COST OF CAPITAL PRACTICE TEST {TOTAL MARKS=50}

*NOTE-IT'S COMPULSORY TO ATTEMPT ALL THE QUESTIONS FROM SECTION-A

*READ ALL THE QUESTIONS CAREFULLY AND GIVE ANSWERS

*QUESTION PAPER READING TIME-10 MINUTES TOTAL TIME FOR TEST IS 1HOUR 40MINUTES

*WISHING YOU BEST OF LUCK FOR YOUR TEST.

SECTION-A {2*10=20MARKS}

*MCQS

Q1.Which of the following statements are true about standard costing & budgetary control?

(A) The budgetary control at inances, production and sales is almost a necessity for best use of Standard Costing

(B) Standard costing can be applied to each concern whereas budgetary control is limited to manufacturing concerns

(C) Both a and b

(D) None of the above

Q2. Which of the following statements are not true?

A) In standard costing standards relies on technical assessment whereas budgetary targets are based on past actual
adjusted to future trend.

B) The scope of standard costing is much wider than budgetary control.

C) Budgetary control demands functional coordination whereas it is not the case with standard costing.

D) Standard costing prescribes a monetary limit which cannot be crossed.

(A) A and B

(B) B and D

(C) C and D

(D) A and C

Q3. Which of the following statements are not true?

A) Standard costs are of forward nature while historical costs are actual in nature.

B) Historical costs are useful for control purposes while standard costs are not.

C) Standard cost is an important tool for measurement of operational ef iciency while historical costs are not related
to operational ef iciency.

D) Standard costs are not reasonably attainable ideal costs.

(A) A and B

(B) B and C

(C) A and C

(D) B and D
Q4. To establish an effective system of standard costing it is essential that

A) The technical process of operation should be prone to planning

B) The cost of the products should be given

C) The process or operating costs of products should be provided

D) The standard costing should be consistent with the technical procedure of the production of the speci ic entity

(A)A, B and C

(B)A, C and D

(C)B, C and D

(D)D, C and A

Q5. Which of the following statements are not true about normal standards?

(A) Normal Standards are meant to smooth out luctuations caused by cyclical and seasonal changes

(B) Normal Standards can be applied for absorption of overheads for a long period of time

(C) In establishing normal standards, allowance is given to normal fatigue and breaks, and normal waste and scrap

(D) None of the above

Q6.Sequence the following activities in the process of standard costing.

A. Establishing standard costs

B. Measurement of actual costs.

C. Identifying variances and causes of variance

D. Disposing the variances to cost and pro it centers

E. Comparision of actual and standard costs

Choose the correct answer from the options given below:

(A). A,B,E,C and D

(B). A,B,C,D and E

(C). A,B,E,D and C

(D). A,B,D,C and E

Q7. Read the following passage carefully and answer the question.

XYZ Ltd. funrnished you with the following information:

Budget Actual (in a particular month)

No. of working days 25 27

Production (in units) 20,000 22,000

Fixed overhead (in Rupees) 30,000 31,000

Budgeted overhead rate is Rs. 1 per unit. In a particular month the actual hours worked were 31,500.Find the capacity
variance for the month from the information given in the passage.
(A). Rs. 1,000 (Favourable)

(B). Rs. 900 (Adverse)

(C). Rs. 1,500 (Favourable)

(D). Rs.1,000 (Adverse)

Q8. Product A requires 10 kg of material. at the rate of Rs. 5 per kg. The actual consumption of material for the
manufacturing of product A comes to 12 kg of material at the rate of Rs. 6 per kg. Direct material cost variance is

(A). R 22 (favourable)

(B). Rs. 22 (unfavourable)

(C). Rs. 12 (favourable)

(D). Rs. 12 (unfavourable)

Q9. Answer the correct material usage variance from the information given below:

Standard material cost for manufacturing 1000 units of an output is 400 kgs of material at Rs. 2.50 per kg. When 2000
units are produced, it is found that actual consumption was of 825 kgs material st for manufa at a price of Rs. 2.70 per
kg.:

(A). Re 650 Favourable

(B). Rs. 67.50 Adverse

(C). Rs. 62.50 Favourable

(D). Rs. 62.50 Adverse

Q10. As per the information given below, what is the correct material yield variance?

Standard input = 100 kg

Standard yield

of output Rs. 20

Actual input = 200 kg

Actual yield 182 kg

Actual cost per kg of output = Rs. 19

(A). Rs 40 (Favourable)

(B). Rs 400 (Favourable)

(C). Rs 400 (Unfavourable)

(D). Rs 38 (Favourable)
 SECTION-B {5*6=30}

*NOTE- ATTEMT ANY 6 QUESTIONS FROM THIS SECTION

*EACH QUESTION CONTAIN 5 MARKS

*NUMERICALS

Q1. alculate Material Price Variance and Material Usage Variance:

Standard (1 FG) Actual (1 FG)

Kg Rate Amount Kg Rate Amount

5,000 20 1,00,000

After analysing, it was found that out of 25,000 unit, 5,000 units were purchased as an emergency order at higher rate
@ 20

Q2. Using the information provided, calculate:

*Material cost variance

*Material price variance

*Material usage variance

A summary of the information needed to complete this task is given as follows:

*Quantity of material purchased = 3,000 units

*Value of material purchased = $9,000

*Standard quantity of material required per tonn of output = 30 units

*Standard rate of material = $2.50 per unit

*Opening stock of materials = Nil

*Closing stock of material = 500 units

*Output during the period = 80 tons

Q3. Calculate different labor cost variances from the following data, which cover the month of January 2024.

Budgeted Data Actual Data

Production (units) 1,000 1,200

Units Produced (per hr.) 8 6

Rate of Wages (per hr.) $8 $10

Hrs. of Unbudgeted Holidays - 15

Idle Time (hrs.) 5 8

Q4.A manufacturing concern, which has adopted standard costing, furnished the following information:

Standard Material for 70 kg inished product: 100 kg.

Price of materials: Re. 1 per kg.

Material used: 2,80,000 kg.

Cost of material: Rs. 2,52,000.

Calculate:

(a) Material Usage Variance (b) Material Price Variance (c) Material Cost Variance

Q5. The standard mix to produce one unit of product is as follows:

Material A 60 units @ Rs. 15 per unit = Rs. 9,00

Material B 80 units @ Rs. 20 per unit = Rs. 1,600

Material C 100 units @ Rs. 25 per unit = Rs. 2,500

240 units Rs. 5,000

During the month of April, 10 units were actually produced and consumption was

as follows:

Material A 640 units @ Rs. 17.50 per unit = Rs. 11,200

Material B 950 units @ Rs. 18.00 per unit = Rs. 17,100

Material C 870 units @ Rs. 27.50 per unit =Rs. 23,925

2,460 units Rs. 52,225

Calculate all material variances.