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 47 of 48
- A. inventory costs
- B. product costs
- C. non-manufacturing costs
- D. manufacturing costs
Explanation: Period costs are charged to the income statement in the period incurred rather than being attached to inventory.
Correct answer: non-manufacturing costs- A. works on cost.
- B. selling overhead.
- C. distribution overhead.
- D. administration overhead
Explanation: Audit fees relate to the general administration and financial control of the business rather than production, selling or delivery.
Correct answer: administration overhead- A. estimation of profit.
- B. estimation of cost.
- C. estimation of selling price.
- D. estimation of units.
Explanation: A tender is a quotation or offer to undertake work at a stated price, so it represents an estimated selling price to the customer.
Correct answer: estimation of selling price.- A. prime cost.
- B. factory cost.
- C. distribution cost.
- D. production cost
Explanation: Rent for a warehouse used to store completed goods is incurred after production and is associated with storing and delivering products, so…
Correct answer: distribution cost.- A. all indirect costs.
- B. all direct costs.
- C. indirect and direct costs.
- D. all specific costs
Explanation: Overhead consists of costs that cannot be directly traced to a particular product or unit, such as indirect materials, labour and…
Correct answer: all indirect costs.- A. Each Department
- B. Each unit of output
- C. Each Month
- D. Each Executive
Explanation: A direct cost can be traced economically and specifically to each unit of output, such as the material used in that unit.
Correct answer: Each unit of output- A. 18,387
- B. 18,560
- C. 18,750
- D. 19,000
Explanation: After the 2% reduction, material cost per unit becomes 1,100 × 98% ÷ 22,000 = 0.049, making revised variable cost per unit 0.069.
Correct answer: 18,387- A. Direct cost
- B. Cost Sheet
- C. Budget
- D. Marginal Costing.
Explanation: A budget is a central cost-planning tool because it estimates expected costs, revenues and resource requirements for a future period.
Correct answer: Budget- A. 792
- B. 820
- C. 840
- D. 864
Explanation: Standard time for 720 units is 60 hours, giving 12 hours saved; Rowan bonus is 12/60 × 48 × 15 = 144.
Correct answer: 864- A. 8,000 units
- B. 11,000 units
- C. 10,000 units
- D. 9,000 units
Explanation: Average stock equals the average of minimum and maximum stock, so maximum stock is 2 × 9,000 − 4,000 = 14,000 units.
Correct answer: 10,000 units- A. 37.50
- B. 38.25
- C. 24.00
- D. 35.00
Explanation: At 80% capacity, output is 150,000 × 80% = 120,000 units. Required selling price is (120,000 × 14 + 800,000 + 400,000) ÷ 120,000 = 24 per…
Correct answer: 24.00- A. 5,80,000
- B. 5,50,000
- C. 5,00,000
- D. 5,75,000
Explanation: Required production equals sales plus desired closing inventories minus opening inventories: 500,000 + 150,000 + 60,000 − 80,000 − 50,000…
Correct answer: 5,80,000- A. Uncontrollable cost
- B. Sunk cost
- C. Avoidable cost
- D. Opportunity cost
Explanation: The inventory cost was incurred several years ago and cannot be changed by the current keep-or-dispose decision, so it is a sunk cost.
Correct answer: Sunk cost- A. Direct cost
- B. Variable cost
- C. Commercial cost
- D. Conversion cost
Explanation: Commercial cost refers to the costs of running the business apart from manufacturing or production costs, such as administration, selling…
Correct answer: Commercial cost- A. Relevant costs
- B. Differential costs
- C. Target costs
- D. Sunk costs
Explanation: Differential costs are the differences in cost between alternative courses of action, so they change when the decision changes.
Correct answer: Differential costs- A. Variable cost
- B. Unit cost
- C. Total cost
- D. Fixed cost
Explanation: Average cost is total cost divided by the number of units produced, which is also called unit cost.
Correct answer: Unit cost- A. No change occurs to inventories for either use absorption costing or variable costing methods
- B. The use of absorption costing produces a higher net income than the use of variable costing
- C. The use of absorption costing produces a lower net income than the use of variable costing
- D. The use of absorption costing causes inventory value to increase more than they would though the use of variable costing
Explanation: When production equals sales, opening and closing inventory quantities are unchanged, so absorption and variable costing report the same…
Correct answer: No change occurs to inventories for either use absorption costing or variable costing methods- A. 2,40,000
- B. 2,10,000
- C. 2,00,000
- D. 1,80,000
Explanation: Inventory turnover gives cost of goods sold: 36,000 × 5 = 180,000. A 25% gross profit on sales means cost is 75% of sales, so sales =…
Correct answer: 2,40,000- A. Prime cost
- B. Explicit cost
- C. Job order cost
- D. Conversion cost
Explanation: Conversion cost is the cost of transforming raw materials into finished goods, normally consisting of direct labour and manufacturing…
Correct answer: Conversion cost- A. selling Expense
- B. Direct labor
- C. factory overhead
- D. selling Expenses & administrative expenses
Explanation: Period costs are charged to the period in which they are incurred rather than included in inventory cost.
Correct answer: selling Expenses & administrative expenses