About Costing

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

Costing MCQ

1. In cost accounting, stock is valued at

  • Cost Price
  • Market Price
  • Selling Price
  • Standard Price

2. How much is a pint of milk?

  • 26p
  • 50p
  • 73p

3. In producing product ZZ, 14,800 direct labor hours were used at a rate of $8.20 per hour. The standard was 15,000 hours at $8.00 per hour. Based on these data, the direct labor:

  • (a)quantity variance is $1,600 favorable.
  • (b)quantity variance is $1,600 unfavorable.
  • (c)price variance is $3,000 favorable.
  • (d)price variance is $3,000 unfavorable.

4. You buy 1 lb of bakers chocolate for 3.98, how much is it for 3lbs of bakers chocolate?

  • $7.94
  • $3.98
  • $11.94
  • $9.98

5. You buy 5 lbs for flour 3.99, the recipe calls for 3 pounds of flour. What is the recipe cost for 3 pounds of flour?

  • $2.39
  • $4.09
  • $2.00
  • $1.89

6. You purchase 1 pound of butter for $2.99, what is the recipe cost for 4 lbs of butter?

  • $9.86
  • $11.96
  • $13.87
  • $7.67

7. You purchase a dozen eggs for $3.89, what is the recipe cost for 28 eggs?

  • $7.24
  • $6.89
  • $5.99
  • $8.96

8. You purchase 20 lbs of sugar for $50.00, how much is it for 8 lbs of sugar?

  • $13.50
  • $10.00
  • $20.00
  • $75.00

9. You purchase 16 oz of vanilla for $3.46 per oz, how much is it for 2 oz of vanilla?

  • $3.46
  • $55.36
  • $6.92
  • $27.68

10. You purchase a can of tomato paste for $.98. This can has 5 servings of 2 Tbsp or a total of 10 Tbsp. How much is it for 1 Tbsp?

  • $0.10
  • $1.00
  • $0.50
  • $0. 98

11. You purchase a gallon of milk for $5.98, how is it for 4 cups of milk?

  • $2.50
  • $12.50
  • $1.50
  • $1.25

12. You purchase 32 oz of almonds for $13.48. What is you recipe cost for 8 oz of almonds?

  • $2.38
  • $6.74
  • $0.64
  • $3.37

13. You purchase 18 oz of cinnamon for $8.06. What is your ingredient cost for 2 Tbsp of cinnamon?

  • $0.45
  • $0.86
  • $0.32
  • $0.22

14. The total variable cost change _________________________with change in output

  • Consistently
  • Constantly
  • Proportionately
  • Un proportionately

15. Fixed cost + profit =

  • Semi - variable cost
  • Margin of safety
  • Contribution
  • Standard profit

16. An increase in variable costs results in

  • An increase in P/V Ratio
  • Reduces contribution
  • Increase in Profit
  • None of the above

17. When fixed cost is Rs.20,000 and P/V Ratio is 40%, the breakeven point will be

  • 75,000
  • 40,000
  • 20,000
  • 50,000

18. Marginal cost is also known as

  • Absorption cost
  • Standard cost
  • Variable cost
  • None of the above

19. Margin of Safety is the difference between the

  • Planned sales and the planned profit
  • Actual sales and Break even sales
  • Planned sales and the break even sales
  • None of the above

20. Contribution margin is also known as

  • Marginal income
  • Gross Profit
  • Net Profit
  • All of the above

21. _________________________________ is the excess of sales over the break even sales.

  • Contrbution
  • Fixed cost
  • Variable cost
  • Margin of Safety

22. Fixed cost is also known as______________________________

  • Flexible cost
  • Marginal cost
  • Period cost
  • All of the above

23. If the total cost of 100 units is Rs. 5,000 and those of 101 units is Rs. 5,040 then increase of Rs. 40 in total cost is

  • Marginal cost
  • Prime cost
  • Fixed cost
  • None of the above

24. Contribution is calculated by the formula

  • Sales minus profit
  • Sales minus variable cost
  • Fixed cost minus profit
  • None of the above

25. P/V Ratio is an indicator of

  • the measurement of rate at which goods and services are bought and sold
  • the measurement of change in profit due to change in volume of sales
  • the measurement of volume of profit to be earned
  • None of the above

26. Break Even Point refers to the point in which

  • total cost is equal to fixed cost
  • total cost is equal to total revenue
  • total cost is equal to contribution
  • total cost is equal to variable cost

27. A high margin of safety indicates that

  • over production
  • business is dull
  • over capitalisation
  • business is going on well

28. Marginal costing technique classifies cost into

  • variable cost and fixed cost
  • operation and Maintainance cost
  • semi-variable cost
  • standard and floating cost

29. Marginal costing helps the management to

  • Fix the price of products
  • Take various decisions
  • Calculate profit
  • All the above

30. Which is not included in primecost?

  • Raw materials
  • Manager Salary
  • Labour expenses
  • Coal

31. Prime cost + all variable cost =

  • Fixed cost
  • Marginal cost
  • Absorbtion cost
  • All of the above

32. If PVR=40%, MOS=50%, Sales=Rs.6,00,000. Find Net profit.

  • Rs 1,50,000
  • Rs 1,00,000
  • Rs.1,20,000
  • Rs.1,60,000

33. If margin of safety -20%, profit volume ratio -60%, Fixed cost = Rs.75,000. Find Actual sales.

  • Rs.1,25,000
  • Rs. 1,58,000
  • Rs. 1,50,250
  • Rs. 1,56,250

34. How much is the average weekly rent in Basingstoke for a single room in a shared house? (food not included)

  • £60
  • £85
  • £100

35. How much is a colour TV Licence?

  • £133.50
  • £143
  • £147

36. How much is an adult cinema ticket (evening/weekends) without discount?

  • £6.80
  • £8.20
  • £11.49

37. Each contract is considered as a separate unit of cost.

  • True
  • False

38. On _____ of the contract entire profit is transferred to P & L A/c.

  • 25% completion
  • 50% completion
  • 90% completion
  • completion

39. Work certified is valued in term of ________ .

  • contract price
  • degree of completion
  • retention amount
  • cash paid by contractee.

40. _____ money is paid a certain period after completion of the contract.

  • work certified
  • work uncertified
  • retention
  • escalation

41. __________ is debited to the contract A/c.

  • Work Certified
  • Work Uncertified
  • Cash Received
  • Sub Contract Cost

42. Most of the costs in a contract are direct cost.

  • True
  • False

43. Work certified is recorded in the contract Account at cost.

  • True
  • False

44. Profit on each contract is computed every year on incomplete portion of the contract.

  • True
  • False

45. A contract usually takes more than one year to complete.

  • True
  • False

46. Cost incurred by undertakings which do not manufacture any product but services is

  • Operation Costing
  • Operating Costing
  • Sunk Costing
  • Joint Costing

47. Extra payment reuired to be paid for overtime work is called as overtime

  • Premium
  • Payment
  • Salary
  • Wages

48. _______ time refers to the time for which wages are paid without any production

  • Over
  • Under
  • Excess
  • Idle

49. ________ labour cost is the remuneration paid to the employees who are directly engaged in the manufacturing operations

  • Direct
  • Indirect
  • Normal
  • Abnormal

50. The main function of cost accounting is _______ reporting

  • Internal
  • External

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