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.
cost document
priced document
source document
direct document
✅ The correct answer is C.
In an accounting system, document which supports journal entries is classified as source document. A source document is an original record which contains the detail that supports or substantiates a transaction that will be (or has been) entered in an accounting system.
conversion costs
sunk costs
inventoriable costs
non inventoriable costs
✅ The correct answer is D.
Cost of abnormal spoilage is not treated as non inventoriable costs. Non-inventoriable cost are costs that are not included in the value of inventory, also known as non-manufacturing overhead. It includes Selling, General and Administrative expenses, and Interest expense.
U=A-b
u=A-a
u=Y-y
u=X-x
✅ The correct answer is C.
An error term, disturbance term or residual term is calculated as u=Y-y.
$138 per labour hour
$137.27 per hour
$140 per labour hour
$142 per labour hour
✅ The correct answer is B.
Budgeted direct labour cost = Budgeted direct labour cost ÷ Budgeted total direct labour hours
= $755000 ÷ 5500 = $137.27 per hour
allocated joint costs
cost of split off point
Gross margin percentage
total production cost of each product
✅ The correct answer is D.
Second step, in constant gross margin percentage NRV method, to allocate joint cost is to compute total production cost of each product.
payroll fringe costs
health costs
premium costs
workers costs
✅ The correct answer is A.
Health care premium for workers and pension costs are included in payroll fringe costs. A fringe benefit rate is a percentage that results from dividing the cost of an employee’s fringe benefits by the wages paid to the employee for the hours actually worked.
112.34 per piece
113.33 per piece
111.34 per piece
110.34 per piece
✅ The correct answer is B.
Budgeted indirect cost = Budgeted annual indirect cost ÷ Budgeted annual quantity of cost allocation base
= $850000 ÷ $7500 = 113.33 per piece
job costing
operating costing
batch costing
process costing
✅ The correct answer is D.
The costing method which can be used in industry where the product pass through different processes is known as process costing. Process costing is used when there is mass production of similar products, where the costs associated with individual units of output cannot be differentiated from each other.
$5,000,000
$3,000,000
$2,000,000
$1,000,000
✅ The correct answer is B.
Flexible budget variable = Number of units × per unit price
= 5000 × $60 = $3,000,000
109.87
$107.78
$106.56
$104.34
✅ The correct answer is B.
Overhead rate = Actual manufacturing overhead costs ÷ Actual total quantity of cost allocation
= $485000 ÷ 4500 = $107.78