190+ Cost and Works Accounting 2 Solved MCQs

These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Commerce (B Com) .

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1.	An example of a production overhead would be:
A.	Material.
B.	Rent
C.	Labour cost.
D.	Supervisory cost
Answer» D. Supervisory cost

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2.	All such expenses which are incurred for creating and enhancing the demands for the products are
A.	Selling expenses
B.	Administrative expenses
C.	Distribution expenses
D.	All of the above
Answer» D. All of the above

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3.	To control costs it is essential to keep control on
A.	Prime cost
B.	Overheads
C.	Indirect materials and tools cost.
D.	All of the above
Answer» B. Overheads

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4.	A cost that is easily traceable to a cost object is known as:
A.	Direct cost
B.	Indirect cost
C.	Variable cost
D.	Fixed cost
Answer» A. Direct cost

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5.	Which of the following best describes a fixed cost? A cost which:
A.	Represents a fixed proportion of total costs
B.	Remains at the same level up to a particular level of output
C.	Has a direct relationship with output.
D.	Remains at the same level when output increases.
Answer» A. Represents a fixed proportion of total costs

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6.	Which of the following is a valid classification of the salary paid to the foreman in charge of the packing department?
A.	Indirect departmental cost
B.	Direct product cost
C.	Direct departmental cost
D.	Service department cost.
Answer» D. Service department cost.

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7.	A cost that changes in total dollar amount with the change in the level of activity is known as:
A.	Direct cost
B.	Indirect cost
C.	Variable cost
D.	Fixed cost
Answer» C. Variable cost

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8.	Which of the following costs is treated as indirect labour?
A.	Idle time
B.	Overtime premium
C.	Fringe benefits
D.	All of the above
Answer» D. All of the above

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9.	Which definition best describes indirect costs?
A.	Indirect costs are those costs which are not controlled directly by a manager.
B.	Indirect costs are those costs which cannot be directly associated with a product or service.
C.	Indirect costs are always fix
Answer» B. Indirect costs are those costs which cannot be directly associated with a product or service.

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10.	What would be the most appropriate way of apportioning depreciation costs across different manufacturing departments in a business?
A.	Floor space
B.	Numbers of personnel
C.	Value of buildings and equipment
D.	Administration costs
Answer» C. Value of buildings and equipment

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11.	Which of the following cost is also known as overhead cost or on cost:
A.	Cost of direct labour
B.	Cost of direct material
C.	Direct expenses
D.	Indirect expenses
Answer» D. Indirect expenses

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12.	Which of the following calculate the actual cost of product:
A.	Cost estimation
B.	Costing
C.	Both a and b
D.	None of these
Answer» D. None of these

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13.	Costing is specialized branch of accounting which deals with:
A.	Classification, recording, allocation, and control of asset
B.	Classification, processing, allocation and directing
C.	Classification, recording, planning and control of asset
D.	Classification, recording, allocation and directing
Answer» D. Classification, recording, allocation and directing

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14.	In cinema halls, composite cost unit is ________________:
A.	A seat per show
B.	Cost of screening
C.	Salary of staff
D.	Rent of cinema hall
Answer» A. A seat per show

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15.	The stage of production at which separate products are identified is known as _______________:
A.	Process costing
B.	Reverse cost method
C.	Subsequent cost
D.	Equivalent production
Answer» A. Process costing

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16.	What item is not included in cost accounting?
A.	Product costing
B.	Profit-sharing
C.	Planning
D.	Controlling
Answer» B. Profit-sharing

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17.	A total of all the direct costs is known as
A.	Cost of production
B.	Cost of sales
C.	Prime cost
D.	Works cost
Answer» C. Prime cost

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18.	Which of the following is not included in functional classification of overheads?
A.	Repairs and maintenance
B.	Lubricating oil
C.	Consumable stores
D.	Chargeable expenses
Answer» D. Chargeable expenses

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19.	The process of distribution of overheads allotted to a particular department or cost center over the units produced is called:
A.	Allocation
B.	Apportionment
C.	Absorption
D.	Departmentalization
Answer» C. Absorption

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20.	A product with a high gross profit could be an unprofitable product.
A.	True
B.	False
C.	none
D.	none
Answer» B. False

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21.	To control costs it is essential to keep control on
A.	Prime cost
B.	Overheads
C.	Indirect materials and tools cost
D.	All of the above
Answer» D. All of the above

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22.	The overhead cost for a particular job =
A.	man hour rate x man hours spent on that job
B.	man hour rate / man hours spent on that job
C.	man hour rate + man hours spent on that job
D.	man hour rate – man hours spent on that jab
Answer» A. man hour rate x man hours spent on that job

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23.	The following method is an improvement over the percentage on direct labour cost method.
A.	Machine hour rate
B.	Percentage on prime cost
C.	Percentage on direct material cost
D.	Man hour rate
Answer» D. Man hour rate

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24.	Which of the following is/are the basic object/s of job analysis?
A.	Determination of wage rates
B.	Ascertain the relative worth of each job
C.	Breaking up job into its basic elements
D.	All of the given options
Answer» A. Determination of wage rates

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25.	An overhead absorption rate is used to:
A.	Share out common costs over benefiting cost canters
B.	Find the total overheads for a cost centre
C.	Charge overheads to products
D.	Control overheads
Answer» C. Charge overheads to products

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26.	Economic Batch Quantity depends on ……………….and ……………..costs.
A.	Material, labour
B.	set-up costs, carrying
C.	transportation, carrying
D.	warehousing, labour
Answer» B. set-up costs, carrying

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27.	The wages paid to maintenance department workers who do repair work principally for production departments but also on the vehicles in the distribution department should be charged as
A.	Service cost
B.	Distribution cost
C.	General cost
D.	Production cost
Answer» A. Service cost

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28.	Which of the following costs of management is likely to have least control?
A.	Machine breakdown cost
B.	Wages cost
C.	Advertising cost.
D.	Buildings insurance cost
Answer» A. Machine breakdown cost

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29.	Which of the following best describes a fixed cost? A cost which:
A.	Represents a fixed proportion of total costs.
B.	Remains at the same level up to a particular level of output.
C.	Remains at the same level when output increases
D.	Has a direct relationship with output
Answer» B. Remains at the same level up to a particular level of output.

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30.	Which of the following would not be considered as a component of 'cost' of stock?
A.	Transportation inward cot
B.	Import duties
C.	Purchase price
D.	Salaries of selling staff
Answer» D. Salaries of selling staff

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31.	. Cost apportionment involves:
A.	The sharing out of overheads to service departments
B.	The sharing out of common costs to departments
C.	The allocation of direct costs to departments
D.	The sharing out of costs to products
Answer» C. The allocation of direct costs to departments

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32.	. What would be the most appropriate way of apportioning depreciation costs across different manufacturing departments in a business?
A.	Floor space
B.	Numbers of personnel
C.	Value of buildings and equipment
D.	Value of land.
Answer» D. Value of land.

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33.	. Which of the following is a conventional method of ascertaining cost?
A.	Absorption costing
B.	Full Costing
C.	Both a & b
D.	None of the above
Answer» A. Absorption costing

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34.	. The total cost of a product will include:
A.	Prime costs plus direct production overhead plus indirect-production overhead plus tax
B.	Prime cost plus absorbed direct production overhead
C.	Prime costs plus direct production overhead plus indirect production overhead
D.	Prime cost only
Answer» C. Prime costs plus direct production overhead plus indirect production overhead

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35.	. Which of the following is not considered to be a benefit of activity-based costing?
A.	More accurate product costs
B.	Reduced complexity of calculating costs
C.	Inclusion of non-manufacturing costs
D.	More detailed understanding of what drives cost.
Answer» D. More detailed understanding of what drives cost.

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36.	Wages paid to a labour who was engaged in production activities can be termed as.
A.	direct cost.
B.	indirect cost
C.	sunk cost
D.	imputed cost.
Answer» A. direct cost.

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37.	. The cost which is to be incurred even when a business unit is closed is a.
A.	imputed cost.
B.	historical cost.
C.	sunk cost.
D.	shutdown cost
Answer» D. shutdown cost

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38.	. Which of the following best describes a fixed cost? A cost which:
A.	Actual direct labour time per unit being greater than budget.
B.	Actual cost of direct labour being greater than budget.
C.	Actual overheads incurred being less than budget.
D.	The number of units produced being greater than budget.
Answer» D. The number of units produced being greater than budget.

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39.	. Which of the following is most likely to be an allocated production overhead cost to the finishing cost centre?
A.	Factory rates.
B.	Salary of the finishing cost centre supervisor.
C.	Power used on finishing cost centre machines.
D.	Salary of the production manager.
Answer» C. Power used on finishing cost centre machines.

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40.	Wages paid to a office cleaning staff who was engaged in Administration activities a can be termed as.
A.	direct cost.
B.	indirect cost
C.	sunk cost
D.	imputed cost.
Answer» B. indirect cost

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41.	Overhead is the cost incurred in the course of making a product, providing a service or running a department, but which cannot be traced directly and in full to the product, service or department.
A.	Correct
B.	Incorrect
C.	none
D.	none
Answer» A. Correct

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42.	Indirect expenses are also known as overheads.
A.	True
B.	False
C.	none
D.	none
Answer» A. True

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43.	Overhead is actually the total of:
A.	Indirect materials
B.	Indirect expenses
C.	Indirect labour
D.	All of the above
Answer» D. All of the above

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44.	Overhead costs may be classified according to the function of the organization as:
A.	Production/Manufacturing overheads
B.	Non-production/Non-manufacturing overheads
C.	Both A&B
D.	None
Answer» C. Both A&B

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45.	. Production Overheads are costs related to the production process other than direct labour and materials. They are also known as factory overheads since they are incurred inside the factory, other overheads such as selling and administrative overheads are always charged to in the period in which they are incurred
A.	The above statement is true
B.	The above statement is false
C.	none
D.	none
Answer» A. The above statement is true

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46.	Production overheads represent indirect materials, indirect wages and indirect expenses attributable to:
A.	Production activities
B.	Service activities
C.	Both A&B
D.	None
Answer» C. Both A&B

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47.	Indirect production costs are incurred in three main ways: • Production activities: costs arising in production departments such as fuel, depreciation, supervision • Service activities: the cost of operating non-producing departments such as materials handling, canteen • Establishment costs: general production overheads such as factory rent/rates, heating and lighting
A.	True
B.	False
C.	none
D.	none
Answer» A. True

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48.	Which of the following procedure is incorrect for attributing overhead costs to cost units? I. Collecting production overhead costs by item II. Establishing cost centres III. Allocating and apportioning overhead costs to cost centres IV. Apportioning service cost centre costs to production cost centres V. Absorbing production cost centre costs into cost units
A.	All of the above are correct
B.	All of the above are incorrect
C.	(II) and (IV) are incorrect
D.	(II) is incorrect
Answer» A. All of the above are correct

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49.	. The total amount of factory overhead represents:
A.	Allocated costs
B.	Apportioned costs
C.	Share of service department costs
D.	All of the above
Answer» D. All of the above

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50.	Allocation is where overheads are allocated to cost centres. If a cost centre is responsible for the entire cost of an item of expenditure, the entire cost is charged directly to the cost centre.
A.	Correct
B.	Incorrect
C.	none
D.	none
Answer» A. Correct

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190+ Cost and Works Accounting 2 Solved MCQs

An example of a production overhead would be:

All such expenses which are incurred for creating and enhancing the demands for the products are

To control costs it is essential to keep control on

A cost that is easily traceable to a cost object is known as:

Which of the following best describes a fixed cost? A cost which:

Which of the following is a valid classification of the salary paid to the foreman in charge of the packing department?

A cost that changes in total dollar amount with the change in the level of activity is known as:

Which of the following costs is treated as indirect labour?

Which definition best describes indirect costs?

What would be the most appropriate way of apportioning depreciation costs across different manufacturing departments in a business?

Which of the following cost is also known as overhead cost or on cost:

Which of the following calculate the actual cost of product:

Costing is specialized branch of accounting which deals with:

In cinema halls, composite cost unit is ________________:

The stage of production at which separate products are identified is known as _______________:

What item is not included in cost accounting?

A total of all the direct costs is known as

Which of the following is not included in functional classification of overheads?

The process of distribution of overheads allotted to a particular department or cost center over the units produced is called:

A product with a high gross profit could be an unprofitable product.

To control costs it is essential to keep control on

The overhead cost for a particular job =

The following method is an improvement over the percentage on direct labour cost method.

Which of the following is/are the basic object/s of job analysis?

An overhead absorption rate is used to:

Economic Batch Quantity depends on ……………….and ……………..costs.

The wages paid to maintenance department workers who do repair work principally for production departments but also on the vehicles in the distribution department should be charged as

Which of the following costs of management is likely to have least control?

Which of the following best describes a fixed cost? A cost which:

Which of the following would not be considered as a component of 'cost' of stock?

. Cost apportionment involves:

. What would be the most appropriate way of apportioning depreciation costs across different manufacturing departments in a business?

. Which of the following is a conventional method of ascertaining cost?

. The total cost of a product will include:

. Which of the following is not considered to be a benefit of activity-based costing?

Wages paid to a labour who was engaged in production activities can be termed as.

. The cost which is to be incurred even when a business unit is closed is a.

. Which of the following best describes a fixed cost? A cost which:

. Which of the following is most likely to be an allocated production overhead cost to the finishing cost centre?

Wages paid to a office cleaning staff who was engaged in Administration activities a can be termed as.

Overhead is the cost incurred in the course of making a product, providing a service or running a department, but which cannot be traced directly and in full to the product, service or department.

Indirect expenses are also known as overheads.

Overhead is actually the total of:

Overhead costs may be classified according to the function of the organization as:

Production overheads represent indirect materials, indirect wages and indirect expenses attributable to:

. The total amount of factory overhead represents:

Allocation is where overheads are allocated to cost centres. If a cost centre is responsible for the entire cost of an item of expenditure, the entire cost is charged directly to the cost centre.