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50+ CA Inter Costing MCQs (New Syllabus) : Material Control 2024

Sandeep Arora Sir at KCC Tutorials provides the best free CA Inter MCQs and Objectives for Material Control for ICAI 2024 New Syllabus

CA Intermediate 2024 Exams

CA Inter Material Control - Multiple Choice Questions & Answers (MCQs) 2024 New Syllabus

1) Direct material can be classified as
a) Fixed cost
b) Variable cost
c) Semi-variable cost.
d) Prime Cost

2) In most of the industries, the most important element of cost is
a) Material
b) Labour
c) Overheads
d) Administration Cost

3) Which of the following is considered to be the normal loss of materials?
a) Loss due to accidents
b) Pilferage
c) Loss due to breaking the bulk
d) Loss due to careless handling of materials.

4) In which of following methods of pricing, costs lag behind the current economic values?
a) Last-in-first out price
b) First-in-first out price
c) Replacement price
d) Weighted average price

5) Continuous stock taking is a part of
a) Annual stock taking
b) Perpetual inventory
c) ABC analysis.
d) Bin Cards

6) In which of the following methods, issues of materials are priced at pre-determined rate?
a) Inflated price method
b) Standard price method
c) Replacement price method
d) Market price method.

7) When material prices fluctuate widely, the method of pricing that gives absurd results is
a) Simple average price
b) Weighted average price
c) Moving average price
d) Inflated price.

8) When prices fluctuate widely, the method that will smooth out the effect of fluctuations is
a) Simple average
b) Weighted average
c) FIFO
d) LIFO

9) Under the FSN system of inventory control, inventory is classified on the basis of:
a) Volume of material consumption
b) Frequency of usage of items of inventory
c) Criticality of the item of inventory for production
d) Value of items of inventory

10) Form used for making a formal request to the purchasing department to purchase materials is a – :
a) Material Transfer Note
b) Purchase Requisition Note
c) Bill of Materials
d) Material Requisition Note

11) Under which of the following inventory control techniques, two piles or bundles are maintained for each item of stock —
a) Min-max plan
b) Order cycling system
c) Two-bin system
d) ABC analysis.

12) A store ledger is a record of receipts, issues and closing balances of material by entering —
a) Quantity only
b) Quantity and value
c) Value only
d) Quality only.

13) Bill of material acts as an authorisation to the stores department in procuring the material and all the materials listed on the bill are sent to the —
a) Sales department
b) Production department
c) Accounts department
d) Stores department.

14) Which of the following method is based on the assumption that costliest materials are issued first and inventory is valued at the lowest possible price —
a) FIFO method
b) LIFO method
c) Highest-in-first-out method
d) Weighted average method.

15) Under activity based costing, ‘material ordering’ is considered as —
a) Unit level activity
b) Batch level activity
c) Product level activity
d) Facility level activity.

16) For a product-X, following information is available:
Maximum consumption per week 300 units
Normal consumption per week 200 units
Re-order period 2 to 4 weeks
The re-order level will be —
a) 400 units
b) 1,200 units
c) 600 units
d) 800 units.

17) A company requires 1,500 units of an item per month. The cost of each unit is `30. The cost of placing an order is `200 and the material carrying charges work out to be 20% of the average material. The economic order quantity (EOQ) is —
a) 1,095 units
b) 316 units
c) 490 units
d) 33 units.

18) A company manufactures several components in batches. The following data relates to one component:
Annual demand: 32,000 units
Set-up cost per batch: `120
Annual rate of interest: 12%
Cost of production per unit: `16

The economic batch quantity is —
a) 4,000 units
b) 3,000 units
c) 2,000 units
d) 2,500 units.

19) Following information is available regarding a product on 1st January, 2015 :
Opening balance : 50 units @ `4 50 units @ `4
Receipts :
5th January, 2015 100 units @ `5
12th January, 2015 200 units @ `5.50
Issues :
2nd January, 2015 30 units
18th January, 2015 170 units
The value of closing stock according to FIFO method is :
a) `660
b) `770
c) `825
d) `1,100.

20) In case of rising prices, FIFO method will provide:
a) Lowest value of closing stock and profit
b) Highest value of closing stock and profit
c) Highest value of closing stock but lowest value of profit
d) Lowest value of closing stock but highest value of profit.

21) A company estimates its quarter wise sales (in units) for the next year as under:
Quarter I II III IV
Sales (units) 30,000 37,500 41,250 45,000
The opening stock of finished goods is 10,000 units and the company expects to maintain the closing stock of finished goods at 16,250 units at the end of the year. The production pattern in each quarter is based on 80% of the sales of the current quarter and 20% of the sales of the next quarter. The production for quarter IV will be:
a) 36,000 units
b) 42,000 units
c) 48,250 units
d) 38,250 units.

22) Crown Ltd. has forecast its sales for the next three months as follows :
April : 12,000 units, May : 15,000 units, June : 17,000 units. Opening stock as on 1st April is expected to be 3,500 units. Closing stock should be equal to 20% of the coming month’s sales needs. The number of units required to be produced in May is:
a) 14,600 units
b) 11,500 units
c) 15,400 units
d) 13,600 units.

23) FIFO method of valuing material issues is suitable in times of —
a) Rising prices
b) Falling prices
c) Price fluctuation
d) Boom period.

24) About 50 units are required every day for a machine. Fixed cost of Rs. 50 is incurred for placing an order. The inventory carrying cost per unit amounts to Rs. 0.02 per day. The lead period is 32 days. Economic Order Quantity is —
a) 200 Units
b) 300 Units
c) 500 Units
d) 100 Units.

25) A factory produces 500 units of a product per week. Consumption of raw material is 8 kg for one (1) unit of the product. Purchase price of raw material is Rs. 130 per kg. Cost of placing an order is Rs. 2,250 and the carrying cost is 20 percent per annum. Assuming 52 weeks in a year, the Economic Order Quantity will be:
a) 832 Units
b) 2121 Units
c) 684 Units
d) 6000 Units

26) Monthly consumption of a material; Economic order quantity and cost per order are 6000 units; 4000 units and Rs. 1,500 respectively, then total annual carrying cost will be :
a) Rs. 27,000
b) Rs. 3,000
c) Rs. 3,00,000
d) Not possible to compute in this case

27) A company purchases 2000 units of a particular item per year at a unit cost of Rs. 20. The ordering cost is Rs. 50 per order and the inventory carrying cost is 25% on unit cost. What will be the total cost, if company decides to buy on the basis of EOQ?
a) Rs. 41325
b) Rs. 41000
c) Rs. 41500
d) Rs. 41525

28) In a company the weekly minimum and maximum consumption of Material-A are 25 units and 75 units respectively. The reorder level as fixed by the company is 300 units. Material-A is received within 4 to 6 weeks from the date of supply order. Find the minimum level.
a) 40 units
b) 50 units
c) 200 units
d) 150 units

29) The following informations are given : 10,000 units of material are consumed per year; per unit cost is Rs. 20; cost of processing an order is Rs. 50; Annual interest rate is 5%; Annual carrying cost of material per unit is 15% (other than interest). What would be the Economic Order Quantity (EOQ) ?
a) 200 units
b) 500 units
c) 400 units
d) 100 units

30) If the Minimum Stock Level is 2,500 units, Normal Consumption is 150 units, Maximum Re-order Period is 10 days and Normal Re-order Period is 8 days, then Re-order Level will be :
a) 1,500 units
b) 4,000 units
c) 1,200 units
d) 3,700 units

31) If annual total carrying cost, per unit carrying cost and cost per order are Rs. 15,000, Rs. 10 and Rs. 150 respectively, then Economic Order Quantity will be :
a) 1,500 units
b) 3,000 units
c) 100 units
d) 200 units

32) The monthly requirement of a component is 4,000 units. The cost per order is Rs. 1,000 and the carrying cost per unit per annum is Rs. 24. The Economic Ordering Quantity is :
a) 2,000 units
b) 4,000 units
c) 577.35 units
d) 1,825.74 units

33) If EOQ is 200 units, ordering cost is Rs. 20 per order and total purchases is 4,000 units. The carrying cost per unit will be :
a) Rs. 4
b) Rs. 6
c) Rs. 8
d) Rs. 2

34) If the annual carrying cost of material Z is Rs. 4 per unit and its total carrying cost is Rs. 12,000 p.a., the economic order quantity of the material is :
a) 3,000 units
b) 4,000 units
c) 5,000 units
d) 6,000 units

35) Under LIFO method, the purchases and issues are as follows :
March 1 Purchased 300 units @ Rs. 3 each
March 5 Purchased 600 units @ Rs. 4 each
March 6 Issued 500 units
March 12 Purchased 700 units @ Rs. 5 each
March 16 Issued 800 units
The value of closing stock shall be :
a) Rs. 900
b) Rs. 1,200
c) Rs. 1,500
d) Rs. 2,100

36) The economic order quantity and number of orders to be placed per quarter of the year will be:
Quarterly consumption of materials 2,000 Kgs.
Cost of placing an order Rs. 50
Cost per unit Rs. 40
Storage and other carrying costs 8% of average inventory
a) 400 Kgs. and 5 orders
b) 500 Kgs. and 4 orders
c) 500 Kgs. and 12 orders
d) 400 Kgs. and 6 ordeRs.

37) About 50 units are required every day for a machine. Fixed cost of Rs. 50 is incurred for placing an order. The inventory carrying cost per unit amounts to Rs. 0.02 per day. The lead period is 32 days. Economic Order Quantity is —
a) 200 Units
b) 300 Units
c) 500 Units
d) 100 Units.

38) The two main methods of calculating equivalent production are —
a) FIFO method and average cost method
b) LIFO method and standard cost method
c) LIFO method and market price method
d) FIFO method and market price method.

39) FIFO method of valuing material issues is suitable in times of —
a) Rising prices
b) Falling prices
c) Price fluctuation
d) Boom period.
40) XYZ Ltd. had 4,000 units of inventory in hand on 1st March, 2016, costing Rs. 4 per unit. Purchases and issues of material during the month were as follows:
Date Purchase Issue
March 8 500 units @ Rs. 5 per unit –
March 15 – 2,000 units
March 20 6,000 units @ Rs. 6 per unit –
March 28 – 4,000 units
The cost of inventory as on 31st March, 2016 under FIFO and weighted average cost method will be —
a) Rs. 27,000 and Rs. 24,498
b) Rs. 27,000 and Rs. 23,625
c) Rs. 22,000 and Rs. 23,625
d) Rs. 22,000 and Rs. 24,498

41) During the month July, 2017, 15,000 units were completed in process I and transferred to the process II. Opening Stock as on 1st July, 2017 was 5,000 units and closing stock as on 31st July, 2017 was 10,000 units. Degree of completion for both opening and closing stock :
Material 100%
Labour and overhead 40%
Equivalent production units for labour and overheads using FIFO method are :
a) 18,000 units
b) 17,000 units
c) 20,000 units
d) 25,000 units

42) The following information is given for receipts and issues of a material in the month of March, 2019.
Date Description Quantity (kg) Rate (Rs.)
1 March Receipt 400 5.00
5 March Receipt 600 6.00
8 March Issue 700 —
20 March Receipt 500 4.50
30 March Issue 600 —
What is the value of closing stock under FIFO and LIFO method ?
a) Rs. 800 and Rs. 900
b) Rs. 900 and Rs. 800
c) Rs. 1,000 and Rs. 900
d) Rs. 900 and Rs. 1,000

Answer Key

  1. b) Variable cost
  2. a) Material
  3. c) Loss due to breaking the bulk
  4. b) First-in-first out price
  5. b) Perpetual inventory
  6. b) Standard price method
  7. a) Simple average price
  8. b) Weighted average
  9. b) Frequency of usage of items of inventory
  10. b) Purchase Requisition Note
  11. c) Two-bin system
  12. b) Quantity and value
  13. b) Production department
  14. c) Highest-in-first-out method
  15. b) Batch level activity
  16. b) 1,200 units
  17. a) 1,095 units
  18. c) 2,000 units
  19. c) `825
  20. b) Highest value of closing stock and profit
  21. c) 48,250 units
  22. c) 15,400 units
  23. b) Falling prices
  24. c) 500 Units
  25. d) 6000 Units
  26. a) Rs. 27,000
  27. b) Rs. 41000
  28. b) 50 units
  29. b) 500 units
  30. d) 3,700 units
  31. b) 3,000 units
  32. a) 2,000 units
  33. a) Rs. 4
  34. d) 6,000 units
  35. a) Rs. 900
  36. b) 500 Kgs. and 4 orders
  37. c) 500 Units
  38. a) FIFO method and average cost method
  39. b) Falling prices
  40. a) Rs. 27,000 and Rs. 24,498
  41. b) 17,000 units
  42. d) Rs. 900 and Rs. 1,000

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