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 28 of 48
- 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- A. 14
- B. 88
- C. 24
- D. 68
Explanation: Because residual error equals observed cost minus predicted cost, observed cost = 51 + 37 = 88.
Correct answer: 88- A. quantitative analysis method
- B. qualitative analysis method
- C. account analysis method
- D. conference analysis method
Explanation: Quantitative analysis uses mathematical or statistical techniques to fit past observations to a cost function.
Correct answer: quantitative analysis method- A. units of labor
- B. unit of production
- C. time horizon
- D. units of inventory
Explanation: Cost behavior depends on the relevant time horizon: a cost may be fixed in the short run but variable over a longer period.
Correct answer: time horizon- A. contractual agreement
- B. knowledge of operations
- C. measureable unit relationship
- D. all of above
Explanation: A cause-and-effect cost relationship may be established through contracts, operational knowledge, or a measurable unit relationship.
Correct answer: all of above- A. mixed curve
- B. experience curve
- C. discrete curve
- D. fixed curve
Explanation: The experience curve shows how average or per-unit cost declines as cumulative production experience increases.
Correct answer: experience curve- A. evaluate variable driver
- B. evaluate cost driver
- C. evaluate price driver
- D. evaluate demand driver
Explanation: After estimating the cost function, the analyst evaluates the cost driver to determine whether it adequately explains changes in cost.
Correct answer: evaluate cost driver554. The Regression Analysis Method of quantitative analysis of cost function considers ____________?
- A. all data points
- B. One data point
- C. Two data points
- D. Four data points
Explanation: Regression analysis uses all available observations to calculate the best-fitting relationship between cost and the activity driver.
Correct answer: all data points- A. related total costs
- B. related fixed cost
- C. related variable cost
- D. related per unit cost
Explanation: Cost-function estimation examines how total costs change when the activity level changes.
Correct answer: related total costs- A. 0.4528
- B. 0.4783
- C. 0.5216
- D. 0.5425
Explanation: The coefficient of determination is 1 minus unexplained variation divided by total variation: 1 − 456,870/955,000 = 0.5216 approximately.
Correct answer: 0.5216- A. 110
- B. 125
- C. 60
- D. 70
Explanation: Observed cost equals predicted cost plus disturbance error, so predicted cost is 85 − 25 = 60.
Correct answer: 60- A. straight line
- B. curved line
- C. horizontal line
- D. vertical line
Explanation: When cost is assumed to change systematically with the cost driver, the observations are connected by a straight line.
Correct answer: straight line- A. higher repair cost
- B. higher setup cost
- C. lower repair cost
- D. higher setup cost
Explanation: Repair cost generally varies with the level of production because greater use causes more wear and maintenance needs.
Correct answer: higher repair cost- A. 2.571
- B. 0.39
- C. 0.2571
- D. 3.39
Explanation: The slope coefficient equals the change in cost divided by the change in machine hours: 7,000/18,000 = 0.3889, which rounds to 0.39.
Correct answer: 0.39