UGC NET - Cost and management accounting: marginal costing, break-even, standard costing, budgetary control, process costing, ABC, decision-making, life cycle costing, target costing, Kaizen, JIT One Line Questions & Answers

1. If a company's sales increase from Rs. 500,000 to Rs. 750,000 and its profit increases from Rs. 50,000 to Rs. 100,000, what is its contribution margin ratio? — 40%

2. A flexible budget is: — A budget that adjusts for changes in volume or activity level

3. Which concept is fundamental to marginal costing? — Separation of costs into fixed and variable components

4. A favorable variance in standard costing occurs when: — Actual cost is lower than standard cost

5. In marginal costing, which costs are considered for product costing? — Only variable costs

6. In process costing, equivalent units are used to: — Calculate the cost per unit for partially completed units

7. The philosophy behind 'Kaizen' in costing is: — Constant, incremental improvements

8. In process costing, the cost of abnormal spoilage is typically: — Charged to the profit and loss account

9. The difference between standard cost and actual cost is known as: — Variance

10. The primary purpose of a master budget is to: — Provide a comprehensive financial plan for the entire organization

11. Which of the following is a key characteristic of target costing? — Customer-driven target cost

12. Target costing is a 'market-driven' costing approach because: — The price is determined by the market, and costs are engineered to meet it

13. Activity-Based Costing (ABC) allocates overhead costs based on: — Cost drivers

14. Life cycle costing considers costs incurred: — Over the entire life cycle of a product, from design to disposal

15. Continuous improvement in Kaizen costing is achieved through: — Employee suggestions and empowerment

16. Management accounting uses cost information primarily for: — Internal decision-making and planning

17. Zero-based budgeting (ZBB) requires: — Justification of all expenses from scratch

18. Which of the following is a prerequisite for successful JIT implementation? — Reliable suppliers and stable production processes

19. Which of the following is a potential benefit of implementing ABC? — More accurate product costing

20. A key benefit of JIT inventory management is: — Reduced work-in-progress inventory

21. Which of the following is NOT a stage in the product life cycle? — Stagnation

22. Which costing method is used when goods pass through several distinct stages of production? — Process costing

23. In process costing, costs are accumulated by: — Department or process

24. Which of the following is a material variance? — Material price variance

25. Which variance is calculated as (Actual Rate - Standard Rate) x Actual Hours? — Labor rate variance

26. Which variance indicates a difference between the actual labor hours worked and the standard labor hours allowed for the actual output? — Labor efficiency variance

27. Which of the following is a 'cost driver' in ABC? — All of the above

28. The total cost of ownership (TCO) concept is closely related to: — Life cycle costing

29. Just-In-Time (JIT) is a production strategy aimed at: — Producing goods only when needed

30. ABC costing is considered superior to traditional costing when: — Overhead costs are significant and products differ widely

31. Under absorption costing, fixed manufacturing overheads are treated as: — Product costs

32. Which costing technique is most suitable for situations involving a wide variety of products with different production processes and overheads? — Activity-Based Costing (ABC)

33. In marginal costing, fixed costs are treated as: — Period costs

34. The break-even point is the level of sales where: — Total revenue equals total costs

35. JIT production aims to eliminate: — Waste and inefficiencies

36. Costs incurred in adding new features to a product after its initial launch are considered part of: — Life cycle costs

37. Kaizen costing emphasizes: — Continuous small improvements in cost reduction

38. Target costing is a cost management technique that focuses on: — Achieving a required profit margin by designing costs into a product

39. Which type of budget is prepared for a single period, typically one year, and is not revised during the period? — Fixed budget

40. Opportunity cost is relevant in which type of decision-making? — Decisions involving alternative courses of action

41. If the contribution margin ratio is 40% and fixed costs are Rs. 100,000, what is the break-even sales revenue? — Rs. 250,000

42. In marginal costing, the profit is calculated as: — Contribution - Fixed Costs

43. Which of the following is a controllable variance at the operational level? — Labor efficiency variance

44. Which of the following is a key element of budgetary control? — Comparing actual performance with the budget and taking corrective action

45. Which of the following is NOT a typical use of cost-volume-profit (CVP) analysis? — Calculating depreciation using straight-line method

46. Make or buy decisions are an example of: — Special decision-making

47. Target costing focuses on determining the cost of a product after establishing: — The desired selling price

48. The 'margin of safety' in break-even analysis indicates: — The amount by which sales can fall before a loss is incurred

49. What is the primary objective of break-even analysis? — To determine the sales volume needed to cover all costs

50. The break-even point in units can be calculated as: — Total Fixed Costs / Contribution Margin per Unit

Cost and management accounting: marginal costing, break-even, standard costing, budgetary control, process costing, ABC, decision-making, life cycle costing, target costing, Kaizen, JIT - One Line Questions