NPTEL Fundamentals of Cost Accounting Week 1 And 2 Assignment Answers 2024
1. Which of the following is not a goal of Cost Accounting?
Options:
A. Determining Costs
B. Setting the Selling Price
C. Controlling and Reducing Costs
D. Helping Shareholders Make Decisions
✅ Answer: D
📝 Explanation: Cost Accounting focuses on identifying, controlling, and reducing costs, and assisting in pricing decisions. Helping shareholders make decisions is primarily the role of Financial Accounting.
2. A profit center is defined as:
Options:
A. A unit where the manager is responsible for generating and maximizing profits
B. A unit focused on achieving a sufficient Return on Investment
C. Both of the above
D. A unit that manages costs
✅ Answer: A
📝 Explanation: A profit center is a branch or division of a company that is treated as a separate unit responsible for generating its own revenue and profits.
3. The components of a product’s cost are:
Options:
A. Only material
B. Only labor
C. Only expenses
D. Material, labor, and expenses
✅ Answer: D
📝 Explanation: Product cost includes direct material, direct labor, and direct expenses. All three components are necessary to determine total cost.
4. Which of the following is not a responsibility of the purchase department?
Options:
A. Receiving purchase requisitions
B. Identifying sources for material supply
C. Preparing and executing purchase orders
D. Accounting for received materials
✅ Answer: D
📝 Explanation: Accounting for received materials is typically handled by the accounting or stores department, not the purchase department.
5. The following is not an example of holding cost:
Options:
A. Storage charges
B. Cost of circulating tender
C. Interest on fund borrowed to purchase stock
D. Costs of obsolescence stock
✅ Answer: B
📝 Explanation: Cost of circulating tenders is related to procurement process, not inventory holding. Holding costs relate to storing inventory over time.
6. A Stores Ledger is:
Options:
A. A record of material received, issued, and balance in both quantity and value
B. A record of material received, issued, and balance in terms of quantity only
C. A record of material received, issued, and balance in terms of value only
D. A record of labor attendance
✅ Answer: A
📝 Explanation: A stores ledger records details of material movement in terms of both quantity and value, helping in inventory control and cost accounting.
7. Re-order level is calculated as:
Options:
A. Maximum consumption × Maximum re-order period
B. Minimum consumption × Minimum re-order period
C. 1/2 of (Minimum + Maximum consumption)
D. Maximum level − Minimum level
✅ Answer: A
📝 Explanation: Re-order level = Maximum consumption × Maximum lead time. This ensures that new stock arrives before existing stock runs out.
8. Which of the following is not an inventory valuation method?
Options:
A. FIFO
B. LIFO
C. Weighted Average
D. EOQ
✅ Answer: D
📝 Explanation: EOQ (Economic Order Quantity) is an inventory management technique, not a valuation method. FIFO, LIFO, and Weighted Average are valuation methods.
9. Which of the following departments is not part of purchasing process?
Options:
A. Storage Department
B. Purchasing Department
C. Production Department
D. Sales Department
✅ Answer: D
📝 Explanation: The sales department is not directly involved in the purchasing process. Purchasing, storage, and production are more closely related to procurement.
10. Which of the following is not an assumption for EOQ model?
Options:
A. Demand for the product is constant.
B. Holding and ordering costs are constant.
C. Unit price is variable.
D. Order of stocks can be replenished immediately.
✅ Answer: C
📝 Explanation: EOQ assumes a constant unit price, among other things. Variable unit price contradicts the model’s basic assumption for cost minimization.
NPTEL Fundamentals of Cost Accounting Week 2 Assignment Answers
1. Which method can help in reducing labor turnover?
Options:
A. Extending work hours
B. Providing competitive salaries
C. Cutting back on training sessions
D. Decreasing employee benefits
✅ Answer: B
📝 Explanation: Offering competitive salaries motivates employees to stay longer in the organization, thereby reducing labor turnover.
2. What is the main goal of a time study?
Options:
A. To lower labor expenses
B. To assess the time needed for each task
C. To boost production
D. To appraise employee performance
✅ Answer: B
📝 Explanation: Time study helps analyze the time required to complete tasks efficiently, aiding in better planning and productivity.
3. Which of the following is classified as a factory overhead cost?
Options:
A. Direct materials
B. Indirect labor
C. Direct labor
D. Sales expenses
✅ Answer: B
📝 Explanation: Indirect labor is part of factory overheads as it supports production but is not directly involved in manufacturing.
4. What is the widely used method to allocate overhead costs?
Options:
A. Direct allocation
B. Absorption costing
C. Marginal costing
D. Cost apportionment on some agreed basis
✅ Answer: D
📝 Explanation: Overheads are commonly apportioned among departments or cost centers based on logical and fair allocation bases.
5. Which overhead cost would include utility bills for a manufacturing facility?
Options:
A. Administrative overhead
B. Factory overhead
C. Sales overhead
D. Office overhead
✅ Answer: B
📝 Explanation: Utility bills related to production fall under factory overheads.
6. In overhead allocation, what does ‘predetermined overhead rate’ mean?
Options:
A. Actual overhead expenses
B. Estimated overhead rate before production starts
C. Overhead costs distributed after production
D. None of the above
✅ Answer: B
📝 Explanation: Predetermined overhead rate is calculated before production begins and helps assign costs based on estimates.
7. Which element is generally found in a cost sheet?
Options:
A. Sales price
B. Direct materials
C. Company income
D. Interest costs
✅ Answer: B
📝 Explanation: Direct materials are a core component of a cost sheet used to calculate product cost.
8. What is the purpose of creating a cost sheet?
Options:
A. To set the selling price
B. To predict future costs
C. To examine the cost components of a product
D. To log daily transactions
✅ Answer: C
📝 Explanation: A cost sheet is used to break down the components of cost involved in producing a product.
9. Which of the following costs is usually excluded from a cost sheet?
Options:
A. Direct labor
B. Depreciation
C. Indirect materials
D. Marketing expenses
✅ Answer: D
📝 Explanation: Marketing expenses are selling expenses and are generally not included in a cost sheet.
10. What does ‘cost per unit’ mean in a cost sheet?
Options:
A. Total production cost
B. Average cost to manufacture one unit
C. Selling price per unit
D. Total revenue divided by total units produced
✅ Answer: B
📝 Explanation: Cost per unit refers to the average production cost of a single unit derived from the total cost.