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 35 of 48
- A. sales quantity variance
- B. cost mix variance
- C. volume mix variance
- D. sales mix variance
Explanation: Sales mix variance measures the difference caused by using the actual sales mix instead of the budgeted mix, while holding budgeted…
Correct answer: sales mix variance- A. $6,200
- B. $1,700
- C. $17,000
- D. $4,500
Explanation: Sales volume variance is the difference between the flexible budget and the static budget: $4,500 − $6,200 = −$1,700.
Correct answer: $1,700- A. discretionary costs
- B. human resource management costs
- C. corporate administration costs
- D. treasury costs
Explanation: Recruitment, employee development, and training are functions of human resource management.
Correct answer: human resource management costs- A. 0.475% per year
- B. 4.475% per year
- C. 3.475% per year
- D. 2.475% per year
Explanation: The rate is calculated as tax operating income divided by net initial investment: $885,000 ÷ $35,750,000 × 100 = 2.475% per year.
Correct answer: 2.475% per year685. The cash flows method, used by net present value method and internal rate of return are ___________?
- A. vertical cash flows
- B. discounted cash flows
- C. lean cash flows
- D. future cash flows
Explanation: NPV and IRR both evaluate investment projects by discounting future cash inflows and outflows to present value.
Correct answer: discounted cash flows- A. net present value
- B. net future value
- C. net discounted value
- D. net recorded cash value
Explanation: NPV is the present value of all expected cash inflows minus the present value of all expected cash outflows, using the required rate of…
Correct answer: net present value- A. cash value of money
- B. net initial investment
- C. net future value
- D. time value of money
Explanation: For uniform annual cash flows, multiplying the payback period by the annual cash flow gives the net initial investment: Payback period ×…
Correct answer: net initial investment- A. horizontally across dimension
- B. horizontally upward dimension
- C. vertically upward dimension
- D. both a and c
Explanation: Dimensional analysis of cost considers movement across the horizontal dimension and upward through the vertical dimension, so both stated…
Correct answer: both a and c- A. nominal rate of return
- B. accrual accounting rate of return
- C. real rate of return
- D. required rate of return
Explanation: The nominal rate reflects the required return before removing inflation, so it includes compensation for investment risk and the loss of…
Correct answer: nominal rate of return- A. net value cash flow method
- B. payback method
- C. single cash flow method
- D. lean cash flow method
Explanation: The payback method measures how long a project takes to recover its initial investment from expected cash inflows.
Correct answer: payback method- A. $10,511,000
- B. $12,105,000
- C. $1,100,000
- D. $11,000,000
Explanation: With uniform annual cash flows, net initial investment equals payback period multiplied by annual cash flow: 4 × $2,750,000 = $11,000,000.
Correct answer: $11,000,000692. If the nominal rate is 26% and the inflation rate is 12%, then the real rate can be __________?
- A. 13.75%
- B. 11.65%
- C. 12.50%
- D. 13.50%
Explanation: The real rate is calculated as [(1 + nominal rate) ÷ (1 + inflation rate)] − 1: (1.26 ÷ 1.12) − 1 = 12.5%.
Correct answer: 12.50%- A. discounting period
- B. investment period
- C. payback period
- D. earning period
Explanation: For uniform cash inflows, dividing net initial investment by the annual cash flow gives the number of years needed to recover the…
Correct answer: payback period- A. net initial investment
- B. cash flow from operations after paying taxes
- C. cash flow from terminal disposal after paying taxes
- D. all of above
Explanation: Capital investment analysis normally considers the initial investment, operating cash flows after tax, and terminal cash flows such as…
Correct answer: all of above- A. $596,300
- B. $485,300
- C. $496,250
- D. $486,250
Explanation: Average investment is calculated as the average of the initial investment and the amount recovered at the end: ($985,000 + $7,500) ÷ 2 =…
Correct answer: $496,250- A. 3.34 years
- B. 4.34 years
- C. 5.34 years
- D. 6.34 years
Explanation: Payback period is calculated as net initial investment divided by uniform annual cash flow: $6,850,000 ÷ $2,050,000 = 3.34 years.
Correct answer: 3.34 years- A. project dimension
- B. accounting-period dimension
- C. back-flush accounting dimension
- D. lean accounting dimension
Explanation: The vertical dimension examines costs across successive accounting periods, so it is called the accounting-period dimension.
Correct answer: accounting-period dimension- A. lead budgeting
- B. lean budgeting
- C. capital budgeting
- D. relevant budgeting
Explanation: Capital budgeting is the process of evaluating and selecting long-term investments such as machinery, property, or major projects.
Correct answer: capital budgeting- A. internal rate of return
- B. accrual accounting rate of return
- C. net present value
- D. all of above
Explanation: Capital budgeting commonly uses NPV, IRR, and the accounting rate of return to evaluate investment proposals.
Correct answer: all of above- A. accrual accounting rate of return
- B. returned working capital
- C. increase in expected average annual
- D. decrease in expected average annual
Explanation: The accounting rate of return is calculated by dividing average annual accounting profit or income by the capital invested, often…
Correct answer: accrual accounting rate of return