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 7 of 48
- A. high incentive bonus
- B. low incentive bonus
- C. influence bonus
- D. revenue bonus
Explanation: When managers produce a higher and reliable profit forecast, the resulting performance target can support a larger performance-based…
Correct answer: high incentive bonus- A. cost budget
- B. material list
- C. revenue budget
- D. list of investors
Explanation: The operating budget normally begins with the revenue or sales budget because expected sales determine production, purchasing, staffing…
Correct answer: revenue budget- A. complexity
- B. process
- C. budget
- D. batching
Explanation: A budget is a formal quantitative expression of management's action plan for a stated future period.
Correct answer: budget- A. profit plan
- B. sales plan
- C. cost plan
- D. marketing planStrategic Planning
Explanation: A comprehensive budget plan is often called a profit plan because it coordinates expected revenues, costs, and the resulting profit.
Correct answer: profit plan- A. cost slack
- B. target slack
- C. budgetary slack
- D. revenue slackAccounting & Auditing
Explanation: Budgetary slack occurs when managers deliberately understate expected revenues or overstate expected costs, making the target easier to…
Correct answer: budgetary slack- A. intelligent interpretations
- B. participation
- C. persuasion
- D. all of above
Explanation: Effective budget administration needs intelligent interpretation of results, participation by responsible managers, and persuasion to…
Correct answer: all of above- A. to be implemented
- B. based on current practice
- C. based on past prices
- D. based on sold quantity
Explanation: Kaizen budgeting builds expected costs after considering continuous improvements that are planned for implementation.
Correct answer: to be implemented- A. controllability
- B. influential power
- C. responsibility
- D. all of above
Explanation: Controllability refers to the extent to which a manager can influence revenues, costs, profits, or investments assigned to that manager.
Correct answer: controllability- A. advantages of budget
- B. disadvantages of budget
- C. advantages of costing method
- D. disadvantages of costing method
Explanation: A budget can provide a strategic framework, promote coordination, and establish a basis for evaluating performance, so these are…
Correct answer: advantages of budget- A. total goods manufactured
- B. total cash available
- C. total revenue
- D. total goods soldAccounting & Auditing
Explanation: Beginning cash plus expected cash receipts gives total cash available before cash payments are deducted.
Correct answer: total cash available- A. price disbursements
- B. cash disbursements
- C. budget disbursements
- D. goods disbursements
Explanation: Direct labour payments, salaries, and payments for direct materials are cash outflows, so they appear under cash disbursements in the cash…
Correct answer: cash disbursements- A. investment planning models
- B. financial planning models
- C. cost planning models
- D. revenues forecast models
Explanation: Financial planning models allow management to change assumptions and study their effects through sensitivity analysis.
Correct answer: financial planning models- A. choose alternatives
- B. evaluate alternatives
- C. efficiency improvements
- D. predicted improvements
Explanation: After identifying the problem, developing alternatives, and evaluating them, management chooses the most suitable alternative as the…
Correct answer: choose alternatives- A. rolling budget
- B. pin budget
- C. specific budget
- D. past budgetAccounting & Auditing
Explanation: A continuous budget is updated regularly by adding a new future period as the current period ends, so it is also called a rolling budget.
Correct answer: rolling budget- A. identify the product
- B. identify the problem
- C. identify the quartiles
- D. identify the percentiles
Explanation: Operating-budget development begins by identifying the problem or planning objective that needs attention.
Correct answer: identify the problem- A. budgetary slack
- B. costly slack
- C. influential slack
- D. target slack
Explanation: Budgetary slack is the cushion created when managers underestimate expected revenues or overestimate expected costs, protecting them…
Correct answer: budgetary slack- A. planned schedule
- B. cash budget
- C. market budget
- D. price schedule
Explanation: A cash budget summarizes expected cash receipts and cash disbursements for a future period, helping management anticipate shortages or…
Correct answer: cash budget- A. marketing center
- B. financial center
- C. responsibility center
- D. planning center
Explanation: Revenue, cost, profit, and investment centers are types of responsibility centers because each manager is accountable for a specified area…
Correct answer: responsibility center- A. cash receipts
- B. budget receipts
- C. goods manufactured
- D. total goods sold
Explanation: Cash sales, collections from accounts receivable, and rental income are all sources of cash inflows, collectively called cash receipts.
Correct answer: cash receipts- A. 11000 units
- B. 13000 units
- C. 10000 units
- D. 7000 units
Explanation: Required production equals budgeted sales plus desired ending inventory minus beginning inventory: 8,000 + 2,000 - 3,000 = 7,000 units.
Correct answer: 7000 units