MCQ Bank
Which of the given is correct for “sales volume profit variance”?
- A) (Actual unit sold +budgeted nits sold) X (Standard profit per unit)
- B) (Actual unit sold +budgeted nits sold) / Standard profit per unit
- C) (Actual unit sold –budgeted nits sold) X (Standard profit per unit
- D) (Actual unit sold –budgeted nits sold) / Standard profit per unit
Which of the given formula is used to calculate activity ratio?
- A) None of the given options
- B) Standard hours produced ÷ Budgeted labor hours
- C) Standard hours produced ÷ Actual labor hours worked
- D) Actual labor hours worked ÷ Budgeted labor hours
Which of the following would be considered as Relevant Cost?
- A) Depreciation expense of existing machinery
- B) Historical cost of plant & machinery
- C) Book value of existing machinery
- D) The current disposal price of existing machinery
Which of the following is not a source of production cost variance?
- A) Prediction Error
- B) Errors in accumulating cost data
- C) Error in accumulating sales data
- D) Planning Error
According to informative analyst, Mr. Joel, which of the following is the source of production cost variance?
- A) None of the given options
- B) Operating error
- C) Cost control
- D) Cost reduction
Following information has been extracted from the Books of ABC Company.
Actual cost incurred Rs. 39,000; Budget based on actual activity Rs. 38,000 and Standard Cost of actual output Rs. 39,500.
Required: Identify Efficiency Variance with the help of provided information.
- A) Rs. 1,500 adverse
- B) Rs. 1,000 adverse
- C) Rs. 1,000 favorable
- D) Rs. 1,500 favorable
…………………………. in measuring the actual cost of operating a process.
- A) A measurement deviation
- B) An implementation Deviation
- C) A standard deviation
- D) A prediction deviation
Budgeted sales= 1,500 units
Budgeted price= 62 Rs. Per unit
Revised price= 70 Rs. Per unit
Selling price planning variance= ?
- A) Rs. 15,000 Favorable
- B) Rs. 15,000 Adverse
- C) Rs. 12,000 Adverse
- D) Rs. 12,000 Favorable
Mr. A distributes leather products in local market and his transportation cost is of Rs. 7 per Kilometer to deliver product by using taxi. He is considering two alternatives i.e. motor cycle which cost of Rs. 84,000 or small Car which costs for Rs. 300,000 on expansion of sales area.
Required: By considering the given information which alternative; Mr. A should consider if he has to travel 20,000 km Per annum.
- A) Local transport: Taxi
- B) Alternative 2: Small car
- C) Alternative 1: Motor cycle
- D) More information is required to find answer
Actual labor hours= 18,000
Standard labor hours= 16,500
Standard labor rate= 12 Rs. Per hour
Actual labor rate= 10 Rs. Per hour
Labor efficiency variance= ?
- A) Rs. 15,000 Adverse
- B) Rs. 15,000 Favorable
- C) Rs. 18,000 Favorable
- D) Rs. 18,000 Adverse
Which of the following cost is NOT relevant for decision making?
- A) Overtime wages to manufacture the product
- B) Opportunity cost
- C) Incremental cost
- D) Sunk cost
Which of the following is NOT feature of a relevant cost?
- A) It affects the future cash flows
- B) It affects the future cost
- C) It causes an increment in cost
- D) It is a sunk cost
Which of the given is correct for “variable overhead efficiency variance”?
- A) (Absorbed variable overhead) – (Standard variable overhead at actual output)
- B) (Absorbed variable overhead) + (Standard variable overhead at actual output)
- C) (Absorbed variable overhead) – (Standard variable overhead at budgeted output)
- D) (Absorbed variable overhead) + (Standard variable overhead at budgeted output)
Which of the given formula is used to calculate efficiency ratio?
- A) Standard hours produced ÷ Budgeted labor hours
- B) None of the given options
- C) Standard hours produced ÷ Actual labor hours worked
- D) Actual labor hours worked ÷ Budgeted labor hours
Manufacturing cost of a company= Rs.12,00,000
Increase in manufacturing cost due to expansion= 35%
Required: What is differential cost in this case?
- A) Rs.420,000
- B) Rs.840,000
- C) Rs.700,000
- D) Rs.350,000
Current manufacturing cost of “Product- A” for Royal Alma Mater is Rs.400, 000 but its manufacturing cost is increased by 30% due to expansion of business operations.
Identify the amount of differential or incremental cost on the basis of provided data.
- A) Required more information to find differential amount
- B) Rs. 520,000
- C) Rs. 280,000
- D) Rs. 120,000
Absorbed variable overhead= Rs. 360,000
Standard variable overhead= Rs. 300,000
Budgeted factory overhead= Rs. 11,60,000
Actual factory overhead= Rs. 12,00,000
Variable overhead efficiency variance= ?
- A) Rs. 40,000 Favorable
- B) Rs. 60,000 Adverse
- C) Rs. 40,000 Adverse
- D) Rs. 60,000 Favorable
Which step can be taken to improve traditional variance analysis?
- A) by investigating variance which justify on cost and benefit criteria
- B) by calculating operating variance
- C) by calculating planning variance
- D) All of the given options
Which of the following is not an advantage of “to manufacture” a component over “to manufacture a component provided that cost of import and cost of manufacturing are the same?
- A) Expansion improve the job opportunity
- B) Burden on production supervisor
- C) Saving in foreign exchange
- D) Saving time and trouble of arranging import license
Identify Sales Volume Profit Variance if actual units sold and budgeted units sold are 45,000 units and 55,000 units respectively. Actual sales price per unit standard, profit per unit and standard sales price per unit are Rs. 215, Rs. 39 and Rs. 205 respectively.
- A) Rs. 390,000 favorable
- B) Rs. 390,000 adverse
- C) Rs. 450,000 favorable
- D) Rs. 450,000 adverse