
Question No. 19 Marks - 10
After making deductions.
Options
- Net
- Gross
- Actual
- Factual
Question No. 20 Marks - 10
Unstated and unrecorded cost is also called ………………. Cost.
Options
- Explicit
- Implicit
- Unit
- Incremental
Question No. 21 Marks - 10
Combination of budgeted profit and loss account, cash flow statement and balance sheet, created from detailed budgets brought together within a finance plan is ………………. Budget.
Options
- Actual
- Master
- Real
- Combined
Question No. 22 Marks - 10
Investment projects that are competing for scarce resources, where choosing one eliminates another.
Options
- Explicit
- Mutually Inclusive
- Mutually Exclusive
- Implicit
Question No. 23 Marks - 10
FIFO stands for First in ………… out.
Options
- First
- Fast
- Foremost
- Feasible
Question No. 24 Marks - 10
One which is not capable of being regulated by a manager within a defined boundary of responsibility, although it may be a cost incurred so that the responsibility may be exercised.
Options
- Controllable
- Adjustable
- Fixed
- Non-controllable
Question No. 25 Marks - 10
The cost difference expected if one course of action is adopted instead of others is called ……. Cost.
Options
- Differential
- Common
- Unit
- Motivated
Question No. 26 Marks - 10
In the month of January, 300 labour hours were worked for a total cost of Rs 4800. The variable overhead expenditure variance was Rs 600 (A). Overheads are assumed to be related to direct labour hours of active working. What was the standard cost per labour hour?
Options
- 14
- 16
- 18
- 34
Question No. 27 Marks - 10
An activity, output, or item whose cost is to be measured.
Options
- Cost Budgeting
- Cost Audit
- Cost Suspension
- Cost Object
Question No. 28 Marks - 10
It is a fixed cost which results from decisions of prior period andis not subject to managerial control in the present.
Options
- Absolute
- Absorption
- Administratrive
- Committed
Question No. 29 Marks - 10
A liability that is expected to be repaid within a short period of time say 9 or 12 months.
Options
- Capital Liability
- Net Liability
- Current Liability
- Fixed Liability
Question No. 30 Marks - 10
The way of describing and analysing the sequence of activities that bring on product/service from initial stage of production to final stage of delivery.
Options
- Task determination
- Rationing
- Value Chain
- budgeting
Question No. 31 Marks - 10
………….. Cost is associated with an activity that would not be incurred if the activity were not performed.
Options
- Rejected
- Accepted
- Avoidable
- Suspended
Question No. 32 Marks - 10
…………… activity is performed each time a product is produced.
Options
- Marginal
- Unit
- Fixed
- Variable
Question No. 33 Marks - 10
It is the indirect cost pertaining to the administrative function which involves formulation of policies, directing the organisation and controlling the operations of an undertaking is …………. Cost.
Options
- Abnormal
- Absolute
- Absorption
- Administratrive
Question No. 34 Marks - 10
The sales of a business or other form of revenue from operations of the business.
Options
- Profit
- Contribution
- Turnover
- Margin
Question No. 35 Marks - 10
Any materials that have no value.
Options
- Waste
- Junk
- Both
- None
Question No. 36 Marks - 10
An agenda, layout, blue print or a plan setting out the actions and resources needed to achieve a stated objective of the long-term plan.
Options
- Consideration
- Strategy
- Thinktank
- Planning
Question No. 37 Marks - 10
It is the total cost of any product or process. For e.g.: in a costsheet, both absolute cost and cost per unit are depicted.
Options
- Average
- Abnormal
- Absolute
- Absorption
Question No. 38 Marks - 10
A fixed cost which increases in steps over a period of several years.
Options
- Absolute
- Absorption Cost
- Budgeted
- Step Cost
Question No. 39 Marks - 10
The amount of work achievable, at standard efficiency levels, in one hour.
Options
- Standard Hour
- Non-Standard Hour
- Fixed Hour
- Incremental Hour
Question No. 40 Marks - 10
Those future costs which will be affected by a decision to be taken are ………….. Costs.
Options
- Relevant
- Irrelevant
- Incremental
- Judgemental