Symbiosis International Education Centre 2008 M.B.A Business Administration Management accounting - Question Paper

(e) Full cost. (1 mark)
(e) Full cost. (1 mark)

7. Sravan Ltd., currently operates at 70% capacity level. The normal capacity is 2,00,000 units. The
variable cost per unit is Rs.28 and the total fixed costs are Rs.16,00,000. If the company aims to earn a
profit of Rs.2,48,000, the selling price of the product per unit would be
(a) Rs.29.76
(b) Rs.33.75
(c) Rs.41.20
(d) Rs.45.93
(e) Rs.48.54. (2marks)

8. If the efficiency ratio of a company is 112% and the activity ratio is 98%, then the capacity ratio of the
company would be
(a) 114.29%
(b) 109.76%
(c) 97.43%
(d) 92.16%
(e) 87.50%. (1 mark)

9. If a company uses a predetermined rate for absorbing factory overhead costs, the quantity variance is the
(a) Under or over applied variable cost element of factory overheads
(b) Under or over applied fixed cost element of factory overheads
(c) Difference in budgeted cost and true cost of fixed factory overhead items
(d) Difference in budgeted cost and true cost of variable factory overhead items
(e) Difference in standard cost and true cost of variable factory overhead items. (1 mark)

10.The costs associated with materials and products that fail to meet quality standards and outcome in
manufacturing losses are known as
(a) External failure costs
(b) Quality costs
(c) Internal failure costs
(d) Appraisal costs
(e) Prevention costs. (1 mark)

11.Return on Investment is used to measure the financial performance of a company. This can be improved
by
(a) Decreasing sales
(b) Increasing assets
(c) Decreasing expenses
(d) Decreasing profit margin
(e) Decreasing assets utilization ratio. (1 mark)

12.Consider the subsequent particulars of a company for the month of March 2008:
The fixed overhead costs were neither under absorbed nor over absorbed and the fixed production
overhead expenditure variance was Rs.2,400 (Favorable). The number of units produced by the
company during the month was
Budgeted production 5,250 units
Budgeted fixed production overhead costs Rs.1,26,000
(a) 4,833
(b) 5,150

Earning:   Approval pending.