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 27 of 48
- A. cost incurrence
- B. valued incurrence
- C. locked incurrence
- D. non valued incurrence
Explanation: Cost incurrence occurs when resources are actually consumed to accomplish a particular objective, such as producing a product or providing…
Correct answer: cost incurrence- A. target price
- B. target cost
- C. outsource price
- D. off shore price
Explanation: A target price is the amount a company expects customers to pay for a market offering.
Correct answer: target price- A. designed-in costs
- B. locked-in costs
- C. value added cost
- D. non-value added cost
Explanation: A value-added cost contributes to the usefulness or features that customers perceive in a product or service, so removing it would reduce…
Correct answer: value added cost- A. price incurrence
- B. price discrimination
- C. price targeting
- D. price engineering
Explanation: Price discrimination occurs when a seller charges different prices to different customers for the same or substantially similar offering.
Correct answer: price discrimination- A. product life cycle
- B. life cycle budgeting
- C. life cycle costing
- D. target costing
Explanation: Life-cycle costing accumulates costs across the entire value chain, from research and development through production, marketing…
Correct answer: life cycle costing- A. $15
- B. $12
- C. $16
- D. $18
Explanation: Target operating income per unit is calculated by dividing total target operating income by planned production: $300,000 ÷ 25,000 units =…
Correct answer: $12- A. budgeted life cycle
- B. targeted life cycle
- C. customer life cycle
- D. operating life cycle
Explanation: Customer life-cycle cost includes the customer's total cost of acquiring, using, maintaining and disposing of a product or service.
Correct answer: customer life cycle- 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: 388.5538. 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