Attempt JAIIB AFM Module D Quiz and Download Free PDF

1. A newly set up manufacturing company is trying to understand the purpose of cost accounting. The finance head explained that cost accounting is used for various purposes beyond mere record-keeping. Which of the following most accurately describes the PRIMARY objective of cost accounting?

2. An organisation operating in the textile sector classifies its costs for internal reporting. The production manager grouped costs into prime cost, factory cost, and total cost. He then further classified costs by behaviour — fixed, variable, and semi-variable. Which classification of cost is being applied in the second instance?

3. A pharmaceutical company engaged in continuous production of a single product incurred the following costs during a period: direct materials Rs 5,00,000; direct labour Rs 2,00,000; factory overheads Rs 1,50,000; administrative overheads Rs 80,000; selling and distribution overheads Rs 70,000. What is the Prime Cost for the period?

4. A company uses a specific cost centre to collect and analyse costs. The production department is treated as a cost centre. What is the primary purpose of establishing a cost centre in a manufacturing organisation?

5. In a job costing environment, a manufacturing firm produces customised machinery for each client. The accountant prepares a job cost card for every order. Direct material Rs 40,000, direct labour Rs 25,000, and factory overheads absorbed at 80% of direct labour cost. What is the total factory cost (Works Cost) of the job?

6. A construction company is executing a long-term bridge construction contract. At year-end, it calculates work certified at Rs 80,00,000 and work uncertified at Rs 12,00,000. Total contract price is Rs 2,00,00,000 and total estimated cost is Rs 1,60,00,000. Cost incurred to date is Rs 96,00,000. Management wants to compute the profit to be recognised. Which method is most appropriate for recognising profit on a partially complete long-term contract?

7. A process manufacturing company runs two sequential processes. In Process 1, input of 1,000 kg of raw material was introduced. Normal loss is expected at 5% of input. Actual output was 920 kg. The cost of abnormal loss is charged to the Abnormal Loss Account. What is the quantity of abnormal loss?

8. In a batch costing system, a company produces 500 units in a batch. Total batch cost is Rs 1,50,000. During inspection, 20 units are rejected as normal scrap with a realizable value of Rs 200 per unit. What is the cost per good unit produced?

9. A hospital provides healthcare services and needs to determine the cost of providing services. It treats each patient-day as its cost unit. Fixed costs are Rs 36,00,000 per annum, variable costs Rs 800 per patient-day, and the hospital operates 300 beds with 80% occupancy for 365 days. This is an example of which type of costing?

10. A manufacturing company installs standard costing for material. The standard quantity of material for one unit is 4 kg at Rs 50 per kg. During the month, 500 units were produced using 2,200 kg at a total cost of Rs 1,05,600. What is the Material Usage Variance?

11. In the context of standard costing for labour, a company set the standard labour rate at Rs 60 per hour with standard time of 3 hours per unit. Actual output was 800 units. Actual hours worked were 2,600 hours at Rs 65 per hour. What is the Labour Rate Variance?

12. A firm uses standard costing and reports a favourable material price variance of Rs 8,000 and an adverse material usage variance of Rs 12,000. The overall material cost variance is:

13. In marginal costing, a firm reports the following data: Selling price Rs 200 per unit, variable cost Rs 130 per unit, fixed costs Rs 3,50,000 per annum. What is the Profit-Volume (P/V) Ratio?

14. Using the data from the previous question (P/V Ratio 35%, Fixed Costs Rs 3,50,000), what is the Break-Even Point in sales value?

15. A company’s actual sales are Rs 15,00,000 and its break-even sales are Rs 10,00,000. What is the Margin of Safety and what does it signify?

16. Under absorption costing, a company produced 10,000 units and sold 8,000 units. Fixed production overheads are Rs 2,00,000. Under marginal costing, what would be the difference in profit reported compared to absorption costing?

17. Under the concept of Cost-Volume-Profit (CVP) analysis, a company is evaluating the impact of a 10% increase in selling price while fixed costs remain at Rs 4,00,000 and variable costs remain at Rs 60 per unit. If the original selling price was Rs 100, what happens to the Break-Even Point in units?

18. A company reported the following data under marginal costing: Sales Rs 20,00,000; Variable costs Rs 12,00,000; Fixed costs Rs 5,00,000. Compute the profit under marginal costing and also the P/V ratio.

19. A company has fixed costs of Rs 6,00,000 and a P/V ratio of 30%. Management wants to earn a target profit of Rs 1,80,000. What level of sales is required to achieve this target profit?

20. In a process costing scenario, Process 2 receives transfer from Process 1. Input to Process 2: 800 kg transferred at Rs 1,20,000, additional material Rs 20,000, direct labour Rs 30,000, overheads Rs 15,000. Normal loss is 10% of input with nil scrap value. Actual output is 760 kg. What is the cost per unit of output?