50 MCQs on Cost Accounting - US CMA PART
_By Prof. Mahaley | Gmsisuccess Mumbai_
_Answer Key at the end_
#### *MCQ SET*
*1. Which of the following is a Product Cost?*
A. Sales Manager Salary
B. Factory Rent
C. Advertising Expense
D. CEO Salary
*Ans: B*
*2. Prime Cost = ?*
A. DM + DL
B. DM + Mfg OH
C. DL + Mfg OH
D. DM + DL + Mfg OH
*Ans: A*
*3. Conversion Cost = ?*
A. DM + DL
B. DL + Mfg OH
C. DM + Mfg OH
D. DM + DL + Mfg OH
*Ans: B*
*4. Cost which remains constant per unit but changes in total is:*
A. Fixed Cost
B. Variable Cost
C. Semi-variable Cost
D. Step Cost
*Ans: B*
*5. Factory Supervisor Salary is an example of:*
A. Direct Material
B. Manufacturing Overhead
C. Period Cost
D. Non-manufacturing Cost
*Ans: B*
*6. The range of activity where cost behavior is valid is called:*
A. Breakeven Point
B. Relevant Range
C. Margin of Safety
D. Capacity Level
*Ans: B*
*7. Which is NOT a factor of production?*
A. Land
B. Labor
C. Marketing
D. Capital
*Ans: C*
*8. Short Run period is defined as:*
A. All inputs are variable
B. At least one input is fixed
C. 1 year period
D. 5 year period
*Ans: B*
*9. Opportunity Cost is:*
A. Past cost incurred
B. Benefit forgone by choosing one option
C. Sunk Cost
D. Out of pocket cost
*Ans: B*
*10. Salary paid to workers is:*
A. Implicit Cost
B. Explicit Cost
C. Sunk Cost
D. Opportunity Cost
*Ans: B*
*11. Job Order Costing is best suited for:*
A. Cement Factory
B. Ship Building
C. Sugar Mill
D. Oil Refinery
*Ans: B*
*12. Process Costing is used when:*
A. Products are unique
B. Products are homogenous and mass produced
C. Service industry
D. Construction
*Ans: B*
*13. Under Absorption Costing, Fixed Mfg OH is treated as:*
A. Period Cost
B. Product Cost
C. Direct Cost
D. Opportunity Cost
*Ans: B*
*14. Under Variable Costing, Fixed Mfg OH is treated as:*
A. Product Cost
B. Period Cost
C. Direct Cost
D. Inventoriable Cost
*Ans: B*
*15. Throughput Costing includes only *_* as product cost:*
A. DM + DL
B. DM
C. DM + DL + Var OH
D. Full Absorption Cost
*Ans: B*
*16. Overapplied Overhead means:*
A. Actual > Applied
B. Applied > Actual
C. Budgeted > Actual
D. Actual > Budgeted
*Ans: B*
*17. Journal to close Overapplied OH to COGS:*
A. Dr. COGS Cr. Mfg OH
B. Dr. Mfg OH Cr. COGS
C. Dr. WIP Cr. Mfg OH
D. Dr. FG Cr. Mfg OH
*Ans: B*
*18. Normal Spoilage cost is:*
A. Expensed as loss
B. Allocated to good units
C. Ignored
D. Charged to Period Cost
*Ans: B*
*19. Abnormal Spoilage cost is:*
A. Allocated to good units
B. Expensed as Loss in period
C. Added to Inventory
D. Capitalized
*Ans: B*
*20. Journal for Abnormal Spoilage $1000:*
A. Dr. WIP Cr. Loss $1000
B. Dr. Loss Cr. WIP $1000
C. Dr. FG Cr. Loss $1000
D. Dr. COGS Cr. Loss $1000
*Ans: B*
*21. High-Low Method is used to separate:*
A. Fixed and Variable Cost
B. Direct and Indirect Cost
C. Product and Period Cost
D. Normal and Abnormal Cost
*Ans: A*
*22. Semi-variable Cost is also called:*
A. Step Cost
B. Mixed Cost
C. Discretionary Cost
D. Committed Cost
*Ans: B*
*23. Electricity bill with $2000 fixed + $2/unit is:*
A. Fixed Cost
B. Variable Cost
C. Semi-variable Cost
D. Step Cost
*Ans: C*
*24. Committed Fixed Cost example:*
A. Advertising
B. R&D
C. Factory Rent
D. Training
*Ans: C*
*25. Discretionary Fixed Cost example:*
A. Depreciation
B. Insurance
C. Advertising
D. Property Tax
*Ans: C*
*26. Overcosting occurs when:*
A. Product uses few resources but charged more OH
B. Product uses many resources but charged less OH
C. Actual < Budgeted
D. Applied < Actual
*Ans: A*
*27. Undercosting occurs when:*
A. Product uses few resources but charged more OH
B. Product uses many resources but charged less OH
C. Actual > Budgeted
D. Applied > Actual
*Ans: B*
*28. Manufacturing OH includes:*
A. Sales Commission
B. Factory Depreciation
C. CEO Salary
D. Advertising
*Ans: B*
*29. Non-Manufacturing OH includes:*
A. Indirect Material
B. Factory Supervisor
C. Sales Manager Salary
D. Machine Maintenance
*Ans: C*
*30. Theoretical Capacity means:*
A. Capacity considering normal downtime
B. Maximum possible output
C. Expected annual output
D. Last year output
*Ans: B*
*31. Practical Capacity means:*
A. Maximum possible output
B. Capacity considering normal downtime
C. Budgeted output
D. Idle Capacity
*Ans: B*
*32. Step Cost example:*
A. Raw Material
B. Supervisor Salary for 0-10,000 units
C. Electricity
D. Direct Labor
*Ans: B*
*33. Economic Cost =*
A. Explicit Cost only
B. Implicit Cost only
C. Explicit + Implicit Cost
D. Sunk Cost
*Ans: C*
*34. Actual Costing uses:*
A. Actual DM, DL, Budgeted OH Rate
B. Budgeted DM, DL, Budgeted OH Rate
C. Actual DM, DL, Actual OH Rate
D. Standard DM, DL, Standard OH Rate
*Ans: C*
*35. Normal Costing uses:*
A. Actual DM, DL, Budgeted OH Rate
B. Budgeted DM, DL, Budgeted OH Rate
C. Actual DM, DL, Actual OH Rate
D. Standard DM, DL, Standard OH Rate
*Ans: A*
*36. Standard Costing uses:*
A. Actual DM, DL, Budgeted OH Rate
B. Budgeted DM, DL, Budgeted OH Rate
C. Actual DM, DL, Actual OH Rate
D. Standard DM, DL, Standard OH Rate
*Ans: D*
*37. Inventoriable Costs are expensed as:*
A. Period Cost
B. COGS when sold
C. Administrative Expense
D. Selling Expense
*Ans: B*
*38. Formula for COGS:*
A. Beg FG + Purchases - End FG
B. Beg FG + COGM - End FG
C. Sales - Gross Profit
D. DM + DL + OH
*Ans: B*
*39. Gross Profit =*
A. Sales - COGS
B. Sales - Operating Exp
C. Net Income + Tax
D. Contribution - Fixed Cost
*Ans: A*
*40. Markup % is calculated on:*
A. Selling Price
B. Cost
C. Gross Profit
D. Net Income
*Ans: B*
*41. Job Order Cost Sheet shows:*
A. Cost by Department
B. Cost by Job
C. Cost by Product Line
D. Cost by Customer
*Ans: B*
*42. Engineered Cost has:*
A. No relation with output
B. Clear physical relationship with output
C. Management decision
D. Fixed in nature
*Ans: B*
*43. Discretionary Cost example:*
A. DM
B. DL
C. R&D Expense
D. Factory Rent
*Ans: C*
*44. Marginal Cost is:*
A. Total Cost / Units
B. Additional cost to produce 1 more unit
C. Fixed Cost / Units
D. DM + DL
*Ans: B*
*45. Efficiency means:*
A. Doing things right
B. Doing right things
C. Minimizing Waste
D. Maximizing Output
*Ans: A*
*46. Economy means:*
A. Doing things right
B. Doing right things / Minimizing input cost
C. Maximizing Output
D. Quality Control
*Ans: B*
*47. Accounting Cost includes:*
A. Implicit Cost only
B. Explicit Cost only
C. Explicit + Implicit Cost
D. Opportunity Cost
*Ans: B*
*48. Which is NOT Inventoriable Cost?*
A. Direct Labor
B. Factory Rent
C. Sales Commission
D. Direct Material
*Ans: C*
*49. When should Abnormal Spoilage be prorated?*
A. Always
B. Never. It is expensed
C. If material
D. At year end only
*Ans: B*
*50. Main objective of Cost Control is:*
A. Reduce cost permanently
B. Achieve target cost through corrective action
C. Eliminate all costs
D. Increase selling price
*Ans: B*
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### *ANSWER KEY*
1.B 2.A 3.B 4.B 5.B 6.B 7.C 8.B 9.B 10.B
11.B 12.B 13.B 14.B 15.B 16.B 17.B 18.B 19.B 20.B
21.A 22.B 23.C 24.C 25.C 26.A 27.B 28.B 29.C 30.B
31.B 32.B 33.C 34.C 35.A 36.D 37.B 38.B 39.A 40.B
41.B 42.B 43.C 44.B 45.A 46.B 47.B 48.C 49.B 50.B
