Paper/Subject Code: 85602/Cost Accounting - IV
TYBAF SEM-6:
Cost Accounting
(Objective Questions with Solutions)
Course: TYBAF
Semester : VI
Subject : Cost Accounting
University : University of Mumbai
Exam : Objective Questions with Solutions
Introduction
This article provides the TYBAF Semester 6 Cost Accounting question paper for the Objective Questions with Solutions examination along with detailed solutions. The solutions are explained step-by-step to help students understand the method used to solve each problem and prepare for their university examination.
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1) QP April 2019 with Solution
2) QP November 2019 with Solution
3) QP April 2013 with Solution
4) QP November 2023 with Solution
5) QP April 2024 with Solution
6) QP November 2024 with Solution
7) QP April 2025 with Solution
8) Objective Question with Solution
9) Most IMP Write a Short Notes
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NOTE:
1- All questions are compulsory.
2- Figures to the right indicate marks.
3- Working notes are forming part of your answers
April 2019
Q.1A) State whether the statements are True or False (Rewrite the sentence) Any eight (08)
1) Sales budget can be prepared only area wise
Ans: False
2) Purchase Budget can be determined only in quantity
Ans: False
3) Absorption costing and Marginal costing are same
Ans: False
4) Effect of price reduction always improves profit volume ratio
Ans: False
5) Under Marginal Costing stocks are over valued
Ans: False
6) Variable cost per unit remains constant at all level of activity
Ans: True
7) Imputed cost is also known as Notional cost
Ans: True
8) Margin of Safety determines profit of the Organization
Ans: True
9) Increase in Profit Volume ratio decreases Break Even Point
Ans: True
10) Cash Budget determines budgeted receipts and payments
Ans: True
B) Match the Following Any seven: (07)
Column A | Column B |
1) Key factor | A) Non cash item |
2) Marginal Cost | B) Gang composition |
3) Sale Mix | C) In quantity |
4) Budgetary Control | D) Part of Material usage variance |
5) Standard Costing | E) Fixed and variable overheads |
6) Flexible Budget | F) Predetermined |
7) Material yield variance | G) Budget Manual |
8) Production budget | H) Multiple products |
9) Labour mix variance | I) Prime cost + variable overheads |
10) Depreciation | J) Limiting factor |
Ans:
Column A | Column B |
1) Key factor | J) Limiting factor |
2) Marginal Cost | I) Prime cost + variable overheads |
3) Sale Mix | H) Multiple products |
4) Budgetary Control | G) Budget Manual |
5) Standard Costing | F) Predetermined |
6) Flexible Budget | E) Fixed and variable overheads |
7) Material yield variance | D) Part of Material usage variance |
8) Production budget | C) In quantity |
9) Labour mix variance | B) Gang composition |
10) Depreciation | A) Non cash item |
November 2019
Q.1) a Choose the correct alternative and rewrite the complete statement (any 8): (08)
1. In the long run, all costs are __________.
a) Fixed.
b) Semi-variable.
c) Variable
d) Standard
2. As the units manufactured decreases, variable cost per unit __________.
a) Remains constant.
b) Decreases.
c) Increase
d) Reduce to half
3. At BEP, both profit and loss is ________.
a) Positive.
b) Profit exceeds loss.
c) Negative
d) Zero
4. Contribution is ___________.
a. Sales - variable cost
b. Sales - profit
c) Fixed cost - Profit.
d) Fixed cost + variable cost.
5. The profit volume ratio will be reduced by ___________.
a. Increasing the selling price per unit
b. Increasing the sales and Fixed cost with equal amount
c. Reducing the variable cost
d. Increasing variable cost.
6. If company uses only one type of material then following Variance cannot be found ___________.
a) Material Cost Variance
b) Material Usages Variance
c) Material Price Variance
d) Material Yield Variance
7. ___________ is the principle tools of planning and control offered to management by accounting functions.
a. Budget
b. Income Statement
c) Balance Sheet
d) Cost Sheet
8. ___________ costing technique is based on the assumption that all costs can be divided into variable costs and fixed costs clearly.
a) Standard
b) Uniform
c) Marginal
d) Contract
9. __________ factor is defined as the factor in the activities of an organization which, at a particular point of time or over a period, will limit the volume of output.
a) Sales
b) Purchase
c) Key
d) BEP
10. __________ decision arises when a firm is selling multiple products.
a) Make or buy
b) Sales mix
c) Plant shut down
d) Exploring new markets.
Q1 B) Match the Following Any seven: (07)
1. Material Price Variance | A. Graphical presentation |
2. Absorption costing | B. Cost per unit decreases with increase in output |
3. Sales volume Variance | c. Responsibility centre |
4. Idle time | D. Direct cost |
5. Budget manual | E. Functional |
6. Sales budget | F. Implementation of budgetary control |
7. Raw material | G. unfavorable |
8. Performance budgeting | H. Difference between actual quantity sold and standard quantity of sales |
9. Fixed Cost | I. Fixed and variable cost charged to the product |
10 Break even chart | J. Change in price |
Ans:
1. Material Price Variance | J. Change in price |
2. Absorption costing | I. Fixed and variable cost charged to the product |
3. Sales volume Variance | H. Difference between actual quantity sold and standard quantity of sales |
4. Idle time | G. unfavorable |
5. Budget manual | F. Implementation of budgetary control |
6. Sales budget | E. Functional |
7. Raw material | D. Direct cost |
8. Performance budgeting | C. Responsibility centre |
9. Fixed Cost | B. Cost per unit decreases with increase in output |
10 Break even chart | A. Graphical presentation |
April 2023
Q.1 A) Match the Column (Any 8): (08)
Column A | Column B |
1) Master Budget | A) Always Unfavorable |
2) Limiting Factor | B) Variable Cost |
3) BEP | C) Based on Marginal Cost |
4) Sales Budget | D) Limiting Factor |
5) Minimum Price | E) Decrease in BEP |
6) Increase in Selling Price | F) Equal to Marginal Costing |
7) Key Factor | G) Estimate of sales |
8) Make or Buy | H) No Profit, No loss stage |
9) Marginal Cost | I) Constraint |
10) Idle Time Variance | J) Summary of all functional budget |
Ans:
Column A | Column B |
1) Master Budget | J) Summary of all functional budget |
2) Limiting Factor | I) Constraint |
3) BEP | H) No Profit, No loss stage |
4) Sales Budget | G) Estimate of sales |
5) Minimum Price | C) Based on Marginal Cost |
6) Increase in Selling Price | E) Decrease in BEP |
7) Key Factor | D) Limiting Factor |
8) Make or Buy | F) Equal to Marginal Costing |
9) Marginal Cost | B) Variable Cost |
10) Idle Time Variance | A) Always Unfavorable |
B) State whether the statements True of False (Rewrite the sentence) (Any 7): (07)
1) Excess of actual cost over standard cost is a favorable variance.
Ans: False
2) Cost incurred in the past is future cost.
Ans: False
3) Flexible budget is rigid.
Ans: False
4) Budget manual is budget prepared annually.
Ans: False
5) Sales manager is responsible for efficient buying.
Ans: False
6) Labour strike causes idle time variance.
Ans: True
7) The most profitable sales mix is the one which gives maximum contribution.
Ans: True
8) Contribution variance is under the control of management.
Ans: True
9) P/V ratio shows the relationship between contribution & sales.
Ans: True
10) At shutdown point operating loss is equal to loss due to shutdown.
Ans: True
November 2023
Q.1 (a) Choose the correct alternative and rewrite it. (Any eight) (08)
1- Budgetary control helps the management in.
a- Obtaining bank credit
b- Issue of shares.
c- Getting grants from government
2- A key factor is one which restricts.
a. The volume of production
b. The volume of sales
c. The volume of purchase
3- The process of budgeting not helps in the control of
a. Cost of production
b. Capital Expenditure
c. Debt payment
4- If semi-variable cost at 60% level of production is Rs 40,000 and at 80% level is Rs 44,000. What will it be at 100% level of production?
a. 45000
b. 48000
c. 51000
Ans:
At 60% = ₹40,000
At 80% = ₹44,000
Increase in cost = 44,000 − 40,000 = 4,000
Increase in activity = 20%
Variable cost per 1% = 4000 / 20 = 200
From 80% → 100% = 20% increase
Increase in cost = 20 × 200 = 4,000
Cost at 100% = 44,000 + 4,000 = ₹48,000
5- CVP analysis requires costs to be categarized as
a. Fixed or variable
b. Direct or indirect
c. Standard or actual
6- Contribution - Fixed Cost=
a. Sales
b. Profit
c. Variable cost
7- In ________ the price can be fixed on the basis of only variable cost.
a. Standard costing
b. Marginal costing
c. Process costing
8. If material price variance is R.s. 3000 (A) and actual price is R.s. 1.5 & actual quantity is 1500 unit. The standard material price will be ________.
a. 2.5
b- 3.5
c. 4.5
Ans:
Formula:
Material Price Variance = AQ (SP − AP)
Given:
MPV = 3000 (Adverse)
AQ = 1500
AP = 1.5
3000 = 1500 (SP − 1.5)
SP − 1.5 = 2
SP = 3.5
9- A standard cost is _______
a- The total amount that appears on the budget for product costs
b- A pre-determined cost which is calculated from management's standards of efficient operation.
c- The total number of units x the cost expected
10-Sales quantity variance is equal to ( _______ Quantity -- Revised Quantity)* Budgeted Price.
a. Actual
b. Standard
c. Budgeted
Q1(b) State whether following statements are True or False. (Any seven) : (07)
1- Budgetary control is costly for small organizations.
Ans: True
2- Cash Budget shows budgeted receipts and payments.
Ans: True
3- At BEP total cost is equal to total revenue.
Ans: True
4 Marginal cost is fixed cost.
5- At shutdown point operating loss is equal to loss due to shut down.
Ans: True
6- Decision to accept or reject export order depends on fixed cost only.
7- Excess of actual cost over standard cost is a favourable variance.
6- Decision to accept or reject export order depends on fixed cost only.
7- Excess of actual cost over standard cost is a favourable variance.
8- Material mix variance arises due to change in rate.
9. Idle time variance is always favourable.
10- Overheads include indirect material, labour and expenses.
April 2024
Q.1 (a) Choose the correct alternative and rewrite it. (Any 8) (08)
1. What is the main purpose of a budget?
A) To control costs
B) To predict future financial performance
C) To increase shareholder dividends
D) To reduce competition
2. Which of the following costs is not included in marginal costing?
A) Fixed costs
B) Variable costs
C) Sunk costs
D) Semi-variable costs
3. What is a standard cost?
A) The actual cost incurred
B) The historical cost of an item
C) The predetermined cost based on a certain level of efficiency and costs
D) The market price of a product
4. Which of the following is not a component of the master budget?
A) Sales budget
B) Production budget
C) Cash budget
D) Variable cost budget
5. Which of the following is not a feature of marginal costing?
A) Fixed costs are treated as period costs
B) Variable costs are allocated to products
C) Contribution margin is calculated
D) Marginal cost per unit remains constant
6. Which variance compares the actual cost of direct materials with the standard cost of direct materials allowed for actual production?
A) Material price variance
B) Material usage variance
C) Labor rate variance
D) Labor efficiency variance
7. What does a flexible budget do?
A) Allows for adjustments in production levels
B) Is fixed and cannot be changed
C) Only considers variable costs
D) Is prepared only for managerial purposes
8. In marginal costing, which of the following statements is true?
A) Marginal cost equals total cost
B) Marginal cost equals total variable cost
C) Marginal cost equals total fixed cost
D) Marginal cost equals total fixed cost plus total variable cost
9. Which variance arises due to the difference between the actual quantity of used and the standard quantity of input allowed for actual production?
A) Material price variance
B) Material usage variance
C) Labor rate variance
D) Labor efficiency variance
10. What is a budgetary control system primarily concerned with?
A) Planning future budgets
B) Comparing actual results with budgeted figures
C) Controlling fixed costs
D) Maximizing shareholder wealth
Q.1.b State whether following statements are True or False. (Any seven): (07)
1. Budgetary control is a technique used for evaluating the performance of a company by comparing actual results with planned results.
Ans: True
2- In marginal costing, fixed costs are treated as product costs and are included in the calculation of cost of goods sold.
Ans: False
3. Standard costing involves setting predetermined costs based on historical data rather than expected future costs.
Ans: False
4. A favorable variance indicates that actual results are better than planned results, while an unfavorable variance indicates the opposite.
Ans: True
5. Contribution margin represents the difference between sales revenue and total variable costs
Ans: True
6. Standard costing is not useful for performance evaluation or cost control purposes.
Ans: False
7. A flexible budget adjusts the budgeted figures based on actual activity levels, providing a more accurate basis for comparison.
Ans: True
8. Marginal costing is often used for short-term decision-making as it focuses on the differential costs between alternatives.
Ans: True
9. Standard costing involves comparing actual costs with predetermined standards to identify variances.
Ans: True
10. A budgetary control system primarily focuses on controlling fixed costs to ensure profitability.
Ans: False
November 2024
Q.1 A) Match the column (Rewrite the sentence) (Any Eight) (08)
1. Imputed cost | A. Fixed and Variable cost charged to production |
2. Standard cost | B. Notional cost |
3. Absorption Costing | C. Pre-determined cost |
4. Sales Budget | D. No profit-No loss point |
5. Master Budget | E. Limiting factor |
6. Break Even Point | F. Estimate of Sales |
7. Key factor | G. Summary Budget |
8. Idle time variances | H. Multiple products |
9. Sales Mix | I. Deviation from standard cost |
10. Variance | J. Always unfavourable |
Ans:
1. Imputed cost | B. Notional cost |
2. Standard cost | C. Pre-determined cost |
3. Absorption Costing | A. Fixed and Variable cost charged to production |
4. Sales Budget | F. Estimate of Sales |
5. Master Budget | G. Summary Budget |
6. Break Even Point | D. No profit-No loss point |
7. Key factor | E. Limiting factor |
8. Idle time variances | J. Always unfavorable |
9. Sales Mix | H. Multiple products |
10. Variance | I. Deviation from standard cost |
Q1 (B) Choose the correct alternative and rewrite it. ( Any seven) (07)
1. The cost of product as determined under standard cost system is a ___________
(a) Fixed Cost
(b) Variable Cost
(c) Pre determined cost
(d) Master Budget
2. If a company uses only one type of material, then which of the following variance cannot be found
(a) Material cost variance
(b) Material price variance
(c) Material usage variance
(d) Material yield variance
3. Contribution is __________
(a) Sales - Profit
(b) Sales - Variable Cost
(c) Sales-Fixed Cost
(d) Fixed Cost + Variable Cost
4. The fixed variable cost classification has a special significance in the preparation of ___________
(a) Capital Budget
(b) Flexible Budget
(c) Master Budget
(d) Cash Budget
5. A flexible budget takes into account __________
(a) Fixed cost only
(b) Variable cost only
(c) Semi variable cost only
(d) Fixed, Variable, Semi-variable cost
6. As the unit manufactured decreases, variable cost per unit __________
(a) Remains Constant
(b) Increases
(c) Decreases
(d) Reduces by half
7. The most profitable Sales Mix is one which gives maximum __________
(a) Contribution
(b) Sales
(c) Cost
(d) Fixed Cost
8. __________ is a principle tools of planning and control to management by accounting functions
(a) Budget
(b) Income statement
(c) Balance Sheet
(d) Cost Sheet
9. Labour time variance __________
(a) (Standard rate-Actual rate) x Standard quantity
(b) (Standard rate - Actual rate) x Actual quantity
(c) (Standard hours Actual hours) x Standard rate
(d) (Standard hours - Actual hours) x Actual rate
10. Break even point in units is calculated by using __________ formulae.
(a) Profit Volume ratio
(b) Fixed Cost plus variable cost
(c) Contribution divided by Sales
(d) Fixed Cost divided by contribution per unit
April 2025
Q.1.A State whether the statement is true or false (Rewrite the sentence) Any eight: (8)
1. Budget manual is a detailed information plans, policies, procedures and operations
Ans: True
2. CVPA stands for Cost Volume Profit Analysis?
Ans: True
3. Idle time variance is caused due to change in efficiency
Ans: False
4. Variable Cost per unit goes on decreasing with increase
Ans: False
5. Material cost variance is equal to MPV + MUV
Ans: True
6. Sales budget shows estimate of future sales
Ans: True
7. P/V ratio increases with decrease in Fixed Cost
Ans: False
8. Margin of Safety Shows how far the company
Ans: True
9. Variable Cost per unit goes on decreasing with increase in volume of production.
Ans: False
10. Variable Cost per unit goes on decreasing with increase in volume of production.
Ans: False
Q.1.B Match the Following (Any 7): (07)
Column A | Column B |
1. Depreciation | 1. Based on Marginal Cost |
2. Prime Cost | 2. Historical cost |
3. Key Factor | 3. Summary of all functional budget |
4. Mater Budget | 4. Arises due to non controllable factors |
5. Non Controllable Variance | 5. Variable Cost |
6. Electricity charges | 6. Increase in BEP |
7. Increase in Variable Cost | 7. Profitability |
8. Contribution test | 8. Fixed Cost |
9. Make or Buy Decision | 9. Direct Cost |
10. Cost incurred in past | 10. Limiting Factor |
Column A | Column B |
1. Depreciation | 8. Fixed Cost |
2. Prime Cost | 9. Direct Cost |
3. Key Factor | 10. Limiting Factor |
4. Mater Budget | 3. Summary of all functional budget |
5. Non Controllable Variance | 4. Arises due to non controllable factors |
6. Electricity charges | 5. Variable Cost |
7. Increase in Variable Cost | 6. Increase in BEP |
8. Contribution test | 7. Profitability |
9. Make or Buy Decision | 1. Based on Marginal Cost |
10. Cost incurred in past | 2. Historical cost |
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