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 36 of 48
- A. project dimension
- B. accounting-period dimension
- C. back-flush accounting dimension
- D. lean accounting dimension
Explanation: The horizontal dimension compares or traces costs across projects, so it is called the project dimension.
Correct answer: project dimension- A. cash flow from operations
- B. terminal disposal of investment
- C. net initial investment
- D. average return on investment
Explanation: Net initial investment combines the machine purchase cost and working-capital outflow, while reducing them by any immediate cash inflow…
Correct answer: net initial investment- A. practical capacity
- B. theoretical costing
- C. standard capacity
- D. actual capacity
Explanation: Practical capacity is the achievable operating capacity after allowing for normal unavoidable interruptions, so it is below theoretical…
Correct answer: practical capacity- A. variable quantity
- B. fixed quantity
- C. price
- D. expense
Explanation: Under variable costing, fixed manufacturing overhead is not attached to inventory; it is charged as a period expense.
Correct answer: expense- A. adjusted labor utilization
- B. unadjusted labor utilization
- C. material utilization
- D. capacity utilization
Explanation: The fixed manufacturing cost rate is calculated by dividing budgeted fixed manufacturing costs by a capacity-based denominator.
Correct answer: capacity utilization- A. denominator level choices
- B. numerator level choices
- C. normal level choices
- D. standard level choices
Explanation: Denominator-level choices determine the capacity base used for product costing, performance evaluation, and sometimes regulatory…
Correct answer: denominator level choices- A. inventory margin
- B. sales margin
- C. Gross margin
- D. production margin
Explanation: An absorption-costing income statement classifies costs by function and reports sales less cost of goods sold to produce gross margin.
Correct answer: Gross margin- A. profit point
- B. breakeven point
- C. production point
- D. cost point
Explanation: The break-even point is determined by fixed operating and manufacturing costs divided by contribution margin per unit.
Correct answer: breakeven point- A. indirect labor
- B. capacity
- C. raw material
- D. direct labor
Explanation: The capacity cost rate expresses budgeted fixed manufacturing cost per unit of capacity supplied, making capacity the relevant concept.
Correct answer: capacity- A. allocation approach
- B. unadjusted approach
- C. proration approach
- D. adjusted approach
Explanation: Proration spreads underapplied or overapplied overhead among ending work in process, finished goods, and cost of goods sold balances.
Correct answer: proration approach- A. master budget capacity utilization
- B. finite cost utilization
- C. infinite cost utilization
- D. infinite budget capacity utilization
Explanation: Master budget capacity utilization is the expected capacity level needed to meet the average customer demand during the budget period.
Correct answer: master budget capacity utilization- A. unadjusted cost approach
- B. adjusted allocation rate approach
- C. unadjusted allocation approach
- D. adjusted cost approach
Explanation: The adjusted allocation-rate approach restates ledger amounts using actual cost-allocation rates.
Correct answer: adjusted allocation rate approach- A. capacity used
- B. capacity available
- C. capacity utilization
- D. downward demand
Explanation: A fixed allocation rate is calculated using the capacity level selected as the denominator, commonly the available or practical capacity.
Correct answer: capacity available- A. 65 units
- B. 75 units
- C. 95 units
- D. 85 units
Explanation: Required units equal target operating income divided by contribution margin per unit: $38,000 ÷ $400 = 95 units.
Correct answer: 95 units- A. higher income
- B. zero dividends
- C. negative income value
- D. lower income
Explanation: When production is below sales, inventory falls and absorption costing releases previously deferred fixed manufacturing overhead, making…
Correct answer: lower income- A. write off variance approach
- B. write in variance approach
- C. adjusted variance approach
- D. unadjusted variance approach
Explanation: Under the write-off variance approach, the production-volume variance is written off rather than allocated among inventory accounts.
Correct answer: write off variance approach- A. unit level of production
- B. unit level of sales
- C. chosen denominator level
- D. all of above
Explanation: Under absorption costing, operating income can be affected by production volume, sales volume, and the denominator level used to assign…
Correct answer: all of above- A. quantity of units sold
- B. quantity of units manufactured
- C. increase in units sold
- D. decrease in units sold
Explanation: With variable costing, fixed manufacturing overhead is expensed in the current period, so operating income changes with units sold and…
Correct answer: quantity of units sold- A. present period
- B. future period
- C. yearly period
- D. monthly period
Explanation: Absorption costing includes fixed manufacturing overhead in inventory, so that cost is deferred until the inventory is sold in a future…
Correct answer: future period720. If the production is greater than sales, then operating income under variable costing is _________?
- A. negative income value
- B. lower income
- C. higher income
- D. zero dividends
Explanation: When production exceeds sales, absorption costing carries some fixed manufacturing overhead in ending inventory, while variable costing…
Correct answer: lower income