Costing Mcqs
Uploaded by
shivam kumarCosting Mcqs
Uploaded by
shivam kumarCosting MCQs
1. Basic objective of cost accounting is _____
a. Tax compliance
b. Financial audit
c. Cost ascertainment
d. Profit analysis
Answer: Option C
Solution:
Basic objective of cost accounting is cost ascertainment. It involves the ascertainment of the cost of every
job, order, product, process or service.
2. The cost which has to be incurred even when a business unit is closed is a ______
a. Imputed cost
b. Historical cost
c. Sunk cost
d. Shutdown cost
Answer: Option D
Solution:
The cost which is to be incurred even when a business unit is closed is a shutdown cost. The shutdown
price is the minimum price a business needs to justify remaining in the market in the short run.
3. _______ is the aggregate of variable costs.
a. Marginal cost
b. Common cost
c. Imputed cost
d. Differential cost
Answer: A
Solution:
Marginal cost is the aggregate of variable costs i.e. primary cost plus variable overheads. Thus, costs are
classified as fixed and variable.
4. Indirect material used in production is classified as _______
a. Office overhead
b. Selling overhead
c. Distribution overhead
d. Factory overhead
Answer: Option D
Solution:
Indirect material used in production is classified as factory overhead. Indirect materials are materials used in
the production process but are not directly traceable to the product.
5. Warehouse rent is a part of _____
a. Prime cost
b. Factory cost
c. distribution cost
d. Production cost
Answer: Option C
Solution:
Warehouse rent is a part of distribution cost. Distribution costs (also known as “Distribution Expenses”) are
usually defined as the costs incurred to deliver the product from the production unit to the end user. It is a
broad terminology and it includes several costs.
6. Total of all direct costs is termed as ____
a. Prime cost
b. Works cost
c. Cost of sales
d. Cost of production
Answer: Option A
Solution:
Total of all direct costs is termed as prime cost. A prime cost is the total direct costs, which may be fixed or
variable, of manufacturing an item for sale.
7. Cost accounting concepts include all of the following except _____
a. Planning
b. Controlling
c. Profit sharing
d. Product costing
Answer: Option C
Solution:
Cost accounting concepts include all the following except profit sharing. Cost accounting is an accounting
method that aims to capture a company's costs of production by assessing the input costs of each step of
production as well as fixed costs, such as depreciation of capital equipment.
8. Toy manufacturing industry should use _____.
a. Unit costing
b. Process costing
c. Batch costing
d. Multiple costing
Answer: Option C
Solution:
Toy manufacturing industry should use batch costing. Batch costing is another form of job costing. Under
this method, homogeneous products are taken as a cost unit. A batch consists of a specific number of
products or units or articles.
9. The ascertainment of costs after they have been incurred is known as _____
a. Marginal costing
b. Historical costing
c. Sunk cost
d. Notional cost
Answer: Option B
Solution:
The ascertainment of costs after they have been incurred is known as historical costing. In this type of
costing system, the costs are ascertained only after they have been incurred.
10. Which of the following is an example of semi-variable cost?
a. Salary
b. Tax
c. Telephone expenses
d. Office expenses
Answer: Option C
Solution:
Telephone expenses is an example of semi-variable cost. A semi-variable cost, also known as a semi-fixed
cost or a mixed cost, is a cost composed of a mixture of both fixed and variable components.
