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Gauhati University Cost and Management Accounting Important Questions FYUGP NEP BCom 4th Sem
Gauhati University Cost and Management Accounting Question Paper FYUGP NEP 4th Sem

Cost and Management Accounting Important Questions - 2025 [FYUGP BCom 4th Sem Gauhati University]

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Are you Looking for help with Cost and Management Accounting Important Questions For FYUGP 4th Sem Gauhati University? If you’re a BCom 4th Semester student at Gauhati University under the FYUGP NEP (Four Year Undergraduate Programme, National Education Policy), you’re in the right place!


In this post, we provide GU Cost and Management Accounting Important Questions for BCom FYUGP NEP 4th Sem for Finance Major, HRM Major and Marketing Management Major – all broken down chapter by chapter with PYQs Chapter Wise Year Marking. These Cost and Management Accounting important Questions for Gauhati University BCom 4th Sem in PDF will make tricky topics. These Important Questions cover Unit I: Cost Accounting: Preliminaries, Unit-II: Accounting for Material, Labour and Overhead,Unit -III: Management Accounting: Preliminaries,Unit IV: Marginal Costing and Budget & Budgetary Control and Unit - V: Standard Costing and Variance Analysis.

Cost and Management Accounting Important Questions - 2025 [FYUGP BCom 4th Sem Gauhati University]
[GU Cost and Management Accounting Important Questions]

Unit 1: Cost Accounting: Preliminaries

Syllabus Topics Covered:

  1. Meaning of cost, costing, and cost accounting

  2. Objectives and functions of cost accounting

  3. Costing as an aid to management

  4. Cost concepts and classification

  5. Relationship between cost accounting and financial accounting

  6. Cost accounting and management accounting

  7. Methods and techniques of costing

  8. Concept of cost audit

  9. Preparation of cost sheet 

Section 1: Objective Type Questions (1 Mark)

Fill in the Blanks, True/False, and Multiple Choice Questions

  1. Cost accounting is a technique of ________ cost. (GU BCom 2022)
     Answer: Ascertaining

  2. Cost accounting is based on ________ figures. (GU BCom 2022)
     Answer: Quantitative

  3. Costing is a tool used by management for ________. (GU BCom 2024)
     Answer: Decision-making

  4. Aggregate of direct costs is referred to as ________ cost. (GU BCom 2024)
     Answer: Prime

  5. Fixed costs depend mainly on the effluxion of time and do not vary directly with volume or rate of output. (GU BCom 2013)
     Answer: True

  6. Cost audit report is addressed to the shareholders. (GU BCom 2014)
     Answer: False (It is addressed to management or the board, not shareholders)

  7. All costs are controllable. (GU BCom 2016)
     Answer: False

  8. Fixed cost does not change in the same proportion in which output changes. (GU BCom 2017)
     Answer: True

  9. Cost accounting is a method of ________ cost. (GU BCom 2023)
     Answer: Ascertaining

  10. Material is the first element of cost. (GU BCom 2023)
     Answer: True

  11. The primary objective of cost accounting is to:
     a) Prepare financial statements
     b) Ascertain and control costs
     c) Audit financial records
     d) Manage taxation
     Answer: b) Ascertain and control costs

  12. Cost concepts are used for:
     a) Decision-making
     b) Tax computation
     c) Dividend declaration
     d) Shareholder reporting
     Answer: a) Decision-making

  13. The relationship between cost accounting and financial accounting is based on:
     a) Legal compliance
     b) Cost control
     c) Providing data for decision-making
     d) Both b and c
     Answer: d) Both b and c

  14. Cost audit ensures:
     a) Compliance with tax laws
     b) Accuracy of cost records
     c) Dividend distribution
     d) Financial statement preparation
     Answer: b) Accuracy of cost records

  15. Which of the following is a technique of costing?
     a) Budgetary control
     b) Standard costing
     c) Ratio analysis
     d) Cash flow statement
     Answer: b) Standard costing

Section 2: Short Answer Questions (2 Marks)

  1. Define the term ‘costing’. (GU BCom 2022)

  2. What is meant by ‘imputed cost’ in cost accounting? (GU BCom 2022)

  3. What is a cost sheet? (GU BCom 2017)

  4. Write any two differences between cost accounting and financial accounting.

  5. State two objectives of cost accounting. (GU BCom 2016)

  6. What is the concept of cost? (GU BCom 2023)

  7. Name two methods of costing.

  8. What is the purpose of cost audit?

  9. How does costing assist management?

  10. Mention two cost concepts used in cost accounting.

  11. What is the relationship between cost accounting and management accounting?

  12. State two functions of cost accounting.

  13. What is meant by classification of costs?

  14. Name two techniques of costing.

  15. What is the significance of preparing a cost sheet?

Section 3: Descriptive Questions (5 Marks)

  1. Write the objectives of cost accounting. (GU BCom 2016)

  2. Write five differences between financial accounting and cost accounting. (GU BCom 2022)

  3. Mention five objectives of cost accounting. (GU BCom 2023)

  4. Mention five benefits of cost accounting. (GU BCom 2024)

  5. Distinguish between cost accounting and management accounting. (GU BCom 2019)

  6. Explain the various functions of cost accounting. (GU BCom 2019)

  7. How is a cost sheet prepared? Explain. (GU BCom 2019)

  8. What is a “Cost Sheet”? Mention four advantages of preparation of cost sheet. 

  9. Explain the concept of cost classification with examples.

  10. Discuss the role of costing as an aid to management.

  11. What are the methods of costing? Explain any two briefly.

  12. What is cost audit? Discuss its importance in cost accounting.

  13. How does cost accounting differ from financial accounting in terms of objectives?

  14. Explain the relationship between cost accounting and management accounting with examples.

  15. Discuss the significance of cost concepts in decision-making.

Section 4: Long Answer Questions (10 Marks)

  1. What is cost accounting? Explain the differences between cost accounting and financial accounting. (GU BCom 2016)

  2. What is cost accounting? Explain the objectives of cost accounting. (GU BCom 2022)

  3. Explain costing as an aid to management. (GU BCom 2017)

  4. Explain the factors to be considered for the installation of a costing system. (GU BCom 2024)

  5. Discuss the various costs classified under functional classification. Give a brief description of each of these costs. (GU BCom 2023)

  6. What are the techniques of costing? (GU BCom 2018)

  7. Discuss the relationship between cost accounting and financial accounting with suitable examples.

  8. Explain the meaning and scope of cost accounting. How does it assist management in decision-making?

  9. What is cost audit? Discuss its objectives and significance in modern business organizations.

  10. Explain the concept of cost sheet. Discuss its importance and limitations in cost accounting. 

  11. Discuss the methods and techniques of costing used in cost accounting. Provide examples for each.

  12. What are cost concepts? Explain their classification and relevance in cost accounting.

  13. How does cost accounting support management in planning and controlling costs? Illustrate with examples.

  14. Compare and contrast cost accounting and management accounting in terms of their objectives and scope.

  15. Discuss the evolution of cost accounting and its importance in the modern business environment.

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Unit 2: Accounting for Material, Labour and Overhead

Syllabus Topics Covered:

  1. Material control concept and techniques

  2. E.O.Q. (Economic Order Quantity), ABC Analysis, and VED Analysis

  3. Labour cost control procedures

  4. Labour turnover

  5. Idle time and overtime

  6. Methods of wage payment – time and piece rates

  7. Importance and classification of overhead

  8. Factory, administrative, and selling overheads

  9. Allocation and apportionment of overhead

  10. Absorption of overhead – under and over absorption (simple application, theoretical aspects only)

Section 1: Objective Type Questions (1 Mark)

Fill in the Blanks, True/False, and Multiple Choice Questions

  1. Indirect expenses are also known as ________. (GU BCom Cost Accounting Paper)
     Answer: Overheads

  2. Variable cost per unit remains constant. (GU BCom 2022)
     Answer: True

  3. Abnormal idle time cost of the factory should be charged to production overhead. (GU BCom 2017)
     Answer: False (It is charged to Costing P&L Account)

  4. The rate of change in the composition of labour force in the organization is called ________. (GU BCom 2017)
     Answer: Labour turnover

  5. Variable cost remains fixed per unit. (GU BCom 2018)
     Answer: True

  6. In case of the LIFO method, issues are based on actual cost. (GU BCom 2018)
     Answer: True

  7. Time wages are suitable where the quantity of work is more important than the quality of work. (GU BCom 2018)
     Answer: False (It’s the opposite: quality over quantity)

  8. Rent is a variable overhead. (GU BCom 2018)
     Answer: False (It is a fixed overhead)

  9. The difference between attendance time and work time is known as:
     a) Motion and rating
     b) Idle time
     c) Overtime
     d) Job time
     (GU BCom 2024)
     Answer: b) Idle time

  10. Indirect labour is treated as part of:
     a) Finished goods
     b) Work-in-progress
     c) Factory overhead
     d) Product
     (GU BCom 2023)
     Answer: c) Factory overhead

  11. FIFO method of valuing materials is suitable in times of rising prices. (GU BCom Cost Accounting Paper)
     Answer: False (LIFO is more suitable)

  12. Overtime work is to be paid for at the ________ rate. (GU BCom 2024)
     Answer: Premium

  13. Bin card shows:
     a) Work-in-process inventory and value of stores
     b) Quantity of stores
     c) Both value and quantity of stores
     d) Value of waste material
     (GU BCom 2016)
     Answer: b) Quantity of stores

  14. Departmentalisation of items of cost is known as ________ distribution. (GU BCom 2016)
     Answer: Primary

  15. Which of the following is a material control technique?
     a) Ratio analysis
     b) ABC Analysis
     c) Budgetary control
     d) Variance analysis
     Answer: b) ABC Analysis

Section 2: Short Answer Questions (2 Marks)

  1. What is meant by Bin Card? (GU BCom Cost Accounting Paper)

  2. What is labour turnover? (GU BCom 2018)

  3. What is a bill of materials? (GU BCom 2018)

  4. State the meaning of overtime. (GU BCom 2022)

  5. State two features of indirect labour. (GU BCom 2022)

  6. What is idle time? (GU BCom 2022)

  7. What is meant by absorption of overheads? (GU BCom 2022)

  8. What is economic order quantity? (GU BCom 2022)

  9. State two objectives of time and motion study. (GU BCom Cost Accounting Paper)

  10. State the meaning of machine hour rate. (GU BCom Cost Accounting Paper)

  11. What is meant by classification of overheads?

  12. Define ABC Analysis in material control.

  13. What is VED Analysis?

  14. Name two methods of wage payment.

  15. What is the difference between idle time and overtime?

Section 3: Descriptive Questions (5 Marks)

  1. Write the basis of apportionment of any five overheads. (GU BCom 2017)
     (e.g., Factory rent, Electricity bill, Depreciation, Supervision, Canteen expenses)

  2. What are under absorption and over absorption of overheads? (GU BCom 2016)

  3. Write a short note on ABC Analysis. (GU BCom 2016)

  4. What is labour turnover? What are the costs associated with it? (GU BCom 2016)

  5. Write the differences between ABC Analysis and VED Analysis. (GU BCom 2018)

  6. What are the different methods of measuring labour turnover? (GU BCom 2018)

  7. Explain briefly the needs of labour cost control. (GU BCom 2024)

  8. Write five features of overhead cost. (GU BCom 2024)

  9. Explain the concept of perpetual inventory system as a technique of effective material control. (GU BCom 2022)

  10. What are the different methods of payment of remuneration to labourers? Briefly explain any one of them. (GU BCom 2017)

  11. Discuss the importance of material control in cost accounting.

  12. Explain the concept of idle time and its impact on cost control.

  13. What is overtime? How can overtime cost be controlled?

  14. Discuss the classification of overheads with examples.

  15. Explain the role of allocation and apportionment in overhead accounting.

Section 4: Long Answer Questions (10 Marks)

  1. What is overtime? How is overtime cost treated in cost accounting? How can such cost be controlled? (GU BCom 2015)

  2. What are the various methods of absorption of overhead? (GU BCom 2018)

  3. What is labour turnover? What are the costs involved in labour turnover? How can you reduce the impact of labour turnover?

  4. What do you mean by over absorption and under absorption of overheads? What are the causes of such over or under absorption?

  5. Discuss various bases for apportionment of overheads to cost centres. (GU BCom 2022)

  6. What is material control? Explain the purchase procedure to be maintained under material control system. (GU BCom 2022)

  7. Explain ‘under-absorption’ and ‘over-absorption’ of overheads. What are the causes for under and over-absorption of overheads? (GU BCom 2023)

  8. What is allocation and apportionment of overheads? Explain with examples. (GU BCom 2023)

  9. Discuss the importance and classification of overheads in cost accounting.

  10. Explain the techniques of material control with suitable examples.

  11. Discuss the procedures for labour cost control in an organization.

  12. What are the methods of wage payment? Explain the advantages and disadvantages of time and piece rate systems.

  13. Explain the significance of ABC Analysis and VED Analysis in material control.

  14. How does overhead accounting assist in cost determination? Discuss the role of factory, administrative, and selling overheads.

  15. Discuss the causes and effects of labour turnover on cost accounting.

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Unit 3: Management Accounting: Preliminaries

Syllabus Topics Covered:

  1. Meaning and objectives of management accounting

  2. Decision situation and role of management accountant

  3. Management accounting techniques: Ratio analysis – meaning of ratio and ratio analysis; uses, significance, and limitations of ratio analysis; activity ratios, liquidity ratios, profitability ratios, and solvency ratios

Section 1: Objective Type Questions (1 Mark)

Fill in the Blanks, True/False, and Multiple Choice Questions

  1. Management accounting deals with the presentation of information in such a way so as to assist ________. (GU BCom 2017)
     Answer: Management

  2. Management accounting is concerned with the ________. (GU BCom 2021)
     Answer: Future

  3. Management accounting provides ________ decisions to the management. (GU BCom 2022)
     Answer: Effective

  4. Budgeting is a tool of management accounting. (GU BCom 2018)
     Answer: True

  5. Liquidity ratios measure long-term solvency of a concern. (GU BCom 2022)
     Answer: False (They measure short-term solvency)

  6. Management accounting is helpful in increasing profitability. (GU BCom 2022)
     Answer: True

  7. The term management accounting was first used in the year ________. (GU BCom 2014)
     Answer: 1950

  8. Liquidity means the ability of a firm to meet its long-term obligations. (GU BCom 2018)
     Answer: False (It refers to short-term obligations)

  9. A quick ratio of 1:1 is considered to represent a satisfactory current financial position. (GU BCom 2018)
     Answer: True

  10. Management accounting deals with both ________ and qualitative information. (GU BCom 2022)
     Answer: Quantitative

  11. The primary objective of management accounting is to:
     a) Prepare financial statements
     b) Assist in decision-making
     c) Comply with tax laws
     d) Audit cost records
     Answer: b) Assist in decision-making

  12. Which of the following is a liquidity ratio?
     a) Debt-equity ratio
     b) Current ratio
     c) Return on investment
     d) Profitability ratio
     Answer: b) Current ratio

  13. Ratio analysis is used to:
     a) Measure financial performance
     b) Prepare budgets
     c) Control material costs
     d) Calculate variances
     Answer: a) Measure financial performance

  14. Profitability ratios assess a firm’s ability to:
     a) Meet short-term obligations
     b) Generate earnings
     c) Manage inventory
     d) Control overheads
     Answer: b) Generate earnings

  15. Solvency ratios indicate:
     a) Short-term liquidity
     b) Long-term debt-paying ability
     c) Operational efficiency
     d) Sales performance
     Answer: b) Long-term debt-paying ability

Section 2: Short Answer Questions (2 Marks)

  1. What is liquidity ratio? (GU BCom 2019)

  2. Mention two objectives of management accounting. (GU BCom 2018)

  3. Write the scope of management accounting. (GU BCom 2016)

  4. Explain any two uses of ratio analysis. (GU BCom 2016)

  5. What are the limitations of financial statements? (GU BCom 2017)

  6. Write two distinctions between cost accounting and management accounting. (GU BCom 2022)

  7. State two advantages of ratio analysis. (GU BCom 2022)

  8. Mention two limitations of ratio analysis. (GU BCom 2021)

  9. What is the significance of current ratio? (GU BCom 2017)

  10. Define management accounting. (GU BCom 2022)

  11. What is the role of a management accountant?

  12. Name two types of activity ratios.

  13. What is meant by profitability ratio?

  14. State the meaning of solvency ratio.

  15. What is the purpose of ratio analysis?

Section 3: Descriptive Questions (5 Marks)

  1. What is a solvency ratio? Explain its significance. (GU BCom 2017)

  2. Explain briefly the nature and scope of management accounting. (GU BCom 2019)

  3. How does management accounting differ from financial accounting? (GU BCom 2019)

  4. Discuss in brief the various tools and techniques used in management accounting. (GU BCom 2019)

  5. Mention five objectives of management accounting. (GU BCom 2022)

  6. Briefly explain the importance and need of management accounting. (GU BCom 2022)

  7. Explain the significance of liquidity ratios. (GU BCom 2021)

  8. Mention five managerial uses of ratio analysis. (GU BCom 2021)

  9. Write a short note on the role of a management accountant in a business organization. (GU BCom Cost Accounting Paper)

  10. What are the objectives of management accounting? (GU BCom 2018)

  11. Discuss the uses of ratio analysis in decision-making.

  12. Explain the significance of profitability ratios for management.

  13. What are the limitations of ratio analysis?

  14. Discuss the role of activity ratios in assessing operational efficiency.

  15. Explain how management accounting supports decision-making situations.

Section 4: Long Answer Questions (10 Marks)

  1. Explain the scope and objectives of management accounting in brief. (GU BCom 2017)

  2. What is a financial statement? Discuss the limitations of financial statements. (GU BCom 2019)

  3. Explain the different tools and techniques of management accounting in the areas of decision-making. (GU BCom 2021)

  4. Explain the functions of management accounting. (GU BCom 2021)

  5. "Management accounting is the presentation of accounting information in such a way as to assist management in the creation of policy and in the day-to-day operations of the undertakings." Explain this statement. (GU BCom 2022)

  6. "The subject of management accounting is very important and useful for optimum utilisation of resources. It is an indispensable discipline for management." Elucidate this statement. (GU BCom 2023)

  7. Describe briefly the limitations of financial accounting and point out how management accounting helps in overcoming them. (GU BCom 2023)

  8. "Ratio analysis is only a technique for making judgments and not a substitute for judgments." Explain. (GU BCom 2023)

  9. Discuss the significance and computation of the following ratios: Return on Investment, Debt-Equity Ratio, Operating Profit Ratio, Stock Turnover Ratio. (GU BCom 2014)

  10. Explain the managerial application of ratio analysis for shareholders, bankers, management, employees, and the government. (GU BCom 2015)

  11. Discuss the meaning, objectives, and scope of management accounting.

  12. Explain the classification of ratios and their significance in financial analysis.

  13. How does a management accountant assist in strategic decision-making?

  14. Discuss the advantages and limitations of ratio analysis as a management accounting technique.

  15. Explain the role of management accounting in improving organizational efficiency.

❑❑❑❑❑

Unit 4: Marginal Costing and Budget & Budgetary Control

Syllabus Topics Covered:

  1. Meaning of marginal costing, assumptions of marginal costing, managerial applications of marginal costing, advantages and disadvantages of marginal costing

  2. Cost-Volume-Profit (CVP) Analysis and Break-Even Analysis (theoretical aspects only)

  3. Meaning of budget and budgetary control

  4. Classification of budgets according to time, function, and flexibility

  5. Master budget

  6. Preparation of flexible budget and cash budget (theoretical aspects only)

  7. Performance budget and zero-based budgeting

Section 1: Objective Type Questions (1 Mark)

Fill in the Blanks, True/False, and Multiple Choice Questions

  1. In an undertaking with high fixed cost, break-even point can be attained at a lower level of activity. (GU BCom 2017)
     Answer: False (Higher fixed costs increase the break-even point)

  2. Marginal costing is a technique of ________ control. (GU BCom 2022)
     Answer: Cost

  3. A budget prepared in a manner so as to give the budgeted cost for various levels of activity is known as ________ budget. (GU BCom 2017)
     Answer: Flexible

  4. The increase in P.V. ratio means lower break-even point and higher ________. (GU BCom 2019)
     Answer: Margin of safety

  5. A flexible budget changes with the change in the level of activity. (GU BCom 2021)
     Answer: True

  6. Contribution is the difference between sales and ________ costs. (GU BCom 2022)
     Answer: Variable

  7. Budgetary control is a system of controlling ________. (GU BCom 2021)
     Answer: Costs

  8. Budgeting is a tool of management accounting. (GU BCom 2018)
     Answer: True

  9. What is the premise of zero-based budgeting? (GU BCom 2015)
     Answer: Starting from zero base

  10. Profit-Volume ratio is also known as the ________ ratio. (GU BCom 2021)
     Answer: Contribution

  11. Which of the following is an objective of budgetary control?
     a) Evaluation
     b) Reporting
     c) Selling estimate
     d) Capital expenditure
     (GU BCom 2019)
     Answer: a) Evaluation

  12. At break-even point:
     a) There is neither profit nor loss
     b) Total revenue equals total costs
     c) Contribution equals fixed costs
     d) All of the above
     (GU BCom 2023)
     Answer: d) All of the above

  13. Marginal costing charges only ________ costs to production. (GU BCom 2021)
     Answer: Variable

  14. A ________ budget does not take into consideration any change in expenditure arising out of changes in the level of activity. (GU BCom 2023)
     Answer: Fixed

  15. The master budget is:
     a) A summary of all budgets
     b) A cash budget
     c) A production budget
     d) A sales budget
     Answer: a) A summary of all budgets

Section 2: Short Answer Questions (2 Marks)

  1. What is contribution? (GU BCom 2019)

  2. What is the margin of safety? (GU BCom 2018)

  3. Write the meaning of budgetary control. (GU BCom 2021)

  4. What is a cash budget? (GU BCom 2022)

  5. Mention two distinctions between fixed budget and flexible budget. (GU BCom 2022)

  6. Write two limitations of budgetary control. (GU BCom 2022)

  7. What is break-even point? (GU BCom 2022)

  8. State the meaning of marginal costing. (GU BCom 2022)

  9. What is angle of incidence in marginal costing? (GU BCom 2022)

  10. What is a flexible budget? (GU BCom 2017)

  11. Define zero-based budgeting.

  12. What is meant by cost-volume-profit analysis?

  13. State two advantages of marginal costing.

  14. Name two types of budgets based on flexibility.

  15. What is a master budget?

Section 3: Descriptive Questions (5 Marks)

  1. What is flexible budget? (GU BCom 2017)

  2. What is budgetary control? (GU BCom 2018)

  3. Explain the assumptions of marginal costing. (GU BCom 2021)

  4. State the objectives of budgetary control. (GU BCom 2022)

  5. Briefly explain any five advantages of cash budget. (GU BCom 2022)

  6. Write a brief note on cost-volume-profit analysis. (GU BCom 2022)

  7. Describe briefly any five requisites for a successful budgetary control system. (GU BCom 2023)

  8. What is break-even analysis? What are its assumptions? (GU BCom 2015)

  9. State the characteristics of good budgeting. (GU BCom 2021)

  10. Explain the purposes of performance budgeting. (GU BCom 2014)

  11. Discuss the advantages of marginal costing.

  12. Explain the managerial applications of marginal costing.

  13. What are the different types of budgets based on function?

  14. Discuss the significance of a cash budget in financial planning.

  15. Explain the concept of zero-based budgeting and its importance.

Section 4: Long Answer Questions (10 Marks)

  1. State the application of marginal costing in pricing decisions and profit planning. (GU BCom 2013) (Theoretical only)

  2. What is zero-based budgeting? How is it different from traditional budgeting? What are the advantages of such a technique of budgeting? (GU BCom 2013)

  3. What are the advantages and disadvantages of budgetary control? (GU BCom 2017)

  4. Explain the managerial applications of marginal costing as an aid to pricing decisions. (GU BCom 2019)

  5. Explain the managerial application of marginal costing. (GU BCom 2018)

  6. What is break-even analysis? What are its assumptions? How is break-even point calculated in terms of sales units and value? (GU BCom 2015)

  7. Explain the advantages of marginal costing and cost-volume-profit analysis. (GU BCom 2022)

  8. What is a budget? Briefly explain the advantages of budgetary control. (GU BCom 2022)

  9. Explain different tools and techniques of management accounting in the areas of decision-making. (GU BCom 2021) (Focus on budgeting aspects)

  10. Explain the uses of marginal costing by management in the decision-making process. (GU BCom 2021)

  11. Discuss the classification of budgets according to time, function, and flexibility.

  12. Explain the assumptions, advantages, and disadvantages of marginal costing.

  13. How does budgetary control assist in cost management? Discuss its objectives and limitations.

  14. Discuss the role of CVP analysis in profit planning and decision-making. (Theoretical only)

  15. Explain the concept of master budget and its significance in organizational planning.

❑❑❑❑❑

Unit 5: Standard Costing and Variance Analysis

Syllabus Topics Covered:

  1. Meaning of standard cost and standard costing

  2. Advantages of standard costing

  3. Standard costing vs. budgetary control

  4. Variance analysis

  5. Classification and computation of variance 

Section 1: Objective Type Questions (1 Mark)

Fill in the Blanks, True/False, and Multiple Choice Questions

  1. The difference between actual cost and standard cost is known as ________. (GU BCom 2021)
     Answer: Variance

  2. Standard costing helps in measuring ________. (GU BCom 2019)
     Answer: Efficiency

  3. When the actual cost incurred is less than the standard cost, the variance is known as ________. (GU BCom 2017)
     Answer: Favourable

  4. Standard cost is a ________ cost. (GU BCom 2022)
     Answer: Predetermined

  5. When actual cost is greater than standard cost, then variance is favourable. (GU BCom 2021)
     Answer: False (It is unfavourable)

  6. The technique of standard costing may not be applicable in case of ________. (GU BCom 2019)
     Answer: Non-standardized products

  7. Labour cost variance is the difference between standard cost of labour and ________ cost of labour. (GU BCom 2022)
     Answer: Actual

  8. Standard costing is a technique of ________ control. (GU BCom 2022)
     Answer: Cost

  9. The difference between actual cost and standard cost is known as:
     a) Variance
     b) Profit
     c) Differential cost
     (GU BCom 2019)
     Answer: a) Variance

  10. Standard costing is primarily used for:
     a) Tax computation
     b) Cost control
     c) Financial reporting
     d) Dividend declaration
     Answer: b) Cost control

  11. Variance analysis helps in:
     a) Budget preparation
     b) Identifying deviations
     c) Cash flow management
     d) Ratio computation
     Answer: b) Identifying deviations

  12. Which of the following is an advantage of standard costing?
     a) Simplifies tax filing
     b) Facilitates cost control
     c) Reduces financial audits
     d) Improves sales forecasting
     Answer: b) Facilitates cost control

  13. Standard costing differs from budgetary control in its focus on:
     a) Long-term planning
     b) Unit-level cost standards
     c) Cash management
     d) Revenue projections
     Answer: b) Unit-level cost standards

  14. Material price variance occurs due to:
     a) Change in material usage
     b) Difference in actual and standard price
     c) Labour efficiency
     d) Overhead allocation
     Answer: b) Difference in actual and standard price

  15. An unfavourable variance indicates:
     a) Cost savings
     b) Higher actual cost than standard
     c) Improved efficiency
     d) Lower production
     Answer: b) Higher actual cost than standard

Section 2: Short Answer Questions (2 Marks)

  1. State two causes of material usage variance. (GU BCom 2019)

  2. Write the significance of the term ‘variance’ in standard costing. (GU BCom 2022)

  3. State the meaning of materials cost variance. (GU BCom 2022)

  4. Write the meaning of variance analysis. (GU BCom 2021)

  5. State the meaning of standard costing. (GU BCom 2022)

  6. What is meant by standard cost?

  7. Name two advantages of standard costing.

  8. What is the difference between standard costing and budgetary control?

  9. Define variance analysis.

  10. What is meant by labour efficiency variance?

  11. State the purpose of standard costing.

  12. What is a favourable variance?

  13. Name two types of variances in standard costing.

  14. What is the role of variance analysis in cost control?

  15. Explain the term ‘standard’ in standard costing.

Section 3: Descriptive Questions (5 Marks)

  1. Distinguish between standard costing and budgetary control. (GU BCom 2015)

  2. What do you mean by variance analysis? Discuss its importance briefly. (GU BCom 2023)

  3. Explain the possible causes for material price variance in standard costing. (GU BCom 2022)

  4. Briefly explain any five advantages of standard costing. (GU BCom 2021)

  5. State the factors considered in the establishment of standard cost. (GU BCom 2021)

  6. Define current standard and basic standard. (GU BCom 2015)

  7. How are standard costs different from estimated costs? (GU BCom 2015)

  8. Discuss the advantages of standard costing.

  9. Explain the concept of variance analysis with examples.

  10. What are the limitations of standard costing?

  11. Discuss the role of standard costing in improving efficiency.

  12. Explain the classification of variances in standard costing.

  13. How does standard costing assist management in decision-making?

  14. Discuss the significance of variance analysis in cost management.

  15. Explain the steps involved in setting up standard costing. 

Section 4: Long Answer Questions (10 Marks)

  1. What are the steps involved in standard costing and also state its limitations? (GU BCom 2013)

  2. What do you understand by standard costing? What are the advantages of standard costing? (GU BCom 2016)

  3. Discuss the preliminary steps for establishing a system of standard costing. (GU BCom 2019)

  4. State the steps involved in standard costing. Discuss the limitations of standard costing. (GU BCom 2022)

  5. Explain how standard costing differs from budgetary control. Discuss its advantages.

  6. Discuss the meaning, objectives, and advantages of standard costing.

  7. Explain the concept of variance analysis. Discuss its classification and significance in cost control.

  8. How does standard costing support management in planning and controlling costs?

  9. Discuss the advantages and limitations of standard costing as a cost control technique.

  10. Explain the role of variance analysis in identifying inefficiencies and improving performance.

  11. What is standard costing? Discuss its application in modern business organizations.

  12. Compare and contrast standard costing and budgetary control in terms of their objectives and techniques.

  13. Discuss the causes of variances and their implications for management decision-making.

  14. Explain the process of establishing standard costs and the challenges involved.

  15. Discuss the evolution of standard costing and its relevance in contemporary cost management.

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