480+ Cost Accounting Solved MCQs

These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Management Studies (BMS) , Bachelor of Accounting and Finance (BAF) , Bachelor of Commerce (B Com) .

Take a Test

301.	Indirect material used in production is classified as: -
A.	Office overhead
B.	Selling overhead
C.	Distribution overhead
D.	Factory overhead
Answer» D. Factory overhead

discuss

302.	The cost per unit that increases or decreases when the volume of output decreases or increases is known as
A.	semi-variable cost
B.	fixed cost
C.	variable cost
D.	marginal cost
Answer» C. variable cost

discuss

303.	Cost accounting has developed due to the ___________ of financial accounting
A.	Advantages
B.	Limitations
C.	Merits
D.	Expansion
Answer» B. Limitations

discuss

304.	The method of costing most suitable for medicine manufacturing industry is:
A.	Unit Costing
B.	Process Costing
C.	Batch Costing
D.	Contract Costing
Answer» C. Batch Costing

discuss

305.	Cost accountancy is considered an art because it _____
A.	Has systematic body of knowledge
B.	requires necessary ability and skills
C.	involves continuous efforts of cost accountant
D.	None of the above
Answer» B. requires necessary ability and skills

discuss

306.	The main objective of cost accounting is
A.	Recording of cost
B.	Fixation of selling price
C.	Cost control
D.	Maximize profit
Answer» C. Cost control

discuss

307.	Cost accounting mainly helps the management in
A.	Earning profit
B.	Providing information to management
C.	Fixing prices of the products
D.	All of the above
Answer» B. Providing information to management

discuss

308.	Costs incurred for the maintenance of inventory is called
A.	Carrying cost
B.	Ordering cost
C.	Period cost
D.	Explicit cost
Answer» A. Carrying cost

discuss

309.	Absorption costing charges:
A.	Only fixed cost
B.	Only variable cost
C.	Both variable and fixed
D.	Some part of fixed cost
Answer» C. Both variable and fixed

discuss

310.	An important feature of a cost centre is that:
A.	it uses only monetary information
B.	it has a clearly defined boundaries
C.	it must be one specific location only
D.	none of the above
Answer» B. it has a clearly defined boundaries

discuss

311.	Prime cost may be correctly defined as
A.	the sum of direct materials and direct labour cost with all other costs excluded
B.	the total of all cost item
C.	the total cost incurred in producing a finished unit
D.	none of the above
Answer» A. the sum of direct materials and direct labour cost with all other costs excluded

discuss

312.	The term “cost” refers to
A.	an asset that has given benefit and is now expired.
B.	the value of the sacrifice made to acquire goods or services
C.	the present value of future benefits
D.	none of the above
Answer» B. the value of the sacrifice made to acquire goods or services

discuss

313.	Costing is a technique of
A.	ascertaining profit
B.	ascertaining variable cost
C.	ascertaining cost
D.	none of the above
Answer» C. ascertaining cost

discuss

314.	Cost Accounting is a separate
A.	branch of accounting
B.	method of accounting
C.	system of accounting
D.	none of the above
Answer» A. branch of accounting

discuss

315.	Cost Accounting serves the information needs of
A.	shareholders
B.	creditors
C.	management
D.	none of the above
Answer» C. management

discuss

316.	Costs which remains constant at all level of production is a
A.	variable cost
B.	fixed cost
C.	sunk cost
D.	none of the above
Answer» B. fixed cost

discuss

317.	An opportunity cost is
A.	the advantage forgone
B.	the disadvantage forgone
C.	the estimated cost
D.	none of the above
Answer» A. the advantage forgone

discuss

318.	Three elements of cost are:
A.	Direct Material, Direct Labour, Direct Expenses
B.	Manufacturing Overheads, Office Expenses, Selling Overheads
C.	Labour, Material, Other Expense
D.	Material, Labour, Overheads
Answer» C. Labour, Material, Other Expense

discuss

319.	Cost of production is equal to:
A.	Prime cost plus works costs
B.	Total cost minus Prime cost
C.	Works cost plus Administrative cost
D.	Prime cost plus Administrative cost
Answer» C. Works cost plus Administrative cost

discuss

320.	Works cost include
A.	Direct Material + Direct Labour + Chargeable Expenses
B.	Direct Material + Direct Labour + Office Overheads
C.	Direct Material + Direct Labour + Direct Expenses + Works Expenses
D.	None of the above
Answer» C. Direct Material + Direct Labour + Direct Expenses + Works Expenses

discuss

321.	Which of the following is not Selling and Distribution Expenses:
A.	Cost of samples
B.	Carriage outward
C.	Bad debts
D.	Primary packing material
Answer» D. Primary packing material

discuss

322.	Profit is:
A.	Sales minus factory cost
B.	Sales minus cost of production
C.	Sales minus cost of sales
D.	Sales minus cost of goods sold
Answer» C. Sales minus cost of sales

discuss

323.	Which of the following is not included in cost?
A.	Consumable stores
B.	Dividend
C.	Indirect labour
D.	Distribution overheads
Answer» B. Dividend

discuss

324.	Value of material consumed is:
A.	Opening stock of material + Closing stock of material
B.	Opening stock of material + Purchases of material – Closing stock of material
C.	Average of opening and closing stock of material
D.	Purchase of material – Closing stock of material
Answer» B. Opening stock of material + Purchases of material – Closing stock of material

discuss

325.	Specify the expenses excluded from costs:
A.	Direct or chargeable expenses
B.	Expenses of raising capital
C.	Selling overheads
D.	Indirect labour
Answer» B. Expenses of raising capital

discuss

326.	In this technique of selective control, materials are analysed according to their value so that costly and more valuable materials are given greater attention and care
A.	Economic order quantity
B.	ABC technique
C.	Material budgets
D.	Minimum level
Answer» B. ABC technique

discuss

327.	. This is a level at which normal issues of materials are stopped and urgent action is taken for procurement of materials
A.	Minimum level
B.	Maximum level
C.	Re-order level
D.	Danger level
Answer» D. Danger level

discuss

328.	The purchasing system where there is a separate purchasing department entrusted with the task of making all purchases is called
A.	Centralised purchasing system
B.	Decentralised purchasing system
C.	Just in Time (JIT) Purchases
D.	Store-Keeping
Answer» A. Centralised purchasing system

discuss

329.	A container in which material is kept is known as
A.	Stores ledger
B.	Material return note
C.	Bin card
D.	None of the above
Answer» C. Bin card

discuss

330.	The method of recording stores balances after each receipt and issue to facilitate regular checking is known as
A.	Periodic Inventory System
B.	Perpetual Inventory System
C.	Store-keeping
D.	None of the above
Answer» B. Perpetual Inventory System

discuss

331.	A material loss during production or storage due to evaporation or shrinkage is called:
A.	Scrap
B.	Waste
C.	Spoilage
D.	Material loss
Answer» B. Waste

discuss

332.	The use of FIFO method in material issue control is more suitable when
A.	prices are constant for a long time
B.	prices are constantly fluctuating
C.	prices are falling
D.	prices are rising
Answer» D. prices are rising

discuss

333.	The use of LIFO method in material issue control is more suitable when
A.	prices are constant for a long time
B.	prices are constantly fluctuating
C.	prices are falling
D.	prices are rising
Answer» C. prices are falling

discuss

334.	Annual usage, ₹ 1,20,000.00, cost of placing ₹ 60.00 & annual carrying cost is 10% of the inventory value. The EOQ will be:-
A.	₹ 12,000.00
B.	₹ 10,000.00
C.	₹ 8,000.00
D.	₹ 6,000.00
Answer» A. ₹ 12,000.00

discuss

335.	Purchase requisitions is generally prepared in:
A.	Duplicate
B.	Triplicate
C.	Original
D.	None of these
Answer» B. Triplicate

discuss

336.	A record of both quantities & values maintained by the costing department is called:
A.	Bin card
B.	Stores ledger
C.	Stores records
D.	Purchase order
Answer» B. Stores ledger

discuss

337.	Under which method materials received first are issued first?
A.	LIFO
B.	FIFO
C.	HIFO
D.	None of these
Answer» B. FIFO

discuss

338.	If maximum consumption is 300 units per day; minimum consumption is 200 units per day; and re-order period is 8 to 10 days, then what will be the re-order level?
A.	3,000 units
B.	4,000 units
C.	1,500 units
D.	2,400 units
Answer» A. 3,000 units

discuss

339.	Indirect material scrap is adjusted along with: -
A.	Prime Cost
B.	Factory Cost
C.	Labor Cost
D.	Cost of goods sold
Answer» B. Factory Cost

discuss

340.	A written request to a supplier for specified goods at an agreed price is called: -
A.	Purchase order
B.	Purchase requisition
C.	Receiving report
D.	Making Payment
Answer» B. Purchase requisition

discuss

341.	Direct material is a____________-
A.	Manufacturing Cost
B.	Administrative Cost
C.	Selling Cost
D.	Distribution Cost
Answer» A. Manufacturing Cost

discuss

342.	A Bill of Materials is ________
A.	An invoice of materials purchased
B.	A voucher of materials received by supplier
C.	A document that shows all the materials required for a job
D.	None of these
Answer» C. A document that shows all the materials required for a job

discuss

343.	The number of Goods Received Note required to be prepared is:
A.	Six
B.	Five
C.	Four
D.	Three
Answer» B. Five

discuss

344.	Economic order quantity is a tool for controlling ___________
A.	Inventory
B.	Price
C.	Machinery
D.	Cost
Answer» A. Inventory

discuss

345.	The purchase requisition is generally prepared in:
A.	Duplicate
B.	Triplicate
C.	Quadruplicate
D.	Five copies
Answer» B. Triplicate

discuss

346.	Bin card is maintained by ____
A.	Accounts department
B.	Costing department
C.	Stores department
D.	Purchase department
Answer» C. Stores department

discuss

347.	_____ is the time between placement of an order and obtaining delivery.
A.	Purchase time
B.	Lead time
C.	Reordering time
D.	Emergency delivery time
Answer» B. Lead time

discuss

348.	_______ technique is a selective control of materials
A.	ABC
B.	Inventory turnover ratio
C.	Input output ratio
D.	EOQ
Answer» A. ABC

discuss

349.	Which document is prepared to transfer material from one job to the other job?
A.	Material Transfer Note
B.	Material Return Note
C.	Shop Credit Note
D.	Bill of materials
Answer» A. Material Transfer Note

discuss

350.	A technique of inventory control where materials are analyzed according to their values so that costly and more valuable materials are given greater attention and care.
A.	Economic Order Quantity
B.	ABC technique
C.	Stock Level
D.	Perpetual inventory system
Answer» B. ABC technique

discuss

480+ Cost Accounting Solved MCQs

Indirect material used in production is classified as: -

The cost per unit that increases or decreases when the volume of output decreases or increases is known as

Cost accounting has developed due to the ___________ of financial accounting

The method of costing most suitable for medicine manufacturing industry is:

Cost accountancy is considered an art because it _____

The main objective of cost accounting is

Cost accounting mainly helps the management in

Costs incurred for the maintenance of inventory is called

Absorption costing charges:

An important feature of a cost centre is that:

Prime cost may be correctly defined as

The term “cost” refers to

Costing is a technique of

Cost Accounting is a separate

Cost Accounting serves the information needs of

Costs which remains constant at all level of production is a

An opportunity cost is

Three elements of cost are:

Cost of production is equal to:

Works cost include

Which of the following is not Selling and Distribution Expenses:

Profit is:

Which of the following is not included in cost?

Value of material consumed is:

Specify the expenses excluded from costs:

In this technique of selective control, materials are analysed according to their value so that costly and more valuable materials are given greater attention and care

. This is a level at which normal issues of materials are stopped and urgent action is taken for procurement of materials

The purchasing system where there is a separate purchasing department entrusted with the task of making all purchases is called

A container in which material is kept is known as

The method of recording stores balances after each receipt and issue to facilitate regular checking is known as

A material loss during production or storage due to evaporation or shrinkage is called:

The use of FIFO method in material issue control is more suitable when

The use of LIFO method in material issue control is more suitable when

Annual usage, ₹ 1,20,000.00, cost of placing ₹ 60.00 & annual carrying cost is 10% of the inventory value. The EOQ will be:-

Purchase requisitions is generally prepared in:

A record of both quantities & values maintained by the costing department is called:

Under which method materials received first are issued first?

If maximum consumption is 300 units per day; minimum consumption is 200 units per day; and re-order period is 8 to 10 days, then what will be the re-order level?

Indirect material scrap is adjusted along with: -

A written request to a supplier for specified goods at an agreed price is called: -

Direct material is a____________-

A Bill of Materials is ________

The number of Goods Received Note required to be prepared is:

Economic order quantity is a tool for controlling ___________

The purchase requisition is generally prepared in:

Bin card is maintained by ____

_____ is the time between placement of an order and obtaining delivery.

_______ technique is a selective control of materials

Which document is prepared to transfer material from one job to the other job?

A technique of inventory control where materials are analyzed according to their values so that costly and more valuable materials are given greater attention and care.