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.
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941 questions · page 29 of 48
- A. data of fixed cost
- B. cost driver of data
- C. pool of data
- D. cost object of data
Explanation: When the cost relationship remains stable across periods, observations from those periods are combined into a pool of data to estimate one…
Correct answer: pool of data- A. 100
- B. 25
- C. 50
- D. 75
Explanation: The residual equals observed cost minus predicted cost, so observed cost equals predicted cost plus residual: 50 + 25 = 75.
Correct answer: 75- A. independence of residuals
- B. dependence of residuals
- C. independence of correlation
- D. none of the above
Explanation: Independence of residuals means that one observation's error or residual is not related to another observation's residual.
Correct answer: independence of residuals- A. 33
- B. 91
- C. 81
- D. 43
Explanation: The disturbance term is the difference between observed and predicted cost: 62 − 29 = 33.
Correct answer: 33- A. coefficient of determination
- B. coefficient of index
- C. coefficient of residual
- D. coefficient of prediction
Explanation: The coefficient of determination, commonly written as R², measures how well the regression model fits or predicts the observed costs.
Correct answer: coefficient of determination- A. $16,000
- B. $200
- C. $400
- D. $20,000
Explanation: The slope coefficient equals the change in cost divided by the change in the cost driver: $8,000 ÷ 40 machine hours = $200 per machine hour.
Correct answer: $200- A. discrete amounts
- B. same amounts
- C. linear amounts
- D. nonlinear amounts
Explanation: A step cost stays constant over a relevant activity range and then rises in discrete amounts when the activity crosses a capacity…
Correct answer: discrete amounts- A. constant
- B. variable
- C. exponent
- D. base
Explanation: In a linear cost function, fixed cost does not change with the activity level within the relevant range, so it is constant.
Correct answer: constant- A. badness of residual
- B. goodness of residual
- C. badness of fit
- D. goodness of fit
Explanation: Goodness of fit describes the strength of the relationship between the cost driver and the cost, or how closely the estimated values match…
Correct answer: goodness of fit- A. residual term
- B. positive term
- C. negative term
- D. squared term
Explanation: The vertical difference between an actual cost and its estimated cost is called the residual term.
Correct answer: residual term- A. U=A-b
- B. u=A-a
- C. u=Y-y
- D. u=X-x
Explanation: The residual is the difference between the actual dependent-variable value, Y, and its estimated value, y.
Correct answer: u=Y-y- A. higher setup cost
- B. lower repair cost
- C. higher setup cost
- D. higher repair cost
Explanation: Repair cost generally varies with the level of production, so producing fewer units results in lower repair cost.
Correct answer: lower repair cost573. In the specification analysis, the assumptions related to variance state that: ________________?
- A. variance of residuals is constant
- B. variance of goodness is constant
- C. goodness of fit is constant
- D. standard error is constant
Explanation: A standard regression assumption is homoscedasticity, meaning the variance of the residuals remains constant across observations.
Correct answer: variance of residuals is constant- A. incremental unit time learning model
- B. incremental price learning model
- C. incremental unit average model
- D. incremental cost learning model
Explanation: The incremental unit-time learning model applies the learning effect to the time required for each successive unit.
Correct answer: incremental unit time learning model- A. linear coefficient
- B. cost coefficient
- C. slope coefficient
- D. price coefficient
Explanation: The high-low method calculates variable cost per unit of activity as the change in cost divided by the change in activity.
Correct answer: slope coefficient- A. x-axis at one
- B. y-axis at constant
- C. x-axis at constant
- D. y-axis at one
Explanation: In the cost equation Y = a + bX, a zero slope means cost does not change with activity and remains at the constant intercept a.
Correct answer: y-axis at constant- A. cost object hierarchy
- B. management hierarchy
- C. price hierarchy
- D. cost hierarchy
Explanation: Different cost pools are driven by different levels of activity, such as unit, batch, product, or facility-level activities.
Correct answer: cost hierarchy- A. price index
- B. cost index
- C. profit index
- D. cost driver index
Explanation: To remove changes caused by inflation, the recorded cost is adjusted by dividing it by an appropriate price index.
Correct answer: price index- A. goodness of each activity
- B. handling of each activity
- C. cost driver for each activity
- D. cost object for each activity
Explanation: Activity-based costing assigns overhead by linking each activity to the factor that causes its cost.
Correct answer: cost driver for each activity- A. discrete curve
- B. fixed curve
- C. mixed curve
- D. experience curve
Explanation: The experience curve broadens the learning-curve idea beyond labor time to include improvements in costs, productivity, and overall…
Correct answer: experience curve