School of Management and Commerce

Question Bank - Unit no.: 2

Program: BBA
Course Name: Cost Accounting Course Code: 21BBA404
Academic year: 2024-2025 Semester: 4th
Level A. Easy Questions (2 marks each)
S. No. Questions
Q1 Identify, which one of the following, does not account for increasing labour
productivity-
(A) Job satisfaction
(B) Motivating workers
(C) High labour turnover
(D) Proper supervision and control
Q2 Which of the following statement is correct in relation to “need for proper
inventory control”?
(A) Inadequate inventory may lead to keep men and machines waiting.
(B) Materials do not constitute a significant part of the total production cost hence
proper planning and controlling of inventories is not a big deal.
(C) Funds are not tied up in surplus stores and stocks.
(D) All of the above
Q3 State the various costs included in the employee cost.
Q4 Explain the concept of danger stock level.
Q5 When materials are unloaded, the warehouse staff checks the material unloaded
with the delivery note. Then the warehouse staff prepares a…………, a copy of
which is given to the supplier’ carrier as a proof of delivery.
(A) Delivery note
(B) Material receipt note
(C) Bill of Material
(D) Purchase Requisition
Q6 Time booking refers to a method wherein __________ of an employee is recorded.
(A) Attendance
(B) Food expenses
(C) Health status
(D) Time spent on a particular job
Q7 The most suitable inventory control technique for spare parts is:
(a) ABC analysis
(b) VED analysis
(c) JIT analysis
(d) FSN analysis
Q8 Cost of abnormal wastage is:
(A) Charged to the product cost
 (B) Charged to the profit & loss account
(C) Charged partly to the product and partly profit & loss account
(D) Not charged at all.
Q9 Which of the following is not an inventory valuation method?
(a) FIFO
(b) LIFO
(c) WAM
(d) EOQ
Q10 The Factories Act consolidating and amending the law relating to labour in
factories, was passed by the Constituent Assembly in:
(A) 1942
(B) 1948
(C) 1952
(D) 1960
Q11 Which of the following details are recorded in bin card?
(A) Date of order and suppliers name along with address
(B) Record of quantities only
(C) Record of both quantities & values
(D) All of the above
Q12 Explain the concept of economic lot size.
Q13 If overtime is required for meeting urgent orders, the overtime premium should
be charged as-
(a) Respective job
(b) Overhead cost
(c) Costing P& L A/c
(d) None of above
Q14 Bills of Materials is issued by:
(A) Purchase Department
(B) Planning Department
(C) Marketing Department
(D) Storekeeper
Q15 Explain employee turnover.
Q16 Write down the different formulas for the measurement of labor turnover?
Q17 EOQ is the quantity at which the cost of carrying is:
1. Less than cost of ordering
2. Equal to cost of ordering
3. More than cost of ordering
4. None of the above
Q18 State two industries where JIT inventory control method is used.
Q19 What do you mean by fringe benefits?
Q20 Explain material requisition note.
Level B. Intermediate Questions (5 marks each)
Q21 Consider the following information:
• April 01: Inventories on hand are 50 units at the rate of 2 and 100 units at
the rate of 4.50
• April 05: 100 units purchased at 1.80
• April 06: 10 units of the inventories purchased on 5 April at the rate of 1.80
are returned to supplier
• April 10: 80 units issued to factory
• April 15: 50 units issued to factory
• April 20: 20 units purchased at the rate of 1.50
• April 25: 70 units issued to factory
• April 30: 50 units purchased at 1.70
Determine the cost of inventory on 30 April using the weighted average method of
costing.
Q22 Explain the methods of time booking and records of time keeping. What are the
functions of time keeping records?
Q23 From the following information , calculate labor turnover rate and flux rate:
No. of workers as on 01.01.2023 = 7600
No. of workers as on 31.12.2023 = 8400
During the year, 80 workers left while 320 workers were discharged, 1500 workers
were recruited during the year of whom 300 workers were recruited because of
exits and the rest were recruited in accordance with expansion plans.

Q24 The John Equipment Company estimates its various cost as follows:
Cost of ordering = Rs. 15 per order
Carrying Cost = 20% of average inventory
The estimated monthly requirement is 12,000 units at a price of Rs. 1.25 per unit.
Required:
1. What is the most economical number of units to order?
2. How many orders should be placed in a year?
3. How often should an order be placed?
Q25 Draw and explain the different components of stock level.
Q26 Two materials A and B are used as follows:
Minimum usage 60 units per week each
Maximum usage 200 units per week each
Normal usage 100 units per week each
Reorder quantity
A= 1000 units and B = 1500 units
Delivery period
A= 4 to 6 weeks and B= 2 to 4 weeks

Calculate various stock levels.

Q27 The following information is given for receipts and issues of a material in the
month of March, 2024.
Date Description Quantity Rate
(kg) (Rs)

01/03/24 Receipt 400 5.5

05/03/24 Receipt 600 6.5

08/03/24 Issue 700 ?

20/03/24 Receipt 500 4.5

30/03/24 Issue 600 ?

You are required to find out (using FIFO method):

1. The price at which the material is issued on 08th and 30th March 2024
2. The value of stock as on 31/03/2024
Q28 Explain the three methods to calculate the employee turnover of an organization
with example.
Q29 Calculate the wages under each of the following methods:
a. Halsey premium plan
b. Halsey weir plan
c. Rowan Plan
Standard time = 60 hours
Wage rate per hour = Rs 6
Actual time taken = 48 hours
Q30 Explain different methods of pricing material issues?
Level C. Difficult Questions (10 marks each)
Q31 Prepare a stores ledger account from the following details using LIFO and FIFO method of
pricing the issue of materials.

1 April opening 10850 kgs @ 130 per kgs

balance

2 purchased 20000kgs @ 134 per kgs

3 issued 6750 kgs to production

5 issued 8500 kgs to production

6 received back 550 kgs from production being surplus

7 purchased 17550 kgs @ 128 per kgs

8 issued 11250 kgs to production

 9 physical 250 kgs
verifications
revealed a loss

10 issued 8950 kgs to production

12 issued 6300 kgs to production

15 purchased 10000 kgs @ 132 per kgs

16 issued 7750 kgs to production

Q32 Explain the various stock levels in detail with an example.

Q33 The following transaction occur in the purchase and issue of a material:

Jan 2 Purchased 4000 units Rs. 4.00 Per unit

Jan 20 Purchased 500 units Rs. 5.00 Per unit
Jan 5 Issued 2000 units
Jan 10 Purchased 6000 units Rs. 6.00 Per unit
Jan 12 Issued 4000 units
Jan 2 Issued 1000 units
Jan 5 Issued 2000 units
Jan 15 Purchased 4500 units Rs. 5.50 Per unit
Jan 20 Issued 3000 units

From the above, prepare the store ledger account using simple average price
method.

Q34 Explain the different methods of inventory management techniques available. Also
state the relevance of each method.
Q35 Describe the procedure of purchasing material from outside.
Q36 Explain the term ‘maximum level ’, ‘minimum level ’and ‘ordering level ’with
regards to maintenance of stocks. What are the factors to be taken into account in
fixing these levels? Discuss the relevance of these concepts in a manufacturing
organization.