CA Intermediate Paper 4: Cost and Management Accounting MCQs

A comprehensive set of vocabulary flashcards covering basic cost concepts, materials, employee costs, overheads, ABC, and budgetary control based on the CA Intermediate CMA MCQ bank.

Main purpose of Cost Accounting

To provide information to management for decision-making.

Cost Object

Anything for which a separate measurement of cost is required.

Cost Unit (Power Sector)

Kilo-Watt-Hour ($kWh$).

Process Costing suitability

Method of costing used in industries with continuous production, such as Chemical Industries.

Semi-Variable Cost

A cost that contains both fixed and variable components, such as a taxi charging a minimum amount plus a rate per kilometer.

Revenue Centre

A segment of an organization that is responsible for generating revenue, such as a Ticket Counter in a Railway Station.

Historical Costs

Costs that are ascertained after they have been incurred.

Prime Cost

The total of all direct costs, including direct materials, direct labor, and direct expenses.

Direct Expenses

Costs specifically identifiable with a job, such as royalty paid on production or the hire of tools for a particular project.

Normal Loss of Materials

Inherent losses during production that cannot be avoided, such as breaking the bulk or evaporation due to weather.

Economic Ordering Quantity (EOQ)

The order size where total annual ordering cost is equal to the total annual carrying cost.

ABC Analysis (Material Control)

Classification of materials based on their importance in value.

FSN System of Inventory Control

Inventory classification based on the Frequency of usage (Fast, Slow, and Non-moving).

Bill of Materials

A standard list prepared by the Production Planning Department containing all materials and stores required for a specific job order.

Inventory Turnover Ratio expression

This ratio is typically expressed in "Times."

Landed Cost

The total price of a product once it has arrived at the buyer's door, including cost of containers, carriage inwards, and unloading charges.

Idle Time

The time during which workers are paid but no productive output is produced.

Time and Motion Study

A technique usually conducted by the Engineering Department to determine the standard time for a job.

Labour Turnover

The rate of change in the labour force of an organization during a specific period.

Time Booking

The method of recording the specific time spent by an employee on a particular job.

Halsey Premium Plan Bonus

A system where the bonus is generally computed as $50\%$ $\times$ $\text{Time Saved}$ $\times$ $\text{Rate per hour}$.

Cost Allocation

The allotment of whole items of cost to specific Cost Centres or Cost Units.

Cost Apportionment

The distribution of common overhead costs to various Cost Centers using appropriate bases.

Practical Capacity

The maximum productive capacity of a plant after accounting for normal anticipated idle time.

Under-absorption of Overhead

Occurs when the amount of overhead absorbed is less than the actual overhead incurred.

Cost Driver

In Activity Based Costing, any resource, activity, or transaction that is a significant determinant of cost.

Cost Pool

Accumulated amounts of overhead costs related to a specific activity in an ABC system.

Integrated Accounting System

A system where both cost and financial accounts are maintained in the same set of books.

General Ledger Adjustment Account

The account used to complete the double entry in a Non-Integrated Accounting System.

Job Costing

A method of costing used for non-standard, non-repetitive products manufactured according to customer specifications.

Economic Batch Quantity (EBQ)

The batch size where the sum of annual Set-Up Costs and Carrying Costs is at its minimum.

Conversion Cost

The cost of converting raw materials into finished goods, comprising Direct Labour, Direct Expenses, and all Factory Overheads.

By-Product

A product of relatively small value produced incidentally along with the main product, such as molasses in sugar manufacturing.

Equivalent Production

The production of a process expressed in terms of completed units, calculated by multiplying physical units by their percentage of completion.

Composite Cost Unit

A complex unit of measure used in services, such as "Per Patient-Day" for hospitals or "Tonne-Kilometers" for cargo transport.

BOT Approach

A model used in infrastructure costing meaning "Build, Operate and Transfer."

Variance Analysis

The process of analyzing the differences between standard costs and actual costs.

Standard Cost

A pre-determined cost of a product or service determined at the beginning of production for the purposes of control.

Marginal Costing

A technique that determines the cost of a product by including only variable costs, treating fixed costs as period costs.

P/V Ratio (Profit Volume Ratio)

The ratio of contribution to sales revenue, represented by the formula $\frac{\text{Contribution}}{\text{Sales}} \times 100$.

Margin of Safety

The excess of actual or budgeted sales over the break-even sales volume.

Flexible Budget

A budget designed to change based on different levels of activity by studying fixed, semi-fixed, and variable expenses.

Principal Budget Factor

The factor that limits the activities or production volume of an organization, such as Sales Demand or Raw Material shortages.

Budget Manual

A document setting out the organization, procedures, and responsibilities for preparing and controlling budgets.