All Free Accounting MCQs with Answers
Every Accounting question in the bank, across all chapters, each with the correct answer and a written explanation. Free and unlimited, with no account needed.
1,971 questions · page 58 of 99
- A. product life cycle method
- B. life cycle budgeting method
- C. life cycle costing method
- D. time and material method
Explanation: The time-and-material method bills service customers for labour time plus the materials used.
Correct answer: time and material method- A. product life cycle
- B. life cycle budgeting
- C. life cycle costing
- D. target costing
Explanation: A product life cycle covers the period from research and development through introduction, growth, maturity, decline and eventual customer…
Correct answer: product life cycle- A. $27,000
- B. $26,000
- C. $24,000
- D. $25,000
Explanation: Targeted operating income equals invested capital multiplied by the target ROI: $150,000 × 16% = $24,000.
Correct answer: $24,000- A. independent revenue approach
- B. market based approach
- C. cost based approach
- D. dependent revenue approach
Explanation: Cost-based pricing is commonly used where competition is limited and products differ substantially, because the company has greater…
Correct answer: cost based approach- A. market based
- B. sunk cost
- C. cost based
- D. both a and c
Explanation: The two principal pricing approaches are market-based pricing, which starts with market conditions, and cost-based pricing, which starts…
Correct answer: both a and c- A. independent revenue approach
- B. market based approach
- C. dependent revenue approach
- D. cost based approach
Explanation: In a competitive market, competitors and market conditions strongly constrain the price, so companies use a market-based pricing approach.
Correct answer: market based approach- A. target pricing
- B. target costing
- C. value engineering
- D. all of above
Explanation: Target costing begins with the target price and customer requirements, then uses value engineering and cross-functional teams to design…
Correct answer: all of above- A. total current full cost
- B. total cost per unit
- C. target operating income per unit
- D. target cost per unit
Explanation: The target-cost formula is target price minus target operating income per unit.
Correct answer: target cost per unit- A. target operating income per unit
- B. target cost per unit
- C. total current full cost
- D. total cost per unit
Explanation: Target cost per unit is the estimated long-run cost that allows the company to earn its planned operating income at the target selling…
Correct answer: target cost per unit- A. 388.5
- B. 350
- C. 362
- D. 368.5
Explanation: A markup of 11% on a $350 cost base is $38.50, so the prospective selling price is $350 + $38.50 = $388.50.
Correct answer: 388.51151. The target annual operating income is divided with invested capital to calculate _____________?
- A. target rate of return on investment
- B. operating income per unit
- C. operating cost per unit
- D. cost of goods sold
Explanation: Dividing target operating income by invested capital gives the target return on investment, usually expressed as a percentage.
Correct answer: target rate of return on investment- A. low high method
- B. constant equation
- C. variable equation
- D. high low method
Explanation: The high-low method estimates cost behavior by using the highest and lowest activity levels, together with their associated costs, within…
Correct answer: high low method- A. step constant functions
- B. step cost functions
- C. step price functions
- D. step object functions
Explanation: Step cost functions are nonlinear because cost remains constant over an activity interval and then jumps to a new level when capacity is…
Correct answer: step cost functions- A. fixed object
- B. cost driver
- C. cost object
- D. mixed object
Explanation: A costing database should include a broad range of cost-driver values because cost behavior is analyzed in relation to the activity that…
Correct answer: cost driver- A. irrelevant range
- B. relevant range
- C. significant range
- D. insignificant range
Explanation: Cost linearity is assumed only within the relevant range, where fixed costs remain fixed and variable cost per unit is reasonably…
Correct answer: relevant range- A. $50,000
- B. $5,400
- C. $6,400
- D. $40,000
Explanation: The slope coefficient equals change in cost divided by change in machine hours, so the hours difference is 16,000 ÷ 0.40 = 40,000 machine…
Correct answer: $40,000- A. x-axis
- B. y-axis
- C. unit axis
- D. term axis
Explanation: In a cost-function graph, the activity level is the independent variable, so it is plotted on the x-axis; cost is plotted on the y-axis.
Correct answer: x-axis- A. 0.5063
- B. 0.4633
- C. 2.16
- D. 0.5367
Explanation: The coefficient of determination is 1 minus the unexplained proportion: 1 − (255050 ÷ 550505) = 0.5367.
Correct answer: 0.5367- A. production driver
- B. cost driver
- C. price driver
- D. estimation driver
Explanation: A cost driver is the activity or factor that causes changes in total cost, such as machine hours causing machine-related costs to change.
Correct answer: cost driver- A. 97
- B. 57
- C. 33
- D. 53
Explanation: The observed cost equals predicted cost plus disturbance error, so predicted cost = 65 − 32 = 33.
Correct answer: 33