cost accounting 45

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(Section-I)

Multiple choice type Questions. Five questions each question carries 1 mark.

From the following circle the correct Answer (5 marks)

1. Nonroutine operating decisions are decisions such :

A) annual budgets and resource allocation decisions

B) weekly work scheduling issues

C)insource or outsource a business activity

  • Support department costs are common costs that are shared between :
  • only operating departments
  • only support departments.
  • two or more other departments including operating departments and occasionally other support departments.

3. The general rule for a special order is to accept the order if :

A)

incremental revenues exceed incremental costs.

B)

the contribution margin exceed the relevant variable costs.

C)the incremental revenues exceed the opportunity cost.

4. The step-down method of allocating support department costs allocates:

A)

All support department costs to other support departments.

B)

Some but not all support department costs to operating departments

C)

Some but not all support department costs to all operating and support departments that use its services.

5. Managers must keep a business segment if:

A)

Its contribution margin cover all its fixed costs.

B)

Its contribution margin covers its variable costs.

C)

Its contribution margin covers its avoidable fixed costs.

(Section-II)

Short Essay type Questions. Each Question carries 2.5 marks(2X2.5=5)

Q 1 Explain the difference between operating departments and support departments.

Answer to Q 1:

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Q2 Explain in details quantitative and qualitative analysis used in special order decisions.

Answer to Q 2:

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