1. An example of an inventoriable cost would be:
a) Shipping fees
b) Advertising flyers
c) Sales commissions
d) Direct materials
2. Direct materials cost is Rs. 80,000. Direct labor cost is Rs. 60,000. Factory overhead is Rs. 90,000. Beginning goods in process were Rs. 15,000. The cost of goods manufactured is Rs. 245,000. What is the cost assigned to the ending goods in process?
a) Rs. 45,000
b) Rs. 15,000
c) Rs. 30,000
d) There will be no ending Inventory
3. The FIFO inventory costing method (when using under perpetual inventory system) assumes that the cost of the earliest units purchased is allocated in which of the following ways?
a) First to be allocated to the ending inventory
b) Last to be allocated to the cost of goods sold
c) Last to be allocated to the ending inventory
d) First to be allocated to the cost of good sold
4. Heavenly Interiors had beginning merchandise inventory of Rs. 75,000. It made purchases of Rs. 160,000 and recorded sales of Rs. 220,000 during November. Its estimated gross profit on sales was 30%. On November 30, the store was destroyed by fire. What was the value of the merchandise inventory loss?
a) Rs. 154,000
b) Rs. 160,000
c) Rs. 235,000
d) Rs. 81,000
5. Inventory control aims at:
a) Achieving optimization
b) Ensuring against market fluctuations
c) Acceptable customer service at low capital investment
d) Discounts allowed in bulk purchase
6. Which of the following is a factor that should be taken into account for fixing re-order level?
a) Average consumption
b) Economic Order Quantity
c) Emergency lead time
d) Danger level
7. 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
8. Grumpy & Dopey Ltd estimated that during the year 75,000 machine hours would be used and it has been using an overhead absorption rate of Rs. 6.40 per machine hour in its machining department. During the year the overhead expenditure amounted to Rs. 472,560 and 72,600 machine hours were used.
Which one of the following statements is correct?
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
9. A business always absorbs its overheads on labor hours. In the 8th period, 18,000 hours were worked, actual overheads were Rs. 279,000 and there was Rs. 36,000 over-absorption. The overhead absorption rate per hours was:
a) Rs. 15.50
b) Rs. 17.50
c) Rs. 18.00
d) Rs. 13.50
10. 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