MCQ Questions ⁉️ on Cost & Management Accounting..Total MCQ 50 Time Allowed 60 minutes, Difficult level Moderate difficult ..ANSWERS ARE AT THE END.....
---
1. Which of the following best defines “cost”?
A. The price paid for acquiring goods only
B. The sacrifice made to obtain goods or services
C. The expenditure incurred to generate income only
D. The future economic benefit derived from an asset
Answer: B
Explanation: Cost is a sacrifice of resources to achieve a specific objective.
---
2. Which of the following is a “period cost”?
A. Direct material
B. Direct labor
C. Factory rent
D. Office salaries
Answer: D
Explanation: Period costs are expensed in the period incurred, not inventoried.
---
3. Which classification of cost is most useful for decision-making?
A. Historical cost
B. Sunk cost
C. Relevant cost
D. Product cost
Answer: C
Explanation: Relevant costs affect future decisions; sunk costs are irrelevant.
---
4. Which cost is controllable at the production supervisor level?
A. Factory depreciation
B. Direct materials usage
C. Factory insurance
D. Building rent
Answer: B
Explanation: Supervisors can control material usage, not fixed costs.
---
5. Cost reduction aims to:
A. Achieve cost savings with no reduction in quality
B. Minimize all costs regardless of quality
C. Postpone expenditure
D. Reduce wages only
Answer: A
---
6. Cost control focuses on:
A. Setting cost targets
B. Ensuring costs do not exceed standards
C. Eliminating non-value activities
D. Both A and B
Answer: D
---
7. Cost tracing means:
A. Assigning direct costs directly to cost objects
B. Allocating indirect costs
C. Apportioning joint costs
D. None of these
Answer: A
---
8. Cost allocation means:
A. Tracing direct costs
B. Distributing indirect costs to cost objects
C. Measuring product efficiency
D. Applying standard cost
Answer: B
---
9. Which basis is most suitable for apportioning factory rent?
A. Floor area
B. Machine hours
C. Direct wages
D. Material usage
Answer: A
---
10. Reapportionment of overheads refers to:
A. Primary distribution
B. Transfer of service department costs to production departments
C. Cost tracing
D. None of these
Answer: B
---
11. When closing inventory is overvalued, profit will be:
A. Overstated
B. Understated
C. Not affected
D. Cannot be determined
Answer: A
---
12. When closing inventory is undervalued, cost of goods sold will be:
A. Overstated
B. Understated
C. Equal to opening stock
D. Not affected
Answer: A
---
13. Abnormal loss is treated as:
A. Included in cost of production
B. Transferred to costing profit and loss account
C. Shared by remaining units
D. Ignored
Answer: B
---
14. Which is the correct journal entry for recording completed production?
A. WIP A/c Dr → Finished Goods A/c Cr
B. Finished Goods A/c Dr → WIP A/c Cr
C. Factory Overhead A/c Dr → WIP A/c Cr
D. Sales A/c Dr → Finished Goods A/c Cr
Answer: B
---
15. When overheads are under-applied:
A. Actual < Applied
B. Actual > Applied
C. Standard = Applied
D. None of these
Answer: B
---
16. Over-applied overheads are adjusted by:
A. Increasing cost of goods sold
B. Decreasing cost of goods sold
C. Increasing WIP
D. Increasing expenses
Answer: B
---
17. Job costing is suitable for:
A. Continuous production
B. Mass production
C. Customized orders
D. Standardized units
Answer: C
---
18. Process costing is suitable for:
A. Custom-made goods
B. Batch manufacturing
C. Uniform continuous production
D. Contract works
Answer: C
---
19. The main difference between job and process costing is:
A. Type of cost center used
B. Nature of product
C. Accounting period
D. Cost sheet format
Answer: B
---
20. Joint cost is:
A. Cost after split-off point
B. Common cost incurred before products become separately identifiable
C. Variable cost only
D. Fixed cost
Answer: B
---
21. Joint products are:
A. By-products with negligible value
B. Products of equal importance derived from same process
C. Scrap items
D. None
Answer: B
---
22. By-products are:
A. Main products
B. Low-value secondary products
C. Rejected units
D. Waste
Answer: B
---
23. Joint cost allocation using physical units method is based on:
A. Sales value
B. Output quantity
C. Net realizable value
D. None
Answer: B
---
24. Absorption costing includes:
A. Only variable manufacturing costs
B. All manufacturing costs (fixed + variable)
C. Only prime costs
D. Selling & admin expenses
Answer: B
---
25. Variable costing treats fixed manufacturing overhead as:
A. Product cost
B. Period cost
C. Prime cost
Answer: B
---
26. In absorption costing, inventory valuation is:
A. Higher than variable costing when production > sales
B. Lower than variable costing when production > sales
C. Equal always
D. None
Answer: A
---
27. Budgetary slack refers to:
A. Underestimation of income or overestimation of costs
B. Accurate estimation
C. Tight budget
D. None
Answer: A
---
28. Principal budget factor means:
A. The key factor that limits organizational performance
B. The main source of income
C. The highest expenditure item
D. Budget controller
Answer: A
---
29. A static budget is:
A. Adjusted for activity level changes
B. Fixed at one level of activity
C. Always flexible
D. None
Answer: B
---
30. Flexible budget is:
A. Prepared for one level of activity
B. Prepared for different levels of activity
C. Historical
D. None
Answer: B
---
31. Material Cost Variance =
A. (Standard Price × Standard Quantity) – (Actual Price × Actual Quantity)
B. Standard Price × (Standard Quantity – Actual Quantity)
C. Actual Quantity × (Standard Price – Actual Price)
D. Both A and C
Answer: A
---
32. Labour Efficiency Variance =
A. (Standard Hours – Actual Hours) × Standard Rate
B. (Actual Hours × Actual Rate)
C. (Actual Hours × Standard Rate) – (Standard Hours × Actual Rate)
D. None
Answer: A
---
33. Variable Overhead Spending Variance =
A. Actual Hours × (Standard Rate – Actual Rate)
B. (Standard Hours – Actual Hours) × Standard Rate
C. Standard Rate × Actual Hours
D. None
Answer: A
---
34. Responsibility centers are classified as:
A. Cost, Revenue, Profit, and Investment centers
B. Functional and Operational centers
C. Departmental centers only
D. None
Answer: A
---
35. A profit center manager is responsible for:
A. Only cost
B. Only revenue
C. Both cost and revenue
D. Investment only
Answer: C
---
36. An investment center is evaluated on:
A. ROI or Residual Income
B. Cost Variance
C. Sales Margin
D. Revenue Variance
Answer: A
---
37. Which of the following is not a controllable cost?
A. Direct materials
B. Direct labor
C. Factory rent
D. Indirect materials
Answer: C
---
38. Opportunity cost is:
A. Past cost
B. The benefit foregone by choosing one alternative
C. Fixed cost
D. Irrelevant for decision-making
Answer: B
---
39. Sunk cost is:
A. Future avoidable cost
B. Past cost not relevant to decisions
C. Variable cost
D. Fixed cost
Answer: B
---
40. Conversion cost includes:
A. Direct labor + Overheads
B. Direct material + Direct labor
C. Direct material + Overheads
D. All manufacturing costs
Answer: A
---
41. Prime cost =
A. Direct material + Direct labor
B. Direct labor + Factory overhead
C. Direct material + Factory overhead
D. All manufacturing costs
Answer: A
---
42. Which cost is most useful for break-even analysis?
A. Sunk cost
B. Variable cost
C. Fixed cost
D. Total cost
Answer: B
---
43. Which variance shows the overall performance of material usage and price?
A. Material cost variance
B. Material mix variance
C. Material yield variance
D. Material efficiency variance
Answer: A
---
44. Labour rate variance shows difference due to:
A. Change in labor efficiency
B. Change in wage rate
C. Idle time
D. Material mix
Answer: B
---
45. Cost of abnormal gain is:
A. Credited to costing P&L
B. Debited to costing P&L
C. Included in process cost
D. None
Answer: A
---
46. Fixed overhead volume variance arises due to:
A. Difference between actual and standard hours
B. Change in efficiency
C. Change in capacity utilization
D. All of the above
Answer: D
---
47. In process costing, normal loss is valued at:
A. Cost price
B. Realizable value
C. Market price
D. Zero
Answer: B
---
48. Transfer price in responsibility accounting is:
A. The price charged for goods/services between divisions
B. Selling price to customer
C. Market price only
D. None
Answer: A
---
49. Marginal costing is most useful for:
A. Long-term investment
B. Short-term decision-making
C. Budget preparation only
D. Cost reduction
Answer: B
---
50. The main objective of cost accounting is:
A. Financial reporting
B. Cost ascertainment and control
C. Tax compliance
D. External audit
Answer: B
***********HERE IS ANSWERS****
Thanks... you solve 50 MCQ Questions in 6 minutes..here is the answers.. please check yourself write ✍️ your performance..how many questions attempted correctly?
MCQ Questions ⁉️ on Cost & Management Accounting..Total MCQ 50 Time Allowed 60 minutes, Difficult level Moderate difficult
---
1. Which of the following best defines “cost”?
A. The price paid for acquiring goods only
B. The sacrifice made to obtain goods or services
C. The expenditure incurred to generate income only
D. The future economic benefit derived from an asset
Answer: B
Explanation: Cost is a sacrifice of resources to achieve a specific objective.
---
2. Which of the following is a “period cost”?
A. Direct material
B. Direct labor
C. Factory rent
D. Office salaries
Answer: D
Explanation: Period costs are expensed in the period incurred, not inventoried.
---
3. Which classification of cost is most useful for decision-making?
A. Historical cost
B. Sunk cost
C. Relevant cost
D. Product cost
Answer: C
Explanation: Relevant costs affect future decisions; sunk costs are irrelevant.
---
4. Which cost is controllable at the production supervisor level?
A. Factory depreciation
B. Direct materials usage
C. Factory insurance
D. Building rent
Answer: B
Explanation: Supervisors can control material usage, not fixed costs.
---
5. Cost reduction aims to:
A. Achieve cost savings with no reduction in quality
B. Minimize all costs regardless of quality
C. Postpone expenditure
D. Reduce wages only
Answer: A
---
6. Cost control focuses on:
A. Setting cost targets
B. Ensuring costs do not exceed standards
C. Eliminating non-value activities
D. Both A and B
Answer: D
---
7. Cost tracing means:
A. Assigning direct costs directly to cost objects
B. Allocating indirect costs
C. Apportioning joint costs
D. None of these
Answer: A
---
8. Cost allocation means:
A. Tracing direct costs
B. Distributing indirect costs to cost objects
C. Measuring product efficiency
D. Applying standard cost
Answer: B
---
9. Which basis is most suitable for apportioning factory rent?
A. Floor area
B. Machine hours
C. Direct wages
D. Material usage
Answer: A
---
10. Reapportionment of overheads refers to:
A. Primary distribution
B. Transfer of service department costs to production departments
C. Cost tracing
D. None of these
Answer: B
---
11. When closing inventory is overvalued, profit will be:
A. Overstated
B. Understated
C. Not affected
D. Cannot be determined
Answer: A
---
12. When closing inventory is undervalued, cost of goods sold will be:
A. Overstated
B. Understated
C. Equal to opening stock
D. Not affected
Answer: A
---
13. Abnormal loss is treated as:
A. Included in cost of production
B. Transferred to costing profit and loss account
C. Shared by remaining units
D. Ignored
Answer: B
---
14. Which is the correct journal entry for recording completed production?
A. WIP A/c Dr → Finished Goods A/c Cr
B. Finished Goods A/c Dr → WIP A/c Cr
C. Factory Overhead A/c Dr → WIP A/c Cr
D. Sales A/c Dr → Finished Goods A/c Cr
Answer: B
---
15. When overheads are under-applied:
A. Actual < Applied
B. Actual > Applied
C. Standard = Applied
D. None of these
Answer: B
---
16. Over-applied overheads are adjusted by:
A. Increasing cost of goods sold
B. Decreasing cost of goods sold
C. Increasing WIP
D. Increasing expenses
Answer: B
---
17. Job costing is suitable for:
A. Continuous production
B. Mass production
C. Customized orders
D. Standardized units
Answer: C
---
18. Process costing is suitable for:
A. Custom-made goods
B. Batch manufacturing
C. Uniform continuous production
D. Contract works
Answer: C
---
19. The main difference between job and process costing is:
A. Type of cost center used
B. Nature of product
C. Accounting period
D. Cost sheet format
Answer: B
---
20. Joint cost is:
A. Cost after split-off point
B. Common cost incurred before products become separately identifiable
C. Variable cost only
D. Fixed cost
Answer: B
---
21. Joint products are:
A. By-products with negligible value
B. Products of equal importance derived from same process
C. Scrap items
D. None
Answer: B
---
22. By-products are:
A. Main products
B. Low-value secondary products
C. Rejected units
D. Waste
Answer: B
---
23. Joint cost allocation using physical units method is based on:
A. Sales value
B. Output quantity
C. Net realizable value
D. None
Answer: B
---
24. Absorption costing includes:
A. Only variable manufacturing costs
B. All manufacturing costs (fixed + variable)
C. Only prime costs
D. Selling & admin expenses
Answer: B
---
25. Variable costing treats fixed manufacturing overhead as:
A. Product cost
B. Period cost
C. Prime cost
D. Conversion cost
Answer: B
---
26. In absorption costing, inventory valuation is:
A. Higher than variable costing when production > sales
B. Lower than variable costing when production > sales
C. Equal always
D. None
Answer: A
---
27. Budgetary slack refers to:
A. Underestimation of income or overestimation of costs
B. Accurate estimation
C. Tight budget
D. None
Answer: A
---
28. Principal budget factor means:
A. The key factor that limits organizational performance
B. The main source of income
C. The highest expenditure item
D. Budget controller
Answer: A
---
29. A static budget is:
A. Adjusted for activity level changes
B. Fixed at one level of activity
C. Always flexible
D. None
Answer: B
---
30. Flexible budget is:
A. Prepared for one level of activity
B. Prepared for different levels of activity
C. Historical
D. None
Answer: B
---
31. Material Cost Variance =
A. (Standard Price × Standard Quantity) – (Actual Price × Actual Quantity)
B. Standard Price × (Standard Quantity – Actual Quantity)
C. Actual Quantity × (Standard Price – Actual Price)
D. Both A and C
Answer: A
---
32. Labour Efficiency Variance =
A. (Standard Hours – Actual Hours) × Standard Rate
B. (Actual Hours × Actual Rate)
C. (Actual Hours × Standard Rate) – (Standard Hours × Actual Rate)
D. None
Answer: A
---
33. Variable Overhead Spending Variance =
A. Actual Hours × (Standard Rate – Actual Rate)
B. (Standard Hours – Actual Hours) × Standard Rate
C. Standard Rate × Actual Hours
D. None
Answer: A
---
34. Responsibility centers are classified as:
A. Cost, Revenue, Profit, and Investment centers
B. Functional and Operational centers
C. Departmental centers only
D. None
Answer: A
---
35. A profit center manager is responsible for:
A. Only cost
B. Only revenue
C. Both cost and revenue
D. Investment only
Answer: C
---
36. An investment center is evaluated on:
A. ROI or Residual Income
B. Cost Variance
C. Sales Margin
D. Revenue Variance
Answer: A
---
37. Which of the following is not a controllable cost?
A. Direct materials
B. Direct labor
C. Factory rent
D. Indirect materials
Answer: C
---
38. Opportunity cost is:
A. Past cost
B. The benefit foregone by choosing one alternative
C. Fixed cost
D. Irrelevant for decision-making
Answer: B
---
39. Sunk cost is:
A. Future avoidable cost
B. Past cost not relevant to decisions
C. Variable cost
D. Fixed cost
Answer: B
---
40. Conversion cost includes:
A. Direct labor + Overheads
B. Direct material + Direct labor
C. Direct material + Overheads
D. All manufacturing costs
Answer: A
---
41. Prime cost =
A. Direct material + Direct labor
B. Direct labor + Factory overhead
C. Direct material + Factory overhead
D. All manufacturing costs
Answer: A
---
42. Which cost is most useful for break-even analysis?
A. Sunk cost
B. Variable cost
C. Fixed cost
D. Total cost
Answer: B
---
43. Which variance shows the overall performance of material usage and price?
A. Material cost variance
B. Material mix variance
C. Material yield variance
D. Material efficiency variance
Answer: A
---
44. Labour rate variance shows difference due to:
A. Change in labor efficiency
B. Change in wage rate
C. Idle time
D. Material mix
Answer: B
---
45. Cost of abnormal gain is:
A. Credited to costing P&L
B. Debited to costing P&L
C. Included in process cost
D. None
Answer: A
---
46. Fixed overhead volume variance arises due to:
A. Difference between actual and standard hours
B. Change in efficiency
C. Change in capacity utilization
D. All of the above
Answer: D
---
47. In process costing, normal loss is valued at:
A. Cost price
B. Realizable value
C. Market price
D. Zero
Answer: B
---
48. Transfer price in responsibility accounting is:
A. The price charged for goods/services between divisions
B. Selling price to customer
C. Market price only
D. None
Answer: A
---
49. Marginal costing is most useful for:
A. Long-term investment
B. Short-term decision-making
C. Budget preparation only
D. Cost reduction
Answer: B
---
50. The main objective of cost accounting is:
A. Financial reporting
B. Cost ascertainment and control
C. Tax compliance
D. External audit
Answer: B
www.gmsisuccess.in
No comments:
Post a Comment