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.

131. Period cost, which consists income statement of manufacturing companies belongs to

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inventory costs
product costs
non-manufacturing costs
manufacturing costs
✅ The correct answer is C.
Period cost, which consists income statement of manufacturing companies belongs to non-manufacturing costs. Non-manufacturing costs refer to those incurred outside the factory or production department. These are costs are not needed in transforming materials into finished goods.

133. Function used to measure decline in labour hours per unit as units of production increases is called

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fixed curve
learning curve
linear curve
mixed curve
✅ The correct answer is B.
Function used to measure decline in labour hours per unit as units of production increases is called learning curve. A learning curve is a concept that graphically depicts the relationship between the cost and output over a defined period of time, normally to represent the repetitive task of an employee or worker.

136. “Calculate the value of closing stock from the following according to LIFO method: 1st January, 20XX: Opening balance: 50 units @ Rs 4 Receipts: 5th January, 20XX: 100 units @ Rs 5 12th January, 20XX: 200 units @ Rs 4.50 Issues: 2nd January, 20XX: 30 units 18th January, 20XX: 150 units”

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Rs. 765
Rs. 805
Rs. 786
Rs. 700
✅ The correct answer is B.
Calculation of Closing Stock:
1st January, 20XX: Opening balance: 50 units @ Rs 4 = 50 × 4 = Rs. 200
Issue: 2nd January, 20XX: 30 units = 30 × 4 = Rs. 120
Remaining Stock = (50 – 30) × 4 = Rs. 80
Reciept: 5th January, 20XX: 100 units @ Rs 5 = 100 × 5 = Rs. 500
Reciept: 12th January, 20XX: 200 units @ Rs 4.50 = 200 × 4.5 = Rs. 900
Remaining Stock = Rs. 80 + Rs. 500 + Rs. 900 = Rs. 1480
Issue: 18th January, 20XX: 150 units = (150 × 4.5) = Rs. 675
Remaining Stock = (50 × 4.5) + (100 × 5) + (20 × 4) = Rs. 805.

138. Centers such as revenue, cost, investment and profit all are known as

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marketing center
financial center
responsibility center
planning center
✅ The correct answer is C.
Centers such as revenue, cost, investment and profit all are known as responsibility center. A responsibility center is a functional entity within a business that has its own goals and objectives, dedicated staff, policies and procedures, and financial reports.

140. Continuous stock taking is a part of ________.

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annual stock taking
perpetual inventory
ABC analysis
VED analysis
✅ The correct answer is B.
Continuous stock taking is a part of perpetual inventory. Perpetual inventory is a method of accounting for inventory that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.