Interview Questions.

Question 1. What Is Marginal Cost And Marginal Costing?

Answer :

Marginal Cost is the amount at any given extent of output by means of which aggregate expenses are modified if the quantity of output is expanded or decreased by using one solidarity. The aggregate expenses consists of both, constant value and variable price. In simple words, marginal fee suggests the in step with unit variable fee.

Marginal Costing is then again is the ascertainment, by using differentiating among fixed charges, variable fees, of the marginal expenses and of the impact on earnings of modifications in extent and kind of output.

Question 2. What Is Sunk Cost?

Answer :

Sunk fee suggests the historic price which has been incurred within the beyond. This kind of value isn't applicable within the decision making procedure. For instance-at the same time as figuring out approximately the alternative of a device, the depreciated book cost of the device won't be applicable in the form of sunk value.

General Accounting Interview Questions
Question 3. What Do You Understand By Cost Accountancy? What Are The Objectives Of Cost Accountancy?

Answer :

Cost accountancy is the software of Costing and Cost accounting standards, methods, and strategies to the science, artwork and practice of fee manage and the ascertainment of profitability as well as the presentation of information for the reason of managerial choice making. 

Following are the goal of value accountancy:

Ascertainment of fee and profitability with the help of various standards, methods and strategies.
Cost control
Presentation of records to permit managerial decision making.
Question 4. What Do You Understand By Cost Center? What Are The Types Of Cost Centers?

Answer :

Cost center is described as a region, individual, or object of device in terms of which expenses may be ascertained and used for the motive of price manipulate. Identification of a value center is a prerequisite for the a hit implementation of the cost accounting manner as the costs are ascertained and managed with recognize tot the cost centers. In many cases cost centers are termed as Responsibility Centers.

Types of price facilities:

Impersonal fee center :Consists of area or object of equipment. 

Example :branch, branch etc.

Personal fee middle : Consists of a person or a set of men and women. 

Example :finance supervisor, income manager and many others.

Production fee center :Is the one wherein the manufacturing activity is carried on. 

For instance : paint save, a system store, and so on.

Service price facilities: Is the only which assists the manufacturing activity. 

For example : shop branch, inner shipping department, labour workplace, accounts branch, etc.

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Question 5. What Are The Different Types Of Cost?

Answer :

Cost indicates the amount of expenditure incurred on a given aspect. 

Following are the unique forms of price:

Direct Cost : also termed as Prime cost. It indicates that fee which may be diagnosed with the character cost middle. It consists of direct material fee, direct labour cost and direct fees.

Indirect Cost : additionally termed as Overhead. It shows that price which can't be recognized with the individual price center. It consists of indirect fabric fee, oblique labour fee and oblique fees.

Fixed Cost :suggests that part of total value which remains steady at all the levels of manufacturing. As the extent of manufacturing increases, per unit constant fee may also lessen, but no longer the full fixed cost.

Variable indicated that part of the overall cost which varies at once with the level of manufacturing. The better the quantity of manufacturing, the higher the variable price and vice versa, although per unit variable fee remains regular at all the levels of production.

Semi-variable value : indicates that part of the entire price which is partly constant and partially variable on the subject of the volume of manufacturing.

Controllable cost : shows that price which can be managed through a selected number of men and women within the organization

Uncontrollable cost : suggests that cost which can't be controlled by means of a selected range of humans in the business enterprise.

Normal cost : indicates that price which is generally incurred at a sure degree of output below everyday occasions.

Abnormal value : shows that price which is normally now not incurred at a sure stage of output under everyday instances.

Financial Reporting and Analysis Interview Questions
Question 6. Which Factors Should Be Considered Before Installing A Costing System?

Answer :

Nature of the Product
Nature of the Organization
Manufacturing Process
Simplicity and Cost
Reporting Systems
Question 7. What Are The Elements Of Costs?

Answer :

Elements of expenses

1.Material Cost : is the cost of commodities and fabric used by the corporation. It may be direct and oblique fabric. Direct material suggests that cloth which can be recognized with the man or woman fee middle and which becomes an necessary a part of the finished items. Indirect material suggests that cloth which can't be diagnosed with the character cost center. This cloth assists the producing procedure and does no longer end up an imperative part of completed goods.

2.Labour Cost : is the fee of remuneration paid to the personnel of the business enterprise. It may be direct or indirect. Direct labour cost indicates that labour cost which may be identified with the individual cost middle and is incurred for those personnel who're engaged within the manufacturing system. Indirect labour fee suggests that labour cost which can't be identified with the character fee center and is incurred for the ones personnel who aren't engaged within the production system but most effective help inside the identical.

3.Expenses : is the fee of offerings furnished to the organization. It may be direct or oblique. Direct prices are the ones fees which may be diagnosed with the character price centers. Indirect fees are those charges which cannot be diagnosed with that individual cost centers.

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Question eight. What Is Overhead? What Items Are Included In Overhead?

Answer :

Overhead is an aggregate of indirect fabric value, oblique labour value and indirect expenses. 

Overheads are further categorized as:

Factory Overheads:  Consists of all overhead charges incurred from the stage of procurement of cloth until the stage of production of completed items
Office and Administration Overheads : Consists of all overhead expenses incurred for the general management of the organization.
Selling and Distribution Overheads : Consists of all overhead prices insured from the degree of final production of completed goods till the degree of sale of products in the market and series of dues from the customers.
Question nine. What Are The Main Consequences Of Overstocking?

Answer :

It will block a massive amount of working capital.
More storage centers might be required.
Risk of degradation of nice and obsolescence of cloth.
More interest could be required in cloth coping with and up keeping.
Additional Insurance price.
Book Keeping Interview Questions
Question 10. What Is The Difference Between Bin Card And Stores Ledger?

Answer :

Bin Card is a quantitative record of receipts, problems and closing stability of an object of material. Whereas Stores ledger records now not simplest portions acquired or issued or in inventory however additionally the economic expressions of the identical.
Bin Card is maintained via stores department while shops ledger is maintained with the aid of costing branch.
Maintenance of stores ledger offers a second check on upkeep of bin cards.
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Question eleven. What Are The Various Ways To Classify Overhead?

Answer :

Element wise Classification:

Indirect Material
Indirect Labour
Indirect Expenses
Function wise Classification:

Factory Overheads
Administration Overheads
Selling and Distribution Overheads
Variability smart Classification:

Fixed Overheads
Variable Overheads
Semi-variable Overheads
Controllability smart Classification:

Controllable Overheads
Uncontrollable Overheads
Normality smart Classification:

Normal Overheads
Abnormal Overheads
Accounts and Finance for Managers Interview Questions
Question 12. What Is The Difference Between Simple Average Method And Weighted Average Method?

Answer :

Under Simple average approach the simple average of the prices of the masses available for making the issues is considered for pricing the troubles. After the receipt of new lot, a brand new common fee is labored out. This technique is suitable if the cloth is received in uniform amount.

Under Weighted common technique the fee of every lot and the amount of the identical is considered. This technique proves to be very useful within the event of varying fees and quantities. It is very simple to calculate.

General Accounting Interview Questions
Question thirteen. What Are The Limitations Of Marginal Costing?

Answer :

The category of general fee as variable cost and fixed fee is hard as no price can be absolutely variable or absolutely fixed.
Fixed expenses are removed for the valuation of stock of completed items and semi-completed goods in spite of the truth that they could were truely incurred.
It does no longer provide any widespread for the evaluation of overall performance.
Fixation of selling fee on marginal price basis may be beneficial for brief term only and can be risky ultimately.
It does not recollect the fixed overheads.
It may be used for evaluation of profitability most effective within the quick run.
Question 14. What Is P/v Ratio?

Answer :

P/V Ratio is Profit Volume Ratio which shows the contribution earned with recognize to one rupee of income. The fundamental property of P/V Ratio is that it stays regular at all of the tiers of sports, provided according to unit income fee and variable value remains constant. A excessive P/V ration suggests that a moderate increase in sales with out corresponding boom in fixed fees will result in better profits while a low P/V ratio indicates low profitability so that efforts may be made to boom the earnings with the aid of increasing promoting fee or via decreasing variable fee.

Question 15. What Are The Basic Assumptions Made By Marginal Costing?

Answer :

Marginal Costing is based on the following the basic assumptions

Variable cost varies in direct percentage with the extent of pastime while in keeping with unit variable price stays consistent at all of the tiers of sports.
Per unit promoting price stays consistent at all of the degrees of activities.
There aren't any variations due to the inventory.
Cost Accounting Interview Questions
Question sixteen. What Do You Understand By Margin Of Safety?

Answer :

Margin of protection are the sales beyond Break Even Point. In simple words, this is the amount of sales which generates earnings. The soundness of the business is indicated by way of the margin of protection. A excessive margin of protection indicates that the Break Even Point is much underneath the real sales or even if there may be reduction in income, enterprise may be nevertheless in income whereas a low margin of protection observed by means of high fixed price and excessive P/V ration suggests that efforts are required to be made for decreasing the constant price or increasing income extent.

Question 17. What Are The Different Methods Of Remunerating The Workers?

Answer :

Remuneration on time foundation

High Wage Plan
Differential Time Rate
Remuneration on work foundation

Straight Piece Rate System
Piece Rate with Guaranteed Time Rate
Differential Piece Rate System
Incentive/Bonus systems

Individual Incentive systems
Group Incentive structures
Indirect economic remuneration

Profit Sharing
Co-partnership
Finance Interview Questions
Question 18. Explain Maximum Level And What Are The Main Factors Considered While Fixing This Level?

Answer :

Maximum stage is the extent above which the real stock ought to no longer exceed. 

Following factors are considered at the same time as fixing this degree:

Maximum Usage.
Lead Time
Price of Material
Cost of Storage
Availability of Funds
Economic Order Quantity.
Financial Reporting and Analysis Interview Questions