S.Y B.COM
SEMESTER - 4
MANAGEMENT ACCOUNTING
(MA)
MCQS = UNIT - II
CHAPTER-1
ACTIVITY BASED COSTING
MULTIPLE CHOICE QUESTIONS
1. Activity based costing identifies the activities which cause to be incurred and trace cost .............. of these activities.
a) center
b) objects
c) drivers
d) pools
2. ......... Is possible to ascertain most accurate and realistic product cost.
a) Activity Based Information
b) Activity Based Accounting
c) Activity Based Costing
d) Activity Based Management
3. In Activity Based Costing, costs are accumulated by -
a) Cost benefit analysis
b) Cost pool
c) Cost objects
d) None of the above
4. The appropriate Cost driver for maintenance of cost poo| is number of -
a) machine hours
b) delivers
c) customers
d) set-ups
5. ......... is the final point to which costs are traced.
a) Cost pool
b) Cost object
c) Cost activity
d) Cost driver
6. In tracing costs, of products by using a measure of resources consumed by each activity ............ is used.
a) Cost driver
b) Cost pool
c) Cost object
d) Cost unit
7. Costs are grouped into .......... according to the activities which drive them.
a) Cost drivers
b) Cost objects
c) Cost pools
d) Cost units
8. Activity based costing is defined as cost attribution to ............ on the basis of benefit received from indirect activities.
a) Cost units
b) Cost pools
c) Cost objects
d) Cost drivers
9. Under ABC system, the aggregate of closely related tasks is known as .........
a) Pool
b) Cost Unit
c) Activity
d) Driver
10. The point of focus for the costs relating to a particular activity in Activity Based Costing system is known as-
a) Cost system
b) Cost ascertainment
c) Cost object
d) Cost pool
11. The method in which cost attribution to cost units on the basis of benefits received from indirect activities is known as -
a) Activity Based Accounting
b) Activity Based Budgeting
c) Activity Based Costing
d) Activity Based Management
12. Under traditional cost system, direct costs are ......... to the units of output in proportion to the volume of production.
a) apportioned
b) allotted
c) added
d) allocated
13. ......... deals with collection, recording, analysis, controlling and reporting of activity related costs rather than departmental or cost center related costs.
a) Activity Based Accounting
b)Activity Based Budgeting
c) Activity Based Costing
d) Activity Based Management
14. ............ is the management philosophy that focuses on the planning, execution and measurement of activities as the key to the competitive advantage.
a) Activity Based Costing
b) Activity Based Budgeting
c) Activity Based Management
d) Activity Based MIS
15. Cost pools under ABC are similar to ............. in traditional cost system.
a) Machine center
b) Cost object
c) Cost center
d) Cost unit
16. ............. is an activity which generates cost.
a) Cost object
b) Cost driver
c) Cost pools
d) Activity based budgeting (ABB)
17. ............. is the reason for performing an activity.
a) Cost object
b) Cost driver
c) Cost pools
d) Activity based budgeting (ABB)
18. Cost object includes -
a) Products
b) Services
c) Customers
d) Contracts
a) (i), (ii), (iii), (iv)
b) (ii), (iii), (iv), (v)
c) (i), (iii), (iv), (v)
d) All of the above
19. .............. Costing is beneficial to the complex and large organization.
a) Activity based
b) Marginal
c) Standard
d) Throughput
20. The cost objects are linked to the objective of the organization.
a) True
b) False
c) Partly True
d) Partly False
21. Cost objects can be defined as those activities or transactions that are significant determinants of cost.
a) True
b) False
c) Partly True
d) Partly False
22. .............. are used to trade costs to products by using a measure of resources consumed by each activity.
a) Cost object
b) Cost driver
c) Cost pools
d) Activity based budgeting (ABB)
23. .............. requires the identification of the activities of the organization, establishing the factors which cause costs, the cost drivers, and the collecting the costs of activities in the cost pools.
a) Cost object
b) Cost driver
c) Cost pools
d) Activity based budgeting (ABB)
24. Activity based budgeting (ABB) is a planning and control system which seeks to support the objective of continuous improvement.
a) Partly False
b) Partly True
c) True
d) False
25. Out of the following, Non-value added activity is -
a) Move time
b) Storage time
c) Idle time
d) Both (a) and (b)
26. A company manufactures two products using common handling facility. The total budgeted material handling cost is Rs.1,20,000. The other details are:
Particulars | Product A | Product B |
Number of units produced | 60 | 60 |
Material moves per product line | 10 | 30 |
Direct labor hours per unit | 400 | 400 |
Under Activity costing system, the material handling costs to be allocated to Product A (per unit) would be
a) Rs.2,500
b) Rs.1,500
c) Rs.500
d) Rs.1000
SOLUTIONS :
c) Rs.500
Total moves in material handling = 10 + 30 = 40
Percentage move for product A = 10/40 = 0.25 or 25%
Material handling cost to be allocated to product A = Rs.1,20,000 × 25/100 = Rs.30,000
Or, Rs.30,000 / 60 Units
= Rs.500 per unit
27. A Ltd. is preparing its annual profit plan. As part of its analysis of the profitability of individual products, the accountant estimates the amount of overhead that should be allocated to the individual product lines from the information given below:
Particulars | X | Y |
Units products | 60 | 60 |
Material moves/Product line | 10 | 30 |
Direct labor hours / unit | 400 | 400 |
Under Activity based costing (ABC), the material handling costs to be allocated to one unit of X would be
a) Rs.2,500
b) Rs.1,500
c) Rs.500
d) Rs.1,000
SOLUTIONS :
c) Rs.500
A Ltd. Allocates overhead to the activity that specifically drives the overhead cost. There will be 20 moves caused by X and Y, of which X require 5. So, X shall be allocated 5/20 of the material handling costs of
Rs.12,500. 25 units of X will be moved. Hence, material handling cost per unit of X = Rs.12,500 / 25
= Rs.500
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