About Cost accounting

Following are some of the multiple choice questions on the Cost accounting with answers that will help the students in developing their knowledge.

Cost accounting MCQ

1. ……………..determines the priorities of functional budget.

  • Principal Budget Factor
  • Limiting Factor
  • both a & b
  • none of the abov

2. When a flexible budget is used a decrease in the actual production level within a relevant range would

  • increased total fixed cost
  • decrease variable cost per unit
  • decrease variable cost
  • increase variable cost per unit

3. A bill of material serves the purpose of…………………

  • Material requisition
  • stores ledger
  • material issue analysis sheet
  • none of these

4. Warehousing cost is an item of

  • Office overhead
  • distribution overhead
  • material cost
  • works overhead

5. Where raw material is to pass certain stages, before it is convertedinto finished goods, the method of costing used is…………………

  • Job costing
  • Operating costing
  • Process Costing
  • both b and c

6. The process costing is not used in one of the following.

  • Chemical
  • textiles
  • cement
  • oil refining

7. Credit and collection cost is an item of

  • Selling overhead
  • office overhead
  • prime cost
  • administrative overhead

8. Under step method of re-apportionment of costs of servicedepartments, the cost of last service department is apportioned only to the …………..

  • Production departments
  • service departments
  • both a & b
  • none of these

9. An unfavourable material price variance occurs because of:

  • Price increase in raw materials
  • Price decrease in raw materials
  • Less than anticipated normal wastage in the manufacturing process
  • More than anticipated normal wastage in the manufacturing process

10. Which of the following would not be considered a fixed cost

  • rent
  • depreciation
  • cost of bottles use in the production of soft drinks
  • property taxes

11. Which of the following is not an example of variable cost

  • straight line depreciation on a machine expected to last five years
  • piece-rate wages paid to manufacturing workers
  • wood used to make furniture
  • commissions paid to sales personnel

12. Which of the following costs will vary directly with the level of production

  • total manufacturing costs
  • total cost of sales
  • variable selling costs
  • variable product costs

13. Which of the following statements is / are true with regard to flexible budgeting?

  • a flexible budget is one which changes from year to year
  • it involves a careful differentiation between fixed and variable expenses
  • it is a system of budgeting under which budgets are recast quickly for changes in the volume of activity
  • both (a) and (b)

14. Cost accounts deal partly with facts and figures and partly with………

  • Estimates
  • costs
  • income
  • revenue

15. ………..is a post mortem of past costs.

  • Financial accounting
  • cost accounting
  • both a & b
  • none of these

16. Basis of apportionment of crèche expenses is ……………..

  • Number of employees
  • number of female employees
  • number of male employees
  • both b&c

17. Total Material cost variance =

  • Standard cost of materials-actual cost of materials
  • Budgeted cost of materials- actual cost of materials
  • Standard cost of materials-budgeted cost of materials
  • Actual cost of materials- budgeted cost of materials

18. The technique of standard costing may not be applicable in case of

  • Large concerns
  • Small concerns
  • All concerns
  • Both b & c

19. Labour rate variance is computed by multiplying the

  • Standard labour rate with the difference between standard labour hours and actual labour hours
  • Actual labour hours with the difference between standard labour hours and actual labour hours
  • Actual labour rate with the difference between standard labour rate and actual labour hours.
  • None of the above

20. In the case of plant, the limiting factor may be:

  • Insufficient capacity
  • shortage of experienced salesmen
  • general shortage of power
  • shortage of materials

21. Integral accounts eliminate the necessity of operating

  • overhead adjustment account
  • stores ledger control account
  • all of these
  • cost ledger control account

22. Which of the following is not function of Cost Accounting

  • cost ascertainment
  • planning and control
  • decision making
  • external reporting

23. Under applied or over applied factory overhead should be

  • Carried forward to next year
  • shown as an extraordinary item
  • apportioned among cost of goods sold and applicable to inventory
  • written off

24. Direct expenses are also called ________.

  • major expenses
  • chargeable expenses
  • overhead expenses
  • sundry expenses

25. The cost which is to be incurred even when a business unit is closed is a _____.

  • imputed cost
  • historical cost
  • sunk cost
  • shutdown cost

26. Cost classification can be done in ________.

  • two ways
  • three ways
  • four ways
  • several ways

27. Process costing is suitable for ________.

  • hospitals
  • oil refing firms
  • transport firms
  • brick laying firms

28. Basic objective of cost accounting is ________

  • tax compliance.
  • financial audit.
  • cost ascertainment.
  • profit analysis.

29. ……………..is an example of short-term budget

  • Cash budget
  • Capital expenditure budget
  • Material budget
  • Both a & c

30. ……………..is an example of long-term budget

  • Cash budget
  • Capital expenditure budget
  • Research and development budget
  • Both b & c

31. Volume variance arises because of :

  • Increase in overhead rate per hour
  • Decrease in overhead rate per hour
  • Increase or decrease in actual output as compared to the budgeted output.
  • Difference in budgeted overheads and actual overheads.

32. The type of standard best suitable for cost control purpose is

  • Basic standard
  • Ideal standard
  • Normal standard
  • Expected standard

33. An unfavourable material usage arises because of:

  • Price increase in raw materials
  • Price decrease in raw mateials
  • Less than anticipated normal wastage in the manufacturing process
  • More than anticipated normal wastage in the manufacturing process

34. Volume Variance =

  • Standard rate (Actual output-budgeted output)
  • Actual output x standard rate-budgeted fixed overheads
  • Standard rate per hour(standard hours produced-actual hours)
  • All of the above

35. A favourable variance will arise when capital revenues are………..thanexpected.

  • More
  • Less
  • Lesser
  • None of the above

36. Total Labour cost variance =

  • Standard cost of labour - actual cost of labour
  • Standard rate(standard time for actual output-actual time worked)
  • Standard rate (standard time for actual output- actual time paid for)
  • Actual time taken (standard rate-actual rate)

37. Material mix variance = standard cost of standard mix - ………………..

  • Actual cost of actual mix
  • Actual cost of standard mix
  • Standard cost of actual mix
  • Standard cost of budgeted mix

38. Material Price Variance = Actual Usage (……………)

  • Standard price
  • Standard unit price-actual unit price
  • Actual price
  • Standard usage

39. Material usage variance = standard price(……………….)

  • Standard usage-actual usage
  • Standard unit price-actual unit price
  • Standard quantity
  • Actual quantity

40. Material Usage Variance=Material Mix Variance +…………..

  • Material Yield Variance
  • Material cost variance
  • Material price variance
  • Material quantity variance

41. Standards set provide yardsticks against which………….are compared.

  • Budgeted costs
  • Estimated costs
  • Actual costs
  • None of these

42. Volume variance is divided into……………

  • Capacity variance, calendar variance andExpenditure variance
  • Capacity variance, calendar variance and efficiency variance
  • Capacity variance, expenditure variance and efficiency variance
  • Calendar variance, expenditure variance and efficiency variance

43. Idle time variance is………….

  • Idle time x actual labour
  • Idle time x standard rate
  • Idle time x budgeted labour rate
  • Idle time x historical cost

44. Labour cost variance is the difference between standard cost of labourand………..

  • Budgeted cost of labour
  • Estimated cost of labour
  • Actual cost of labour
  • None of these

45. Material price variance is the difference between standard and actualprices of materials used multiplied by………………..

  • Actual quantity of materials used
  • Budgeted quantity of materials used
  • Standard quantity of materials used
  • Either a or b

46. Management by exception is exercising control over………..

  • Costs
  • Favourable items
  • Unfavourable items
  • all of these

47. The deviation of the actual cost or profit or sales from the standardcost or profit or sale is known as …………

  • Difference
  • Variance
  • Discrepancy
  • Inconsistency

48. Three types of standards are…………..

  • Current standard, basic standard and normal standard
  • Currency standard, basel standard and actual standard
  • Actual standard, estimated standard and expected standard
  • Expected standard, ideal standard and current standard

49. Standard costing is more widely applied in…………………industries.

  • Process and engineering
  • jobbing industries
  • construction industry
  • all of these

50. The limitations of …………………………has led to the development ofstandard costing system.

  • Historical costing system
  • cost accounting
  • management accounting
  • none of these

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