Costing

Costing MCQs with Answers and Explanations | Cost Accounting Objective Questions

Sharpen your understanding of Costing and Cost Accounting with our collection of MCQs with answers and detailed explanations. Covering key topics such as marginal costing, standard costing, process costing, job order costing, variance analysis, budgeting, cost control, and managerial decision-making, these objective questions are highly useful for students, teachers, and candidates preparing for professional and competitive exams (CA, ACCA, ICMA, MBA, CSS, PMS, NTS, FPSC, PPSC, UPSC, etc.). Each question includes a clear solution and explanation to strengthen concepts, improve problem-solving skills, and enhance exam preparation. Perfect for practice, self-assessment, and revision in the field of Cost Accounting.

101. Broad’s average use to assign cost of revenue to cost objects will be classified as

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refined costing system
refined selling system
undefined costing
defined selling system
✅ The correct answer is A.
Broad’s average use to assign cost of revenue to cost objects will be classified as refined costing system. A refined costing system reduces the use of broad averages for assigning the cost of resources to cost objects (such as jobs, products, and services) and provides better measurement of the costs of indirect resources used by different cost objects no matter how differently various cost objects use indirect resources.

103. Subtracted flexible budget amount can form an actual result to calculate

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unstated budget variance
flexible budget variance
constant budget variance
static budget variance
✅ The correct answer is B.
Subtracted flexible budget amount can form an actual result to calculate flexible budget variance. A flexible budget variance is any difference between the results generated by a flexible budget model and actual results. If actual revenues are inserted into a flexible budget model, this means that any variance will arise between budgeted and actual expenses, not revenues.

104. Differential piece wages means _______.

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different wages for different level of performance
different wages for different time consumed
different wages for different level of output
different wages for different types of industries
✅ The correct answer is A.
Differential piece wages means different wages for different level of performance. A differential piece-rate system is a method of wage payment in which after tests have set a standard time for any task assigned the worker gets a high piece rate for completing the job within the allotted time and lower piece rate for completing the job beyond the allotted time.

105. ABC analysis is an inventory control technique in which:

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Inventory levels are maintained
Inventory is classified into A, B and C category with A being the highest quantity, lowest value
Inventory is classified into A, B and C Category with A being the lowest quantity, highest value
Either b or c
✅ The correct answer is C.
ABC analysis is an inventory control technique in which Inventory is classified into A, B and C Category with A being the lowest quantity, highest value.

106. Degree of influence that a manager would have on revenues, cost, profit and investment is known as

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controllability
influential power
responsibility
all of above
✅ The correct answer is A.
Degree of influence that a manager would have on revenues, cost, profit and investment is known as controllability. Controllability is an important property of a control system, and the controllability property plays a crucial role in many control problems, such as stabilization of unstable systems by feedback, or optimal control.

107. Budget which calculates expected revenues and expected costs, based on actual output quantity is named as

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flexible budget
fixed budget
variable budget
multiplied budget
✅ The correct answer is A.
Budget which calculates expected revenues and expected costs, based on actual output quantity is named as flexible budget. A flexible budget, also called a variable budget, is financial plan of estimated revenues and expenses based on the current actual amount of output.

108. Fifth step in process costing system is to

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allocate separable costs
allocate joint costs
compute gross margin
assign total cost to completed units
✅ The correct answer is D.
Fifth step in process costing system is to assign total cost to completed units. Total cost is an economic measure that sums all expenses paid to produce a product, purchase an investment, or acquire a piece of equipment including not only the initial cash outlay but also the opportunity cost of their choices.

109. Which of the following method of wage payment is most suitable where the speed of production is beyond the control of worker?

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Time rate system
Piece rate system
Halsey premium system
Rowan premium plan
✅ The correct answer is A.
Time rate system method of wage payment is most suitable where the speed of production is beyond the control of worker. The time rate system is that system of wage payment in which the workers are paid on the basis of time spent by them in the factory.

110. Support department cost allocation method which makes no difference between variable and fixed costs is classified as

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sales mix allocation method
dual-rate cost-allocation method
single rate cost allocation method
quantity variance allocation method
✅ The correct answer is C.
Support department cost allocation method which makes no difference between variable and fixed costs is classified as single rate cost allocation method. The single-rate cost-allocation method makes no distinction between fixed costs and variable costs in the cost pool.