Interview Questions.

Q1. What Is P/v Ratio?

P/V Ratio is Profit Volume Ratio which suggests the contribution earned with admire to one rupee of sales. The fundamental assets of P/V Ratio is that it stays steady at all of the ranges of activities, furnished in line with unit sales charge and variable price stays consistent. A high P/V ration indicates that a mild increase in income with out corresponding boom in constant fees will result in better profits while a low P/V ratio indicates low profitability in order that efforts can be made to growth the earnings by using growing selling fee or by way of lowering variable price.

Q2. What Are The Basic Assumptions Made By Marginal Costing?

Marginal Costing is based on the subsequent the basic assumptions

Variable value varies in direct proportion with the level of pastime whereas in step with unit variable cost stays consistent at all the stages of activities.

Per unit selling fee stays steady at all of the tiers of sports.

There aren't any versions because of the stock.

Q3. What Are The Main Consequences Of Overstocking?

It will block a large quantity of operating capital.

More storage centers might be required.

Risk of decay of exceptional and obsolescence of cloth.

More attention can be required in fabric handling and up keeping.

Additional Insurance value.

Q4. What Is Marginal Cost And Marginal Costing?

Marginal Cost :is the quantity at any given quantity of output through which combination charges are changed if the quantity of output is multiplied or reduced via one team spirit. The combination fees consists of both, fixed fee and variable price. In easy phrases, marginal price indicates the consistent with unit variable value.

Marginal Costing :is then again is the ascertainment, by way of differentiating between fixed prices, variable charges, of the marginal expenses and of the impact on profit of changes in volume and sort of output.

Q5. What Items Are Included In Prime Cost?

Prime Cost is an aggregate of direct material cost, direct labour price and direct expenses.

Q6. What Are The Limitations Of Marginal Costing?

The type of general value as variable fee and stuck fee is tough as no cost may be absolutely variable or completely constant.

Fixed prices are eliminated for the valuation of inventory of completed items and semi-completed items in spite of the truth that they could had been certainly incurred.

It does now not offer any widespread for the assessment of overall performance.

Fixation of selling fee on marginal fee foundation can be beneficial for quick term only and may be risky in the end.

It does no longer do not forget the constant overheads.

It may be used for assessment of profitability most effective inside the brief run.

Q7. What Are Non Operating Financial Incomes And Non Operating Financial Expenses?

Non working financial profits represents that profits which arises now not as a part of regular operations of the agency. Due to these earning operating earnings as per fee assertion can be much less than earnings as in step with Profit and Loss account. For instance: earnings on the sale of assets, dividend received etc.

Non working financial expense represents that fee which arises no longer as part of regular operations of the business enterprise. Due to those expenses the running profit as consistent with the price statement can be more than the earnings as per Profit and Loss Account. For example: a loss on the sale of belongings, provision for profits tax, interest paid and many others.

Q8. What Are The Elements Of Costs?

Elements of costs

Material Cost – is the value of commodities and fabric utilized by the organisation. It can be direct and oblique cloth. Direct cloth suggests that material which can be identified with the individual price middle and which will become an fundamental a part of the finished items. Indirect fabric suggests that cloth which cannot be identified with the person fee middle. This cloth assists the producing manner and does not end up an crucial a part of finished items.

Labour Cost – is the fee of remuneration paid to the employees of the company. It may be direct or indirect. Direct labour price suggests that labour fee which can be recognized with the person cost middle and is incurred for the ones personnel who are engaged in the production system. Indirect labour cost suggests that labour fee which cannot be diagnosed with the individual fee middle and is incurred for those personnel who are not engaged within the production method however handiest assist in the same.

Expenses – is the fee of services provided to the business enterprise. It can be direct or oblique. Direct prices are the ones costs which may be diagnosed with the man or woman price centers. Indirect prices are those prices which can't be identified with that individual cost facilities.

Q9. What Is The Difference Between Bin Card And Stores Ledger?

Bin Card is a quantitative document of receipts, problems and final balance of an object of cloth. Whereas Stores ledger facts now not best quantities acquired or issued or in stock but additionally the financial expressions of the identical.

Bin Card is maintained through shops branch whilst shops ledger is maintained with the aid of costing branch.

Maintenance of stores ledger offers a 2d check on renovation of bin playing cards.

Q10. What Do You Understand By Margin Of Safety?

Margin of safety are the sales past Break Even Point. In easy phrases, this is the amount of sales which generates income. The soundness of the business is indicated by means of the margin of protection. A excessive margin of safety indicates that the Break Even Point is plenty below the real sales or even if there is discount in income, business may be still in profits whereas a low margin of safety observed by excessive constant value and excessive P/V ration suggests that efforts are required to be made for reducing the constant cost or growing income volume.

Q11. What Is The Difference Between Simple Average Method And Weighted Average Method?

Under Simple average method: the simple average of the costs of the plenty to be had for making the troubles is considered for pricing the problems. After the receipt of latest lot, a new average rate is worked out. This approach is suitable if the fabric is obtained in uniform quantity.

Under Weighted common approach: the fee of each lot and the amount of the equal is taken into consideration. This approach proves to be very useful in the occasion of varying charges and portions. It is very simple to calculate.

Q12. What Are The Different Methods Of Remunerating The Workers?

Remuneration on time foundation

High Wage Plan

Differential Time Rate

Remuneration on paintings foundation

Straight Piece Rate System

Piece Rate with Guaranteed Time Rate

Differential Piece Rate System

Incentive/Bonus structures

Individual Incentive structures

Group Incentive systems

Indirect monetary remuneration

Profit Sharing

Co-partnership

Q13. What Is Sunk Cost?

Sunk fee suggests the historic fee which has been incurred within the past. This type of fee is not applicable within the decision making manner. For example-whilst finding out about the substitute of a machine, the depreciated ebook cost of the system may not be relevant within the form of sunk value.

Q14. What Are The Different Types Of Cost?

Cost shows the quantity of expenditure incurred on a given factor. 

Following are the special kinds of cost:

Direct Cost – also termed as Prime cost. It indicates that cost which may be recognized with the character value center. It includes direct cloth value, direct labour price and direct charges.

Indirect Cost – also termed as Overhead. It shows that cost which cannot be recognized with the man or woman price center. It consists of oblique material value, indirect labour fee and oblique charges.

Fixed Cost – suggests that portion of overall price which stays constant at all the stages of manufacturing. As the volume of manufacturing will increase, according to unit constant value might also lessen, but no longer the full fixed cost.

Variable – indicated that portion of the full price which varies at once with the level of production. The higher the quantity of production, the better the variable cost and vice versa, even though per unit variable fee remains consistent at all of the levels of production.

Semi-variable price – indicates that portion of the whole value that's partially constant and partly variable when it comes to the extent of manufacturing.

Controllable price – shows that value which may be controlled through a particular range of people in the organisation

Uncontrollable cost – indicates that value which can't be controlled by using a specific range of folks within the enterprise.

Normal fee – suggests that fee which is normally incurred at a positive level of output underneath everyday situations.

Abnormal fee - indicates that fee that's usually now not incurred at a certain level of output below ordinary circumstances.

Q15. What Do You Understand By Cost Accountancy? What Are The Objectives Of Cost Accountancy?

Cost accountancy is the software of Costing and Cost accounting concepts, methods, and techniques to the science, artwork and practice of value manipulate and the ascertainment of profitability in addition to the presentation of records for the motive of managerial selection making. 

Following are the objective of fee accountancy:

Ascertainment of price and profitability with the help of diverse principles, techniques and techniques.

Cost manipulate

Presentation of data to enable managerial selection making.

Q16. Explain Maximum Level And What Are The Main Factors Considered While Fixing This Level?

Maximum level is the extent above which the real inventory display Following factors are considered while fixing this level:

Maximum Usage.

Lead Time

Price of Material

Cost of Storage

Availability of Funds

Economic Order Quantity.

Q17. What Are The Various Ways To Classify Overhead?

Element sensible Classification:

Indirect Material

Indirect Labour

Indirect Expenses

Function smart Classification:

Factory Overheads

Administration Overheads

Selling and Distribution Overheads

Variability clever Classification:

Fixed Overheads

Variable Overheads

Semi-variable Overheads

Controllability wise Classification:

Controllable Overheads

Uncontrollable Overheads

Normality smart Classification:

Normal Overheads

Abnormal Overheads

Q18. Which Factors Should Be Considered Before Installing A Costing System?

Nature of the Product

Nature of the Organization

Manufacturing Process

Simplicity and Cost

Reporting Systems

Q19. What Is Overhead? What Items Are Included In Overhead?

Overhead is an combination of indirect material fee, oblique labour value and indirect fees. 

Overheads are similarly classified as:

Factory Overheads – Consists of all overhead expenses incurred from the degree of procurement of cloth until the stage of manufacturing of completed items

Office and Administration Overheads – Consists of all overhead fees incurred for the general management of the organisation.

Selling and Distribution Overheads – Consists of all overhead fees insured from the degree of final production of completed items till the level of sale of products within the marketplace and collection of dues from the clients.

Q20. What Do You Understand By Cost Center? What Are The Types Of Cost Centers?

Cost middle is defined as a place, person, or object of device when it comes to which fees may be ascertained and used for the reason of value manipulate. Identification of a cost center is a prerequisite for the a hit implementation of the value accounting technique because the charges are ascertained and managed with recognize tot the price facilities. In many instances price centers are termed as Responsibility Centers.

Types of cost facilities:

@Impersonal fee center – Consists of region or item of device. 

Example - department, department and many others.

@Personal fee middle – Consists of a person or a group of humans. 

Example – finance supervisor, sales manager and so forth.

@Production fee middle – Is the one in which the manufacturing interest is carried on. 

For instance - paint keep, a device shop, and so on.

@Service cost centers – Is the only which assists the manufacturing interest. 

For example - save branch, inner trport department, labour workplace, accounts branch, and so on.