1) I. Cost accounting is a subset of Management Acctg. II. Cost accounting and management accounting can be used interchangeably. a) Both statements are true. b) Both statements are false. c) Only statement I is true. d) Only statement II is true. 2) I. Financial accounting format is established by local law, by IAS and IFRS. II. Management accounting format is entirely based on IAS only. a) Both statements are false. b) Both statements are true. c) Only statement I is false. d) Only statement II is false. 3) Which of the following are direct materials?  a) Primary packaging b) Wages of workers making the product c) Oil for machinery d) Cost of wood for a chair e) Office costs f) Safety gear for laboratory workers 4) Which of the following are factory overheads? a) OT basic pay of direct workers b) OT premium pay of direct workers in the factory c) Basic pay of indirect workers in the factory d) Rent for factory building e) Salaries of delivery personnel f) Insurance for plant and machinery 5) I. Bonus and idle time pay are indirect costs. II. Administration overheads include depreciation of office equipment, salaries of secretaries, fuel for machinery.  a) Only statement I is true. b) Only statement is true. c) Both statements are true. d) Both statements are false. 6) Which costs are variable? a) Paint and sandpaper for tables b) Salary of supervisor c) Total machine operator's wages, computed based on labour hours d) Workers' salaries on piece-rate basis e) Woods used for tables f) Insurance for factory machinery 7) This method attaches a value to each issue of materials or goods from stores, using the most recent cost prices first. a) FIFO b) LIFO c) AVCO d) Specific identification e) none of these 8) The total of all direct costs. a) Product cost b) Conversion cost c) Prime cost d) Inventoriable cost 9) Margin of safety is calculated by deducting break-even sales from budgeted or actual sales. a) True b) False c) Maybe 10) The lowest level that a stock should fall to before the new order from the supplier is delivered. a) Reorder level b) Minimum stock level c) Danger level d) Buffer stock 11) The process by which whole cost items are charged directly to the cost unit or cost centre is known as ___. a) Apportionment b) Allocation c) Re-apportionment d) Repeated distribution 12) Which of the following costs are apportioned based on floor area? a) depreciation of equipment b) heat and light c) depreciation of buildings d) rent 13) Which costs are apportioned based on number of employees? a) depreciation of buildings b) rent c) personnel office d) canteen costs 14) Direcct materials + direct labour + direct expenses = ___. a) Production cost b) Conversion cost c) Product cost d) Prime cost 15) In this reapportionment method, some inter-service department work is recognised. a) reciprocal method b) direct method c) repeated distribution method d) step-down method 16) In this reapportionment method, all inter-service department work are ignored. a) reciprocal method b) direct method c) step-down method d) algebraic method 17) In accounting for labour, piecework is also called: a) payment by results b) time rate with bonus c) output-related pay d) time rate e) high day rate f) bonus 18) The reorder level is calculated by multiplying the normal lead time with the maximum usage. a) True b) False c) cannot be determined 19) Reapportionment is done before allocation and apportionment. a) True b) False c) cannot be determined 20) To calculate the break-even points in units, simply divide total fixed cost by the contribution margin ratio. a) True b) False c) cannot be determined 21) The margin of safety ratio is calculated by dividing margin of safety in units by___ then multiply by 100. a) break-even in units b) budgeted units c) cm ratio d) cm per unit e) selling price per unit f) none of these 22) An increase in the vc per unit will also increase the cm per unit. a) False b) True c) cannot be determined 23) Another way of calculating margin of safety in total BD would be to multiply the margin of safety in units by ___. a) cm per unit b) vc per unit c) selling price per unit d) none of these 24) At break-even point, total contribution margin in BD would be equal to ___. a) total fixed cost b) margin of safety c) total variable cost d) none of these 25) The insurance of equipment is apportioned among cost centres based on ___. a) Re-sale value of equipment b) Floor area c) Cost or NBV of equipment d) Number of employees using the equipment

Theory exercise Intro - OH

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