Free Cost Accounting MCQs with Answers
941 Cost Accounting MCQs from Accounting, each with the correct answer and a written explanation of why it is correct. Free and unlimited, with no account needed.
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
Last updated
941 questions · page 13 of 48
- A. stock-out costs
- B. ordering costs
- C. carrying costs
- D. purchasing costsCompare Credit Cards
Explanation: The amount paid to acquire goods from suppliers is a purchasing cost. Ordering costs relate to placing and processing orders, while…
Correct answer: purchasing costsCompare Credit Cards- A. relevant purchase order costs
- B. relevant inventory carrying costs
- C. irrelevant inventory carrying costs
- D. relevant opportunity cost of capitalHire An Accountant
Explanation: Capital tied up in inventory cannot earn its return elsewhere, so the forgone profit is an opportunity cost of carrying inventory.
Correct answer: relevant opportunity cost of capitalHire An Accountant- A. $7,500
- B. $7,000
- C. $6,500
- D. $6,000Try Asset Software
Explanation: Relevant inventory carrying cost combines the relevant incremental carrying costs with the opportunity cost of invested capital: $5,000 +…
Correct answer: $7,500- A. annual irrelevant ordering costs
- B. annual relevant carrying costs
- C. annual relevant ordering costs
- D. annual irrelevant carrying costsCompare Credit Cards
Explanation: Annual relevant ordering cost is calculated by multiplying the number of orders placed during the year by the relevant cost per order.
Correct answer: annual relevant ordering costs- A. economic accounting
- B. back-flush accounting
- C. lean accounting
- D. lead accountingHire An Accountant
Explanation: Lean accounting evaluates performance across the entire value stream so that customer value, waste reduction, and flow are emphasised.
Correct answer: lean accounting- A. 14000 units
- B. 14500 units
- C. 15000 units
- D. 15500 units
Explanation: The reorder point equals demand during purchase-order lead time: 35 minutes × 400 units per minute = 14,000 units.
Correct answer: 14000 units- A. stock-out costs
- B. ordering costs
- C. carrying costs
- D. purchasing costsCompare Credit Cards
Explanation: Issuing purchase orders, preparing delivery records, and inspecting received items are ordering costs because they arise from placing and…
Correct answer: ordering costs- A. economic order quantity purchasing
- B. annual purchasing
- C. just in time purchasing
- D. both a and b
Explanation: Just-in-time purchasing arranges for materials to arrive directly at the production facility when needed, reducing inventory held and…
Correct answer: just in time purchasing- A. $6.20
- B. $7.20
- C. $4.20
- D. $5.20
Explanation: Opportunity cost of capital per unit is calculated as the required return multiplied by the unit cost: 12% × $35 = $4.20.
Correct answer: $4.20250. The decision model to calculate optimal quantity of inventory to be ordered is called ____________?
- A. efficient order quantity
- B. economic order quantity
- C. rational order quantity
- D. optimized order quantity
Explanation: Economic order quantity, or EOQ, is the inventory model that balances ordering and carrying costs to determine the most economical order…
Correct answer: economic order quantity- A. in-time production
- B. materials requirement planning
- C. on-time production
- D. pull strategy of productionHire An Accountant
Explanation: Materials requirements planning is a push system because production and material purchases are scheduled from forecasted demand and…
Correct answer: materials requirement planning- A. incoming freight
- B. storage costs
- C. insurance
- D. clerical errors
Explanation: Shrinkage reflects inventory losses or discrepancies, including those caused by recording and clerical errors.
Correct answer: clerical errors- A. carrying costs
- B. purchasing costs
- C. stock-out costs
- D. ordering costsCompare Credit Cards
Explanation: Carrying costs arise from holding inventory and include storage, spoilage, obsolescence, insurance and financing costs.
Correct answer: carrying costs- A. $240,000.00
- B. $320,000
- C. $210,000
- D. $420,000
Explanation: Total manufacturing cost equals unit cost multiplied by units manufactured: $70 × 6,000 = $420,000.
Correct answer: $420,000- A. $80
- B. $65
- C. $7
- D. $35
Explanation: Per-unit cost is found by dividing total manufacturing cost by total output: $40,000 ÷ 500 = $80 per unit.
Correct answer: $80- A. $220,000
- B. $232,000
- C. $250,000
- D. $25,000
Explanation: Total manufacturing cost equals cost per unit multiplied by the number of units: $50 × 5,000 = $250,000.
Correct answer: $250,000- A. relevant range
- B. irrelevant range
- C. cause range
- D. effective range
Explanation: Relevant range is the normal span of activity within which the assumed relationship between activity levels and costs remains valid.
Correct answer: relevant range- A. manufacturing sector companies
- B. merchandising sector companies
- C. service sector companies
- D. raw material companiesCompare Credit Cards
Explanation: Manufacturing companies purchase raw materials and transform them into finished goods.
Correct answer: manufacturing sector companies- A. food processing companies
- B. automotive companies
- C. distribution companies
- D. advertising agenciesHire An Accountant
Explanation: Merchandising companies buy finished goods and resell them, so distribution companies belong to this sector.
Correct answer: distribution companies- A. distribution companies
- B. textile companies
- C. retailing companies
- D. internet service providers
Explanation: Textile companies convert materials such as fibres or yarn into finished textile products, making them manufacturing businesses.
Correct answer: textile companies