1. Which of the following is a factor that should betaken into account for fixing re-order level?
a) Average consumption
b) Economic Order Quantity
c) Emergency lead time
d) Danger level
2. EOQ is a point where:
a) Ordering cost is equal to carrying cost
b) Ordering cost is higher than carrying cost
c) Ordering cost is lesser than the carrying cost
d) Total cost should be maximum
3. Grumpy & Dopey Ltd estimated that during the year75,000 machine hours would be used and it has been using anoverhead absorption rate of Rs. 6.40 per machine hour in itsmachining department. During the year the overhead expenditureamounted to Rs. 472,560 and 72,600 machine hours wereused.
Which one of the following statements iscorrect?
a) Overhead was under-absorbed by Rs.7,440
b) Overhead was under-absorbed by Rs.7,920
c) Overhead was over-absorbed by Rs.7,440
d) Overhead was over-absorbed by Rs.7,920
4. A business always absorbs its overheads on laborhours. In the 8th period, 18,000 hours were worked, actualoverheads were Rs. 279,000 and there was Rs. 36,000over-absorption. The overhead absorption rate per hours was:
a) Rs. 15.50
b) Rs. 17.50
c) Rs. 18.00
d) Rs. 13.50
5. The main purpose of cost accounting is to:
a) Maximize profits
b) Help in inventory valuation
c) Provide information to management for decision making
d) Aid in the fixation of selling price