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 3 of 48
- A. A unit for which cost is measured
- B. A report prepared for shareholders
- C. A rule for valuing closing stock
- D. A method for recording cash payments
Explanation: A cost object is anything for which a separate cost is required, such as a product, service, job, department or customer.
Correct answer: A unit for which cost is measured- A. Allocation assigns a whole cost, while apportionment shares a cost
- B. Allocation shares a cost, while apportionment assigns a whole cost
- C. Allocation records revenue, while apportionment records expenses
- D. Allocation measures output, while apportionment measures labour
Explanation: Allocation charges an entire overhead item to one cost centre when it can be identified with that centre.
Correct answer: Allocation assigns a whole cost, while apportionment shares a cost- A. Transferred to an abnormal loss account
- B. Added to the cost of normal output
- C. Ignored because it is unavoidable
- D. Credited directly to the production account
Explanation: Abnormal loss is valued at the applicable process cost per unit and transferred to an abnormal loss account, which is ultimately charged…
Correct answer: Transferred to an abnormal loss account- A. Actual quantity is below standard quantity for actual output
- B. Actual price is below standard price for actual purchases
- C. Actual quantity is above standard quantity for actual output
- D. Actual price is above standard price for actual purchases
Explanation: Material usage variance compares the quantity actually used with the standard quantity allowed for the actual output, usually at standard…
Correct answer: Actual quantity is below standard quantity for actual output- A. 500 units
- B. 632 units
- C. 707 units
- D. 1,000 units
Explanation: Economic order quantity is calculated as the square root of 2DS divided by H.
Correct answer: 707 units- A. Rs. 50
- B. Rs. 60
- C. Rs. 600
- D. Rs. 50,600
Explanation: Marginal cost is the change in total cost divided by the change in output. The additional cost is Rs.
Correct answer: Rs. 60- A. Costs from development through disposal
- B. Only factory costs during production
- C. Only selling costs after production
- D. Only direct materials used in production
Explanation: Life-cycle costing considers costs over the entire life of a product, including research, design, production, marketing, servicing and…
Correct answer: Costs from development through disposal- A. A permanent decrease in cost without reducing required quality
- B. A temporary postponement of payment to suppliers
- C. An increase in selling price to improve total contribution
- D. A transfer of factory costs to the administration department
Explanation: Cost reduction seeks a genuine and continuing reduction in unit cost while maintaining the required quality and performance.
Correct answer: A permanent decrease in cost without reducing required quality- A. Commission paid to sales representatives
- B. Depreciation of factory machinery
- C. Wages of production-line workers
- D. Power used by manufacturing equipment
Explanation: Sales commission is incurred to obtain and distribute sales, so it is a selling and distribution overhead.
Correct answer: Commission paid to sales representatives- A. A predetermined cost under specified operating conditions
- B. The actual cost paid after production is completed
- C. The maximum price charged to a customer
- D. The total cash balance available to a business
Explanation: A standard cost is predetermined for a product or service under stated conditions of efficiency and price.
Correct answer: A predetermined cost under specified operating conditions- A. 1200 units
- B. 990 units
- C. 1300 units
- D. 1000 units
Explanation: Units to account for are 2,600 beginning WIP plus 9,000 started, or 11,600 units.
Correct answer: 1300 units- A. 14%
- B. 15%
- C. 10%
- D. 12%
Explanation: Using the figures given, the spoilage rate is 150 divided by 1,500, which equals 10%.
Correct answer: 10%- A. normal scrap
- B. normal spoilage
- C. abnormal spoilage
- D. weighted spoilage
Explanation: Spoilage that is expected under normal operating conditions of a production process is called normal spoilage.
Correct answer: normal spoilage- A. reduced work
- B. spoilage
- C. rework
- D. scrap
Explanation: Scrap is residual material left from manufacturing that generally has little value but may be sold or reused.
Correct answer: scrap- A. abnormal spoilage
- B. Gross weighted spoilage
- C. inventoriable spoilage
- D. partial spoilage
Explanation: Abnormal spoilage is found by subtracting the spoilage expected under normal production conditions from total spoilage.
Correct answer: abnormal spoilage- A. Gross weighted spoilage
- B. inventoriable spoilage
- C. partial spoilage
- D. total spoilage
Explanation: Total spoilage is found by reconciling units: beginning work in process plus units started, less ending work in process and units…
Correct answer: total spoilage- A. normal spoilage rates
- B. abnormal spoilage rates
- C. normal scrap rates
- D. abnormal scrap rates
Explanation: The normal spoilage rate uses normal spoilage units as the numerator and total completed good units as the denominator.
Correct answer: normal spoilage rates- A. normal spoilage
- B. abnormal spoilage
- C. weighted spoilage
- D. both a and b
Explanation: Spoilage is classified as normal when it is expected under efficient operations and abnormal when it exceeds the expected amount.
Correct answer: both a and b- A. spoilage
- B. rework
- C. scrap
- D. equivalence
Explanation: Spoilage consists of partially or fully completed units that fail specifications and cannot be economically corrected, so they are…
Correct answer: spoilage- A. abnormal spoilage
- B. normal spoilage
- C. transferred-in spoilage
- D. transferred-out spoilage
Explanation: Abnormal spoilage is considered avoidable and controllable because it results from inefficiencies beyond the expected production loss.
Correct answer: abnormal spoilage