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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- A. cost of indirect labor
- B. cost of direct labor
- C. cost of direct material
- D. unit costs
Explanation: Dividing total production cost by the number of output units gives the cost per unit, commonly called unit cost.
Correct answer: unit costs- A. accounting period costing system
- B. process costing system
- C. job costing system
- D. none of aboveHire An Accountant
Explanation: Process costing assigns accumulated costs across large quantities of similar or identical units, producing an average unit cost.
Correct answer: process costing system- A. summarize flow of output
- B. compute output in units
- C. summarize total costs
- D. compute cost for each equivalent unitGet Executive Coaching
Explanation: The first step is to summarize the physical flow of output, including units to account for and units accounted for.
Correct answer: summarize flow of output- A. partial inventory costing method
- B. current period inventory method
- C. Last-in, first-out method
- D. First-in, first-out method
Explanation: FIFO process costing completes the beginning inventory first, then accounts for work started and completed during the current period.
Correct answer: First-in, first-out method- A. conversion process
- B. operation
- C. hybridization
- D. both a and b
Explanation: An operation is a standardized procedure repeated on different materials to produce different finished products.
Correct answer: operation- A. incremental costing system
- B. split off costing system
- C. inventoriable costing system
- D. operation costing systemAccounting & Auditing
Explanation: Operation costing is a hybrid of job-order and process costing used for batches of similar but non-identical products.
Correct answer: operation costing systemAccounting & Auditing- A. weighted costing system
- B. average costing system
- C. hybrid costing system
- D. double costing system
Explanation: A hybrid costing system combines job costing for identifiable batches or jobs with process costing for standardized production stages.
Correct answer: hybrid costing system- A. market equity
- B. total assets employed
- C. total assets available
- D. stockholders' equity
Explanation: Total assets employed are found by removing idle assets from total assets available for use.
Correct answer: total assets employed- A. net income
- B. after tax income
- C. residual income
- D. operating incomeFinance
Explanation: Residual income equals income minus the required return on the investment or assets employed.
Correct answer: residual income- A. net income
- B. nominal income
- C. residual income
- D. residual investment
Explanation: Economic value added is a refined form of residual income that subtracts a capital charge from after-tax operating profit.
Correct answer: residual income- A. weighted average cost of capital
- B. economic value added
- C. after-tax operating income
- D. net income
Explanation: The weighted average cost of capital is the after-tax average required return on the company’s long-term sources of finance, weighted…
Correct answer: weighted average cost of capital- A. return on sales
- B. investment turnover
- C. residual income
- D. return on investment
Explanation: Return on investment is calculated by dividing income by the investment base, usually expressed as a percentage.
Correct answer: return on investment- A. DuPont investment
- B. return on investment
- C. investment
- D. investment turnoverCompare Investment Apps
Explanation: Investment represents the total resources employed to generate operating income, such as assets committed to the business.
Correct answer: investment- A. interactive control system
- B. belief system
- C. boundary system
- D. diagnostic control system
Explanation: A belief system communicates the organization’s purpose, mission, and core values to guide employee behavior.
Correct answer: belief system- A. 8.24%
- B. 7.24%
- C. 9.24%
- D. 10.24%
Explanation: Return on sales equals operating income divided by revenue: $5,650,000 ÷ $68,558,000 × 100 ≈ 8.24%.
Correct answer: 8.24%- A. residual income
- B. return on after-tax operating income
- C. return on sales
- D. return on investmentCompare Credit Cards
Explanation: Return on sales uses operating income as the numerator and revenue as the denominator.
Correct answer: return on sales- A. $30,500
- B. $20,500
- C. $25,500
- D. $32,500Compare Investment Apps
Explanation: Residual income equals operating income minus the required return on investment: $375,000 − (13% × $2,650,000) = $30,500.
Correct answer: $30,500- A. accrual accounting rate of return
- B. accounting rate of return
- C. nominal rate of return
- D. both a and b
Explanation: Return on investment is commonly called the accounting rate of return, and accrual accounting rate of return is a fuller name for the same…
Correct answer: both a and b- A. interactive control system
- B. belief system
- C. boundary system
- D. diagnostic control systemHire Grant Writers
Explanation: A boundary system sets the limits of acceptable behavior through rules, codes of conduct and prohibited actions.
Correct answer: boundary system- A. residual income
- B. return on investment
- C. return on sales
- D. investment turnoverCompare Investment Apps
Explanation: The DuPont relationship decomposes ROI into return on sales multiplied by investment turnover.
Correct answer: return on investment