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 76 of 99
- A. increase in product diversity
- B. increase in indirect costs
- C. product market competitions
- D. all of above
Explanation: Greater product diversity, rising indirect costs, and stronger market competition all increase the need for a more refined costing system.
Correct answer: all of above- A. expected under cost
- B. expected over cost
- C. product under costing
- D. product over costing
Explanation: A product is overcosted when it is assigned more cost than the resources it actually consumes.
Correct answer: product over costing1503. In an activity based costing implementation, the product's diverse demand is based on _________?
- A. batch size
- B. complexity
- C. process steps
- D. all of above
Explanation: Activity-based costing recognises that products may differ in batch sizes, complexity and the number of process steps they require.
Correct answer: all of above- A. different task
- B. purpose cost
- C. an activity
- D. an allocation cost
Explanation: An activity is a unit of work or task performed for a specific purpose, such as setting up a machine or inspecting a batch.
Correct answer: an activity- A. service-cost across subsidizing
- B. product-price cross subsidizing
- C. product-cost cross subsidizing
- D. product cross subsidizing
Explanation: Product-cost cross-subsidising occurs when one product is undercosted and at least one other product is overcosted.
Correct answer: product-cost cross subsidizing- A. budgeted direct cost rate
- B. budgeted indirect cost rate
- C. expected indirect cost rate
- D. direct budget percentage
Explanation: An indirect cost rate is calculated by dividing the budgeted indirect cost pool by the budgeted quantity of its allocation base.
Correct answer: budgeted indirect cost rate1507. The costs of all the activities for individual products or services can be called ___________?
- A. purpose level costs
- B. output-unit level costs
- C. input-unit level costs
- D. activity level costs
Explanation: Output-unit-level costs arise from activities performed for each individual unit of a product or service, so they increase with the number…
Correct answer: output-unit level costs- A. indirect costs
- B. direct cost
- C. labor cost
- D. raw material cost
Explanation: In ABC, output-unit-level activity costs are commonly treated as indirect costs and allocated to products using an activity driver such as…
Correct answer: indirect costs1509. The costs of undertaken activities is to support individual products and are known as __________?
- A. expected sustaining
- B. input sustaining
- C. output sustaining
- D. product sustaining costs
Explanation: Product-sustaining costs support an individual product or service regardless of how many units or batches are produced.
Correct answer: product sustaining costs- A. cost hierarchy
- B. price hierarchy
- C. activity hierarchy
- D. purpose hierarchy
Explanation: A cost hierarchy groups activities according to the level at which their costs are incurred, such as unit-level, batch-level…
Correct answer: cost hierarchy- A. individual sustaining costs
- B. facility sustaining costs
- C. sustained tracing
- D. support tracing
Explanation: Facility-sustaining costs support the organization as a whole and cannot be traced economically to individual products.
Correct answer: facility sustaining costs- A. heterogeneous price pool
- B. homogenous cost pool
- C. heterogeneous cost pool
- D. homogenous price pool
Explanation: A homogeneous cost pool contains costs with similar cause-and-effect relationships, so one cost driver can reasonably serve as its…
Correct answer: homogenous cost pool- A. activity level costs
- B. input level costs
- C. batch level costs
- D. output level costs
Explanation: Batch-level costs arise from performing activities for a group or batch of products, rather than for each individual unit.
Correct answer: batch level costs- A. indirect wages
- B. health wages
- C. idle time wages
- D. shortage time wages
Explanation: Wages paid for time when workers cannot perform productive work because materials are unavailable are idle time wages.
Correct answer: idle time wages- A. $13,500
- B. $55,600
- C. $60,000
- D. $110,000
Explanation: Prime cost consists only of direct materials plus direct manufacturing labor: $85,000 + $25,000 = $110,000.
Correct answer: $110,000- A. $19,500
- B. $30,500
- C. $45,500
- D. $22,500
Explanation: Direct manufacturing labor equals prime cost minus direct materials: $25,000 − $5,500 = $19,500.
Correct answer: $19,500- A. payroll fringe costs
- B. health costs
- C. premium costs
- D. workers costs
Explanation: Payroll fringe costs are indirect employee-related costs, including health-care premiums, pension contributions, insurance, and similar…
Correct answer: payroll fringe costs- A. finished goods inventory
- B. indirect material inventory
- C. direct materials inventory
- D. work in process inventory
Explanation: Finished goods inventory consists of completed products that remain unsold at the reporting date.
Correct answer: finished goods inventory- A. direct material costs
- B. indirect material costs
- C. direct labor costs
- D. indirect labor costs
Explanation: Raw material that can be specifically traced to the manufactured product becomes part of the cost object, so it is a direct material cost.
Correct answer: direct material costs- A. $55,000
- B. $37,500
- C. $95,000
- D. $26,000
Explanation: Prime cost combines direct materials and direct manufacturing labour. Thus, $75,000 + $20,000 = $95,000.
Correct answer: $95,000