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110+ Cost Management Solved MCQs

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

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51.

During July actual labour costs amounted to 19,800, the standard rate of pay was 4.50 per hour and the labour rate variance amounted to 225 adverse. The actual hours worked were:

A. 4,400
B. 1,012
C. 4,350
D. 3,450
Answer» A. 4,400
discuss
52.

An adverse material usage variance together with a favourable materials price variance could suggest that:

A. We are paying the same for our materials but we are using more than expected
B. We are paying higher prices for our materials than expected
C. We are paying less for our materials than expected but we are using more materials
D. We are using less material than expected but in total we are paying more than we should
Answer» A. We are paying the same for our materials but we are using more than expected
discuss
53.

An adverse labour efficiency variance together with a favourable labour rate variance may mean that:

A. The business is paying a higher hourly rate than the standard
B. Less labour hours are needed to make the same amount of output
C. Less skilled staff are being used in production
D. More products are being made per hour
Answer» C. Less skilled staff are being used in production
discuss
54.

The formula for calculating the variable overhead total variance is:

A. (Standard hours less actual hours) x variable overhead absorption rate
B. Actual variable overhead less (actual hours x actual hours worked x variable overhead absorption rate)
C. Actual variable overhead expenditure less budgeted variable overhead expenditure
D. Actual variable overhead less (standard hours x actual production x variable overhead absorption rate)
Answer» B. Actual variable overhead less (actual hours x actual hours worked x variable overhead absorption rate)
discuss
55.

The formula for calculating the fixed overhead volume variance is:

A. Budgeted fixed expenditure less (actual hours x actual production x fixed overhead absorption rate)
B. Budgeted fixed expenditure less (actual hours x fixed overhead absorption rate)
C. Actual fixed overhead less (standard hours x actual production x fixed overhead absorption rate)
D. Budgeted fixed expenditure less (standard hours x actual production x fixed overhead expenditure variance)
Answer» D. Budgeted fixed expenditure less (standard hours x actual production x fixed overhead expenditure variance)
discuss
56.

-------- are the factor which have direct cause and effect relationship with cost

A. Cost object
B. Cost pool
C. Cost driver
D. Cost centre
Answer» C. Cost driver
discuss
57.

------------ is also known as ‘Transaction Costing’.

A. Target costing
B. Kaizen costing
C. Throughput costing
D. Activity based costing
Answer» D. Activity based costing
discuss
58.

----------- is maximum permissible cost in a competitive business environment.

A. Activity cost
B. Target cost
C. Kaizen cost
D. None of these
Answer» B. Target cost
discuss (1)
59.

Promoters of Activity based Costing was /were----------

A. Kaplan and Cooper
B. Galloway
C. Goldratt
D. Ouchy
Answer» A. Kaplan and Cooper
discuss
60.

In innovative cost management terminologies ‘BPR’ stands for?

A. Business Process Reconstruction
B. Business Production Reschedule
C. Business Process Re-engineering
D. None of these
Answer» C. Business Process Re-engineering
discuss
61.

A cost centre is:

A. The part of the business where all costs are paid to suppliers
B. A production department where all production costs are aggregated
C. An area for which costs are accumulated
D. An area of the business accountable for both costs and revenues
Answer» C. An area for which costs are accumulated
discuss
62.

An investment centre is a responsibility centre where the manager has control of:

A. Costs
B. Costs, profits and product quality
C. Costs, profits and assets
D. Costs and profits
Answer» C. Costs, profits and assets
discuss
63.

Responsibility accounting aims to:

A. Ensure that costs become the responsibility of a specific manager
B. Ensure that a manager is punished if things go wrong
C. Reduce the costs that a department incurs
D. Allocate costs to all areas of a business
Answer» A. Ensure that costs become the responsibility of a specific manager
discuss
64.

Prime cost can be defined as:

A. The total costs of manufacturing a product
B. The total direct costs of manufacturing a product
C. The total costs of operating the production department where the product is made
D. The cost of the first stage of the manufacture of a product
Answer» B. The total direct costs of manufacturing a product
discuss
65.

Which of the following best describes a fixed cost?

A. Has a direct relationship with output
B. Increases proportionately with output
C. Represents a fixed proportion of total costs
D. Remains constant irrespective of the level of activity
Answer» D. Remains constant irrespective of the level of activity
discuss
66.

Direct labour costs will include:

A. Direct labour costs plus any bonuses and overtime premiums
B. Direct labour costs plus any bonuses
C. Total direct labour hours at the normal hourly rate of pay
D. All labour costs attributable to a product
Answer» C. Total direct labour hours at the normal hourly rate of pay
discuss
67.

The company which applied first ‘Just in Time’ in its manufacturing is---------

A. GE Electricals
B. Motorola
C. Toyota
D. Suzuki
Answer» C. Toyota
discuss
68.

----------- is developed on the concept ‘inventory is evil’.

A. Quality circle
B. JIT
C. Kaizen
D. All of these
Answer» B. JIT
discuss
69.

JIT was first developed by:

A. Taiichi Ohno
B. Ouchy
C. Kaplan
D. None of these
Answer» A. Taiichi Ohno
discuss
70.

“Kanban’ system is similar to ---------- philosophy

A. Kaizen
B. Cost driver
C. Just in Time
D. None of these
Answer» C. Just in Time
discuss
71.

Which of the following is / are the method of establishing ‘target cost’?

A. Addition method
B. Subtraction method
C. Integration method
D. All of these
Answer» D. All of these
discuss
72.

Accumulated cost of an activity called------------ in Activity based costing.

A. Cost driver
B. Cost object
C. Cost centre
D. Cost Pool
Answer» D. Cost Pool
discuss
73.

------------ is regarded as ‘Price-led costing’.

A. Activity based costing
B. Target costing
C. Kaizen costing
D. Back flush costing
Answer» B. Target costing
discuss
74.

Upstream cost, Down stream cost etc., are the concepts in---------------.

A. Target costing
B. Kaizen costing
C. Life cycle costing
D. Activity based costing
Answer» C. Life cycle costing
discuss
75.

When output in relation to the input is expressed mathematically it is called as----------

A. Outcome index
B. Efficiency index
C. Productivity index
D. All the above.
Answer» C. Productivity index
discuss
76.

If Profit divided by the capital employed, it reveals--------------

A. Labour productivity
B. Machine productivity
C. Material productivity
D. None of these
Answer» D. None of these
discuss
77.

The type of spoilage that should not affect the cost of inventories is

A. Abnormal spoilage
B. Seasonal spoilage
C. Normal spoilage
D. Indirect spoilage
Answer» A. Abnormal spoilage
discuss
78.

Materials may not be put into process

A. At the beginning of an operation
B. Continuously
C. At the end of the operation
D. In the shipping department.
Answer» D. In the shipping department.
discuss
79.

Process cost method is especially suitable for

A. Custom production
B. FIFO
C. Standard costs
D. LIFO
Answer» C. Standard costs
discuss
80.

In process costing, costs follow

A. Price rise
B. Product flow
C. Price declines
D. Finished goods
Answer» B. Product flow
discuss
81.

When average costing is used, the opening inventory costs are

A. Kept separate from the costs for the new period
B. Added to the costs of the new period
C. Subtracted from the new costs
D. Averaged with other costs to arrive at total cost.
Answer» A. Kept separate from the costs for the new period
discuss
82.

A disadvantage of FIFO costing is that

A. The first units produced cannot be distinguished from later production.
B. Several units’ costs are used at the same time.
C. The units have to be kept separate
D. The shipping costs are higher
Answer» B. Several units’ costs are used at the same time.
discuss
83.

Which of the following method of costing can be used in a large oil refinery?

A. Process costing
B. Unit costing
C. Operating costing
D. Job costing
Answer» A. Process costing
discuss
84.

Which of the following pair is odd one?

A. Construction-Contract costing
B. Ship-building-Job costing
C. Brick manufacturing – Process costing
D. Transport undertaking – Operating costing
Answer» C. Brick manufacturing – Process costing
discuss
85.

A product which has practically no sales or utility value is--------

A. Waste
B. Spoilage
C. Scrap
D. Defectives
Answer» A. Waste
discuss
86.

Trimmings in timber industry should be treated as a---------

A. Waste
B. Spoilage
C. Scrap
D. Defectives
Answer» C. Scrap
discuss
87.

The type of process loss that should not affect the cost of inventory is

A. Abnormal loss
B. Seasonal loss
C. normal loss
D. standard loss
Answer» A. Abnormal loss
discuss
88.

The stage where joint products are separated from each other is known as--------

A. break-even point
B. angle of incidence
C. split-off point
D. Point of indifference
Answer» C. split-off point
discuss
89.

Fifty units are put in a process at a total cost of Rs. 90. Wastage is normally 10% without any scrap value. If output is 40 units the amount of abnormal loss would be-----------

A. Rs. 80
B. Rs. 10
C. Rs. 8
D. Rs. 9
Answer» B. Rs. 10
discuss
90.

Abnormal loss is charged to--------------

A. process account
B. costing profit and loss account
C. Normal loss account
D. None of these.
Answer» B. costing profit and loss account
discuss
91.

Classification and accumulation of costs by fixed and variable costs is a distinctive feature of-----------

A. Process costing
B. Unit costing
C. Operating costing
D. Batch costing
Answer» C. Operating costing
discuss
92.

Composite unit is distinctive feature of-------

A. Single or output costing
B. Process costing
C. Job costing
D. Operating costing
Answer» D. Operating costing
discuss
93.

Electricity generating company should employ----------

A. Unit costing
B. Process costing
C. Operating costing
D. Multiple costing
Answer» C. Operating costing
discuss
94.

Cinema houses must adopt-------

A. Operating costing
B. Job costing
C. Batch costing
D. Contract costing
Answer» A. Operating costing
discuss
95.

For a library the best method of costing suitable is-----------

A. Output costing
B. Operating costing
C. Process costing
D. Multiple costing
Answer» B. Operating costing
discuss
96.

For an educational institute the right method of costing is------------

A. Output costing
B. Job costing
C. Operating costing
D. Process costing
Answer» B. Job costing
discuss
97.

Hospitals must make use of-----------

A. Operating costing
B. Batch costing
C. Process costing
D. Multiple costing
Answer» A. Operating costing
discuss
98.

For hotels the best method of costing is----------

A. Single or output
B. Contract costing
C. Process costing
D. Operating costing
Answer» D. Operating costing
discuss
99.

Flight/Air services must make use of-----------

A. Job costing
B. Operating costing
C. Batch costing
D. Process costing
Answer» B. Operating costing
discuss
100.

Indian Railways must adopt----------

A. Operating costing
B. Unit costing
C. Batch costing
D. Multiple costing
Answer» A. Operating costing
discuss

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