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Costing MCQ
Costing MCQ
BASIC COSTING
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COST ACCOUNTING – MCQ 9810226733
8. A Ltd. has three production department, and each department has two machines,which
of the following cannot be treated as cost centre for cost allocation:
(a) Machines under the production department
(b) Production departments
(c) Both Production department and machines
(d) A Ltd.
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COST ACCOUNTING – MCQ 9810226733
MATERIAL COST
4. In which of following methods of pricing, costs lag behind the current economic
values?
(a) Last-in-first out price
(b) First-in-first out price
(c) Replacement price
(d) Weighted average price
7. When material prices fluctuate widely, the method of pricing that gives absurd
results is
(a) Simple average price
(b) Weighted average price
(c) Moving average price
(d) Inflated price.
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COST ACCOUNTING – MCQ 9810226733
8. When prices fluctuate widely, the method that will smooth out the effect of
fluctuations is
(a) Simple average
(b) Weighted average
(c) FIFO
(d) LIFO
9. Under the FSN system of inventory control, inventory is classified on the basis of:
(a) Volume of material consumption
(b) Frequency of usage of items of inventory
(c) Criticality of the item of inventory for production
(d) Value of items of inventory
10. Materials are issued to and from one process to another, on the basis of:
(a) Material Transfer Note
(b) Material Requisition Note
(c) Bill of Materials
(d) Purchase Requisition Note
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COST ACCOUNTING – MCQ 9810226733
EMPLOYEE COST
4. Identify, which one of the following, does not account for increasing labour
productivity-
a) Job satisfaction
b) Motivating workers
c) High labour turnover
d) Proper supervision and control
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COST ACCOUNTING – MCQ 9810226733
8. If the time saved is less than 50% of the standard time, then the wages underRowan
and Halsey premium plan on comparison gives-
a) More wages to workers under Rowan plan than Halsey plan
b) More wages to workers under Halsey plan than Rowan plan
c) Equal wages under two plans
d) None of the above
9. Standard time of a job is 60 hours and guaranteed time rate is ` 0.30 per hour. What
is the amount of wages under Rowan plan if job is completed in 48 hours?
a) ` 16.20
b) ` 17.28
c) ` 18.00
d) ` 14.40
12. If overtime is required for meeting urgent orders, the overtime premium should be
charged as-
a) Respective job
b) Overhead cost
c) Costing P& L A/c
d) None of above
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COST ACCOUNTING – MCQ 9810226733
OVERHEADS COSTING
1. “Fixed overhead costs are not affected in monetary terms during a given period by a
change in output”. But this statement holds good provided:
(a) Increase in output is not substantial
(b) Increase in output is substantial
(c) Both (a) and (b)
(d) None of the above
6. Which of the following is not the classification of overhead based on its functionality?
(a) Production overhead
(b) Administration overhead
(c) Fixed overhead
(d) Selling overhead
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COST ACCOUNTING – MCQ 9810226733
9. The difference between actual factory overhead and absorbed factory overhead will be
usually at the minimum level, provided pre- determined overhead rate is based on:
(a) Maximum capacity
(b) Direct labour hours
(c) Machine hours
(d) Normal capacity
10. Identify among the following a scientific and accurate method of factory overhead
absorption:
(a) Percentage of direct material cost method
(b) Percentage of direct labour cost method
(c) Percentage of prime cost method
(d) Machine hour rate method.
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COST ACCOUNTING – MCQ 9810226733
COST SHEET
1. Generally, for the purpose of cost sheet preparation, costs are classified onthe basis
of:
(a) Functions
(b) Variability
(c) Relevance
(d) Nature
6. A manufacture has set-up a lab for testing of products for compliance with
standards, salary of this lab staffs are part of:
(a) Works overheads
(b) Quality Control Cost
(c) Direct Expenses
(d) Research & Development Cost.
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COST ACCOUNTING – MCQ 9810226733
10. A company pays royalty to State Government on the basis of production, itis treated
as:
(a) Direct Material Cost
(b) Factory Overheads
(c) Direct Expenses
(d) Administration cost.
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COST ACCOUNTING – MCQ 9810226733
2. Notional costs
(a) May be included in Integrated accounts
(b) May be included in Non-integrated accounts
(c) Cannot be included in Non-integrated accounts
(d) None of the above
6. Under Non-integrated accounts, if materials worth ` 1,500 are purchased fora special
job, then which account will be debited:
(a) Special job account / work in process account
(b) Material control account
(c) Cost control account
(d) None of the above
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COST ACCOUNTING – MCQ 9810226733
10. Which of the following items should be added to costing profit to arrive atfinancial
profit?
(a) Over-absorption of works overhead
(b) Interest paid on debentures
(c) Income tax paid
(d) All of the above
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COST ACCOUNTING – MCQ 9810226733
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COST ACCOUNTING – MCQ 9810226733
8. Batch costing is similar to that under job costing except with the difference that
a:
(a) Job becomes a cost unit.
(b) Batch becomes the cost unit instead of a job
(c) Process becomes a cost unit
(d) None of the above
9. The main points of distinction between job and contract costing includes:
(a) Length of time to complete.
(b) Big jobs
(c) Activities to be done outside the factory area
(d) All of the above
10. Economic batch quantity is that size of the batch of production where:
(a) Average cost is minimum
(b) Set-up cost of machine is minimum
(c) Carrying cost is minimum
(d) Both (b) and (c)
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COST ACCOUNTING – MCQ 9810226733
1. In case product produced or jobs undertaken are of diverse nature, the system of
costing to be used should be:
a) Process costing
b) Operating costing
c) Job costing
d) None of the above
3. Job costing is similar to that under Batch costing except with the differencethat
a) Job becomes a cost unit.
b) Batch becomes the cost unit instead of a job
c) Process becomes a cost unit
d) None of the above.
4. The main points of distinction between job and contract costing includes:
a) Length of time to complete
b) big jobs
c) Activities to be done outside the factory area
d) All of the above
5. In job costing which of the following documents are used to record theissue of
direct material to a job’:
a) Goods received note
b) Material requisition
c) Purchase order
d) Purchase requisition
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COST ACCOUNTING – MCQ 9810226733
7. The most suitable cost system where the products differ in type of materials and
work performed is :
a) Job Costing
b) Process Costing
c) Operating Costing
d) None of these.
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COST ACCOUNTING – MCQ 9810226733
PROCESS COSTING
1. The type of process loss that should not be allowed to affect the cost ofgood
units is:
(a) Abnormal loss
(b) Normal loss
(c) Seasonal loss
(d) Standard loss
2. 200 units were introduced in a process in which 20 units is the normal loss.If the
actual output is 150 units, then there is:
(a) No abnormal loss
(b) No abnormal gain
(c) Abnormal loss of 30 units
(d) Abnormal gain of 30 units
3. 100 units are processed at a total cost of ` 160, normal loss is 10%, & scrap units are
sold @ ` 0.25 each. If the output is 80 units, then the value of abnormal loss is:
(a) ` 2.50
(b) ` 16
(c) ` 17.50
(d) ` 17.75
4. When average method is used in process costing, the opening inventorycosts are:
a) Subtracted from the new costs
b) added to the new costs
c) Kept separate from the costs of the new period
d) Averaged with other costs to arrive at total cost
5. Spoilage that occurs under inefficient operating conditions and is ordinarily
controllable is called:
(a) Normal spoilage
(b) Abnormal spoilage
(c) Normal defectives
(d) None of the above
6. An abnormal gain in a process occurs in which of the following situations?
(a) When the actual output is greater than the planned output.
(b) When actual loss is more than the expected.
(c) When actual loss is less than the expected loss
(d) When normal loss is equal to actual loss.
7. The value of abnormal loss is equal to:
(a) Total cost of materials
(b) Total process cost less realizable value of normal loss
(c) Total process cost less cost of scrap
(d) Total process cost less realizable value of normal loss - value of transferred out goods.
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COST ACCOUNTING – MCQ 9810226733
10. A process account is debited by abnormal gain, the value is determined as:
(a) Equal to the value of normal loss
(b) Cost of good units less realizable value of normal loss
(c) Cost of good units less realizable value of actual loss
(d) Equal to the value of good units less closing stock
11. Lean Labs develops 55mm film using a four-step process that moves progressively
through four departments. The company specializes in overnight service and has the
largest drug store chain as its primary customer. Currently, direct labor, direct
materials, and overhead are accumulated by departments.
The cost accumulation system that best describes the system Lean Labs isusing
is:
(a) Operation costing.
(b) Activity-based costing.
(c) Job-order costing.
(d) Process costing.
13. Assume 550 units were worked on during a period in which a total of 500 good units
were completed. Normal loss consisted of 30 units; abnormal loss 20 units. Total
production costs were ` 2,200. The company accounts for abnormal spoilage
separately on the income statement as loss due to abnormal loss. Normal loss is not
accounted for separately. What is the cost of the good units produced?
(a) ` 2,080
(b) ` 2,115
(c) ` 2,200
(d) ` 2,332
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COST ACCOUNTING – MCQ 9810226733
14. A Limited uses process costing systems and inspects its goods post manufacturing.
An engineer noticed on May 30 the following:
Good units completed 15,000
Normal loss (units) 300
Abnormal loss (units) 100
Unit costs were:
Material ` 2.50
Conversion costs (Labour & overheads) ` 6.00
The number of units that company would transfer to its finished goods stock and the
related cost of these units are:
(a) 15,000 units transferred at a cost of ` 127,500
(b) 15,000 units transferred at a cost of ` 130,050
(c) 15,000 units transferred at a cost of ` 135,000
(d) 15,300 units transferred at a cost of ` 130,050
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COST ACCOUNTING – MCQ 9810226733
2. Method of apportioning joint costs on the basis of output of each joint product at
the point of split off is:
(a) Sales value method
(b) Physical unit method
(c) Average cost method
(d) Marginal cost and contribution method
3. In the Net realisable value method, for apportioning joint costs over thepoint
products, the basis of apportionment makes use of:
(a) Selling price per unit of each of the joint products
(b) Selling price multiplied by units sold of each of the joint products
(c) Sales value of each joint product less further processing costs ofindividual products
(d) Both (b) and (c)
4. The main purpose of accounting of joint products and by- products is to:
(a) Determine the opportunity cost
(b) Determine the replacement cost
(c) Determine profit or loss on each product line
(d) None of these
5. Under net realizable value method of apportioning joint costs to joint products,
the selling & distribution cost is:
(a) Added to joint cost
(b) Deducted from further processing cost
(c) Deducted from sales value
(d) Ignored
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COST ACCOUNTING – MCQ 9810226733
7. Which of the following is an example of by-product
(a) Diesel and Petrol in an oil refinery
(b) Edible oils and oil cakes
(c) Curd and butter in a dairy
(d) Mustard seeds and mustard oil.
8. Which of following method can be used when the joint products are of unequal
quantity and used for captive consumption:
(a) Technical estimates, using market value of similar goods
(b) Net Realisable value method
(c) Physical Units method
(d) Market value at split-off method.
10. When a by-product does not have any realisable value, the cost of by-product is:
(a) Transferred to Costing Profit & Loss A/c
(b) By-product cost is borne by the good units
(c) By-product cost is ignored
(d) By-product cost is determined taking value of similar goods
11. SG Ltd manufactures two products from a joint milling process. The two products
developed are Mine support (MS) and Commercial building (CB). A standard
production run incurs joint costs of ` 1,00,000 and results in 60,000 units of MS and
90,000 units of CB. Each MS sells for ` 200 per unit,and each CB sells for ` 450 per
unit. Assuming no further processing work is done after the split-off point, the
amount of joint cost allocated to Commercial building (CB) on a physical quantity
allocation basis would be:
(a) ` 60,000.
(b) ` 1,80,000.
(c) ` 2,25,000.
(d) ` 1,20,000.
12. For the purpose of allocating joint costs to joint products, the sales priceat point
of sale, reduced by cost to complete after split-off, is assumed tobe equal to the:
(a) Joint costs
(b) Sales price less a normal profit margin at point of sale
(c) Net sales value at split off
(d) Total costs.
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COST ACCOUNTING – MCQ 9810226733
13. Kay Company manufactures two hair care lotions, L and S, out of a joint process.
The joint costs incurred are ` 6,30,000 for a standard production run that generates
1,80,000 gallons of L and 1,20,000 gallons of S. L sells for ` 240 per gallon, and
S sells for ` 390 per gallon.
If additional processing costs beyond the split-off point are ` 140 per gallon for L
and ` 90 per gallon for S, the amount of joint cost of each production run allocated
to L on a physical-quantity basis is:
(a) ` 340,000.
(b) ` 378,000.
(c) ` 232,000.
(d) ` 580,000.
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COST ACCOUNTING – MCQ 9810226733
SERVICE COSTING
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COST ACCOUNTING – MCQ 9810226733
10. Which of the following costing method is not appropriate for costing of educational
institutes:
(a) Batch Costing
(b) Activity Based Costing
(c) Absorption Costing
(d) Process Costing
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COST ACCOUNTING – MCQ 9810226733
STANDARD COSTING
1. Under standard cost system the cost of the product determined at the beginning of
production is its:
(a) Direct cost
(b) Pre-determined cost
(c) Historical cost
(d) Actual cost
4. The standard most suitable from cost control point of view is:
(a) Normal standard
(b) Theoretical standard
(c) Expected standard
(d) Basic standard
6. Which of the following variance arises when more than one material is used in
the manufacture of a product:
(a) Material price variance
(b) Material usage variance
(c) Material yield variance
(d) Material mix variance
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COST ACCOUNTING – MCQ 9810226733
7. If standard hours for 100 units of output are 400 @ ` 2 per hour and actual hours
take are 380 @ ` 2.25 per, then the labour rate variance is:
(a) ` 95 (adverse)
(b) ` 100 (adverse)
(c) ` 25 (favourable)
(d) ` 120 (adverse)
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COST ACCOUNTING – MCQ 9810226733
MARGINAL COSTING
4. When sales and production (in units) are same then profit under:
(a) Marginal costing is higher than that of absorption costing.
(b) Marginal costing is lower than that of absorption costing.
(c) Marginal costing is equal to that of absorption costing.
(d) None of the above.
6. The main difference between marginal costing and absorption costing is regarding
the treatment of:
(a) Prime cost.
(b) Fixed overheads.
(c) Direct materials.
(d) Variable overheads.
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COST ACCOUNTING – MCQ 9810226733
9. If P/V ratio is 40% of sales then what about the remaining 60% of sales:
(a) Profit.
(b) Fixed cost.
(c) Variable cost.
(d) Margin of safety.
10. The P/V ratio of a product is 0.60 and profit is ` 9,000. The margin of safety is:
(a) ` 5,400
(b) ` 15,000
(c) ` 22,500
(d) ` 3,600
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COST ACCOUNTING – MCQ 9810226733
BUDGETARY CONTROL
2. The classification of fixed and variable cost is useful for the preparation of:
(a) Master budget
(b) Flexible budget
(c) Cash budget
(d) Capital budget
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COST ACCOUNTING – MCQ 9810226733
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