Management Accounting - Absorption and variable costing are two different methods of measuring profit and valuing inventory. Explain.

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Management Accounting

Multiple choices:

1. If the variable cost(VC) be Rs 5 and the sales revenue(SR) be Rs 8 then the V/V ratio is given by

a. 1.6

b. 3

c. 40

d. 0.625

2. Re-order level =

a. Minimum level + (normal usage * average delivery time)

b. (Daily usage + lead time) * safety stock

c. (Daily usage * lead time) + average stock

d. (Average stock level - minimum level)/2

3. Acid test ratio is the ratio between

a. Quick assets and current liabilities

b. Net credit sales and average debtors

c. Cost of goods sold and average inventory

d. None

4. In select account standards AS-17 is a

a. Related party disclosure

b. Segment reporting

c. Discontinuing operation

d. Interim financial reporting

5. Ledger is

a. A kind of payment

b. A kind of strategy

c. A book in which bank accounts are kept

d. It is a receipt of selling

6. Which of the following industries does not use process costing?

a. Oil refineries

b. Distilleries

c. Sugar

d. Chemical

e. Aircraft manufacturing

7. The demand curve is also called the

a. Total revenue curve

b. Marginal revenue curve

c. Average revenue curve

d. Marginal cost curve

e. Profit curve

8. To decrease the Break Even Point one must

a. Increase the fixed Cost

b. Decrease the unit contribution

c. Decrease the selling price

d. Increase variable Cost

e. Decrease fixed Cost

9. Rent to be paid for a factory premises is an example of

a. Discretionary Cost

b. Programmed Cost

c. Future Cost

d. Committed Cost

e. Opportunity Cost

10. Performa statements are otherwise called as

a. Master budget

b. Capital budget

c. Strategic plan

d. Rolling budget

e. There is no such budget

Part Two:

1. Define ‘Liquidity Ratio’.

2. Define ‘Debt Equity’ ratio.

3. What do you mean by ‘Batch costing’?

4. Explain ‘The margin of safety’.

5. Based on the financial analysis, what recommendation would you, as the finance manager, make to the CEO of PCL?

6. Managerial accounting information is sometimes described as a means to an end whereas financial accounting information is described as an end in itself. In what sense is this true?

7. Absorption and variable costing are two different methods of measuring profit and valuing inventory. Explain.

Need Answer Sheet of this Question paper, contact

aravind.banakar@gmail.com

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ARAVIND – 09901366442 – 09902787224