Solve following mocktest on Cost Accounting. Basic Concept.. please submit your answers..on what's up 9773464206
Section A...
Below are 50 exam-oriented MCQ questions on Cost Accounting – Cost Classification & Related Concepts, carefully aligned with US CMA and ACCA Foundation (MA/FMA) exam style.
Questions include conceptual, logical, and application-based traps.
Cost Accounting – MCQs (50 Questions)
1. Which of the following is a direct cost?
A. Factory rent
C. Direct material used in production
Answer:
2. Indirect materials are classified as:
A. Prime cost
D. Period cost
Answer:
3. Prime cost consists of:
A. Direct material + Direct labor
B. Direct labor + Factory overhead
C. Direct material + Factory overhead
Answer:
4. Conversion cost includes:
A. Direct material + Direct labor
B. Direct labor + Factory overhead
C. Prime cost + Overheads
D. Material + Overheads
Answer:
5. Which of the following is NOT a production cost?
A. Direct labor
B. Factory depreciation
D. Factory electricity
Answer:
6. Factory overheads include:
A. Direct wages
B. Indirect wages
D. Office rent
Answer:
7. Cost tracing refers to:
A. Allocation of common costs
B. Assigning costs using cost drivers
C. Directly identifying cost with cost object
D. Apportionment of overheads
Answer:
8. Cost allocation means:
A. Dividing overheads among departments
B. Assigning entire cost to one cost object
C. Estimating future costs
D. Reducing cost
Answer:
9. Cost apportionment is used when:
A. Cost is directly traceable
B. Cost relates to more than one department
C. Cost is variable
D. Cost is sunk
Answer:
10. Which is the best basis for apportioning power cost?
A. Floor area
D. Sales value
Answer:
11. Economies of scale arise due to:
A. Increase in per-unit cost
B. Inefficiency
C. Large-scale production advantages
D. External competition
Answer:
12. Internal economies of scale include:
A. Industry-wide benefits
B. Government subsidies
D. Market price reduction
Answer:
13. External diseconomies of scale occur due to:
A. Improved technology
C. Better management
D. Bulk buying
Answer:
14. A cost pool is:
A. Individual cost item
B. Group of homogeneous costs
C. Cost object
D. Fixed cost
Answer:
15. A cost driver is:
A. Cost object
B. Cost pool
C. Factor causing cost incurrence
D. Fixed overhead
Answer:
16. The High–Low method is used to:
A. Separate fixed and variable costs
B. Allocate overhead
C. Compute marginal cost
D. Reduce cost
Answer:
17. Semi-variable costs:
A. Are fully fixed
B. Are fully variable
C. Contain both fixed and variable elements
D. Are sunk costs
Answer:
18. Which cost remains constant in total within relevant range?
A. Variable cost
B. Semi-variable cost
C. Fixed cost
D. Marginal cost
Answer:
19. Variable cost per unit is:
A. Constant
B. Increasing
C. Decreasing
D. Unpredictable
Answer:
20. Cost behavior analysis is studied to understand:
A. Cost control
B. Cost-volume relationship
C. Profit maximization
D. Pricing strategy only
Answer:
21. Cost accounting differs from financial accounting because cost accounting:
A. Is statutory
B. Focuses on internal users
C. Records only past data
D. Follows GAAP strictly
Answer:
22. A cost object may be:
A. Product only
B. Department only
C. Customer only
D. Any item for which cost is measured
Answer:
23. Relevant range refers to:
A. Long-term period
B. Level where cost behavior remains valid
C. Maximum production
D. Break-even point
Answer:
24. In the short run:
A. All factors are variable
B. All factors are fixed
C. At least one factor is fixed
D. No factor is fixed
Answer:
25. Factors of production include:
A. Land, labor, capital, entrepreneurship
B. Raw material only
C. Machinery only
D. Overheads only
Answer:
26. Cost of factors of production includes:
A. Rent, wages, interest, profit
B. Sales, profit, tax
C. Overheads only
D. Variable costs only
Answer:
27. In the long run:
A. At least one factor is fixed
B. All factors are variable
C. Costs are irrelevant
D. Production stops
Answer:
28. A manufacturing business differs from a service provider because:
A. Services have inventory
B. Manufacturing produces tangible goods
C. Services have COGS
D. Manufacturing has no overhead
Answer:
29. Which is a financial factor in decision making?
A. Employee morale
B. Market reputation
C. Cost savings
D. Customer satisfaction
Answer:
30. Which is a non-financial factor?
A. Contribution margin
B. Relevant cost
C. Employee motivation
D. Variable cost
Answer:
31. Sunk costs are:
A. Future costs
B. Avoidable costs
C. Past costs not affected by decision
D. Relevant costs
Answer:
32. Historical cost is:
A. Replacement cost
C. Original acquisition cost
D. Relevant cost
Answer:
33. Relevant costs are:
A. Past costs
B. Costs that differ between alternatives
C. Fixed costs
D. Allocated costs
Answer:
34. Irrelevant costs include:
A. Future costs
B. Avoidable costs
C. Sunk costs
D. Opportunity costs
Answer:
35. Sales minus COGS equals:
A. Net profit
B. Operating profit
C. Gross profit
D. Contribution
Answer:
36. Cost of Goods Sold includes:
A. Selling expenses
B. Administrative expenses
C. Opening stock + production cost – closing stock
D. Office rent
Answer:
37. Cost reduction focuses on:
A. Temporary measures
B. Maintaining standards
C. Permanent reduction in cost
D. Budgetary control
Answer:
38. Cost control emphasizes:
A. Reducing cost at any level
B. Comparing actual with standards
C. Eliminating cost
D. Increasing sales
Answer:
39. Raw material consumed is calculated as:
A. Opening stock + Purchases – Closing stock
B. Purchases – Closing stock
C. Sales – Profit
D. Production cost – WIP
Answer:
40. Management accounting is similar to economics because both:
A. Are statutory
B. Focus on external reporting
C. Use marginal analysis
D. Record transactions
Answer:
41. Homogeneous products are:
A. Different in nature
B. Similar in composition
C. Custom-made
D. Service-based
Answer:
42. Heterogeneous products require:
A. Process costing
B. Job costing
C. Single cost pool
D. No costing
Answer:
43. Opportunity cost is:
A. Book cost
B. Past cost
C. Benefit foregone from best alternative
D. Fixed cost
Answer:
44. Which cost is relevant for make-or-buy decision?
A. Allocated fixed cost
B. Sunk cost
C. Avoidable cost
D. Historical cost
Answer:
45. Which is NOT a cost driver?
A. Machine hours
B. Number of setups
C. Sales revenue
D. Purchase orders
Answer:
46. Period costs are charged to:
A. Inventory
B. Cost of production
C. Income statement of the period
D. Work-in-progress
Answer:
47. Which cost increases in total but remains constant per unit?
A. Fixed cost
B. Variable cost
C. Step cost
D. Sunk cost
Answer:
48. Step-fixed cost behaves as:
A. Fully variable
B. Fixed within a range
C. Sunk cost
D. Opportunity cost
Answer:
49. Which costing system is suitable for homogeneous products?
A. Job costing
B. Batch costing
C. Process costing
D. Contract costing
Answer:
50. Which statement is TRUE?
A. Cost accounting is mandatory
B. Financial accounting is future-oriented
C. Cost accounting aids management decisions
D. Financial accounting ignores profit
Answer:
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Section B...
COST CONCEPTS – DIFFICULT LOGICAL MCQs (US CMA & ACCA FMA)
1. Which cost becomes relevant only when a machine is replaced?
A. Book value of old machine
B. Original purchase cost
C. Scrap value of old machine
D. Accumulated depreciation
Answer:
2. A fixed cost per unit:
A. Increases as output increases
B. Decreases as output increases
C. Remains constant at all levels
D. Is irrelevant for decision-making
Answer:
3. Which cost is NOT included in marginal cost?
A. Direct material
B. Direct labor
C. Variable overhead
D. Fixed overhead
Answer:
4. When production exceeds the relevant range, fixed cost:
A. Decreases in total
B. Remains constant
C. Changes step-wise
D. Becomes sunk
Answer:
5. Which of the following is a differential cost?
A. Historical cost
B. Cost that changes between alternatives
C. Sunk cost
D. Allocated cost
Answer:
6. In a make-or-buy decision, which cost is irrelevant?
A. Variable manufacturing cost
B. Avoidable fixed cost
C. Allocated common fixed cost
D. Opportunity cost
Answer:
7. A cost that has already been incurred and cannot be changed is:
A. Relevant cost
B. Opportunity cost
C. Sunk cost
D. Differential cost
Answer:
8. Which situation creates an opportunity cost?
A. Paying factory rent
B. Using idle capacity
C. Using scarce resource for one product
D. Paying depreciation
Answer:
9. A cost is relevant if it:
A. Is historical
B. Is fixed
C. Differs between decision alternatives
D. Is allocated
Answer:
10. High–Low method assumes:
A. Linear cost behavior
B. Step-fixed behavior
C. Non-linear cost
D. Inflation-adjusted cost
Answer:
11. Which cost remains fixed per unit but variable in total?
A. Fixed cost
B. Variable cost
C. Semi-variable cost
D. Step cost
Answer:
12. Which of the following is a period cost?
A. Direct material
B. Factory wages
C. Selling commission
D. Machine depreciation (factory)
Answer:
13. Which cost is included in conversion cost?
A. Direct material
B. Direct labor
C. Prime cost
D. Selling overhead
Answer:
14. A company shuts down temporarily but still pays factory rent. This rent is:
A. Avoidable cost
B. Relevant cost
C. Unavoidable fixed cost
D. Opportunity cost
Answer:
15. Which cost would be considered avoidable?
A. Allocated head office rent
B. Salary of factory supervisor (if factory closed)
C. Depreciation on owned building
D. Past research cost
Answer:
16. A step-fixed cost increases because:
A. Output increases slightly
B. Capacity limit is crossed
C. Variable rate increases
D. Inflation occurs
Answer:
17. Which of the following is NOT a cost driver?
A. Machine hours
B. Number of setups
C. Units produced
D. Sales price
Answer:
18. In relevant cost analysis, allocated fixed costs are ignored because they:
A. Are variable
B. Do not change between alternatives
C. Are cash costs
D. Are controllable
Answer:
19. Which cost is relevant for shutdown decision?
A. Fixed factory rent
B. Sunk cost
C. Variable cost
D. Allocated overhead
Answer:
20. A product uses a material that has no alternative use and no resale value. Material cost is:
A. Zero
B. Purchase price
C. Opportunity cost
D. Sunk cost
Answer:
21. A company owns a machine with zero book value but resale value ₹50,000. This value is:
A. Sunk cost
B. Opportunity cost
C. Irrelevant cost
D. Historical cost
Answer:
22. Which cost classification helps in pricing decisions?
A. Historical cost
B. Sunk cost
C. Marginal cost
D. Allocated cost
Answer:
23. Which cost changes in total but not per unit?
A. Fixed cost
B. Variable cost
C. Opportunity cost
D. Sunk cost
Answer:
24. A committed fixed cost is best described as:
A. Easily avoidable
B. Short-term discretionary
C. Long-term and difficult to change
D. Variable in nature
Answer:
25. Which cost is considered in accepting a special order?
A. Fixed manufacturing overhead
B. Variable cost plus opportunity cost
C. Historical cost
D. Allocated cost
Answer:
26. If spare capacity exists, opportunity cost of accepting an order is:
A. Contribution margin lost
B. Variable cost only
C. Zero
D. Fixed cost
Answer:
27. Which cost classification is MOST useful for CVP analysis?
A. Direct vs indirect
B. Fixed vs variable
C. Product vs period
D. Historical vs replacement
Answer:
28. A sunk cost becomes relevant when:
A. It affects cash flow
B. It changes between alternatives
C. It is allocated
D. It is fixed
Answer:
29. Which of the following is a controllable cost?
A. Factory rent
B. Allocated head office cost
C. Overtime wages
D. Past advertising cost
Answer:
30. Which statement is TRUE?
A. All fixed costs are irrelevant
B. All variable costs are relevant
C. Relevant costs are always cash costs
D. Relevant costs affect future decisions
Answer:
🔹 Exam Tip (CMA & ACCA)
Relevant cost = Future + Incremental + Cash + Decision-dependent
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