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.

161. Factor which provides hedge to managers in adverse and unexpected circumstances is known as

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budgetary slack
costly slack
influential slack
target slack
✅ The correct answer is A.
Factor which provides hedge to managers in adverse and unexpected circumstances is known as budgetary slack. Budgetary slack is the deliberate under-estimation of budgeted revenue or over-estimation of budgeted expenses.

162. Overvaluation of opening stock in financial accounting results ________.

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decreases costing profit
decreases financial accounts profit
increases costing profit
increases financial accounts profit
✅ The correct answer is B.
Overvaluation of opening stock in financial accounting results decreases financial accounts profit. Overvalued opening inventory means understated profit and and undervalued opening inventory means high profit.

165. Normal idle time __________.

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can be avoided
can be minimized
cannot be avoided
can be controlled
✅ The correct answer is C.
Normal idle time cannot be avoided. The main reasons for the occurrence of normal idle time are as follows:

i. Time taken by workers to travel the distance between the main gate of factory and the place of their work.

ii.Time lost between the finish of one job and starting of next job.

iii. Time spent to overcome fatigue.

iv. Time spent to meet their personal needs like taking lunch, tea etc.

166. In accounting, cost incurred in past or in historical financial statements is classified as

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actual cost
budgeted cost
past cost
incurred cost
✅ The correct answer is A.
In accounting, cost incurred in past or in historical financial statements is classified as actual cost. Actual cost is the actual expenditure made to acquire an asset, which includes the supplier-invoiced expense, plus the costs to deliver, set up, and test the asset.

167. Sunk costs are:

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relevant for decision making
Not relevant for decision making
cost to be incurred in future
future costs
✅ The correct answer is B.
Sunk costs are not relevant for decision making. A sunk cost is a cost that cannot be recovered or changed and is independent of any future costs a business may incur. Since decision-making only affects the future course of business, sunk costs should be irrelevant in the decision-making process.

168. In an income statement, when costs become cost of sold goods and manufactured products are sold, such costs are

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inventoriable costs
finished costs
factory overhead costs
manufacturing overhead costs
✅ The correct answer is A.
In an income statement, when costs become cost of sold goods and manufactured products are sold, such costs are inventoriable costs. Inventoriable costs are included in the cost of a product. For a manufacturer, these costs include direct materials, direct labor, freight in, and manufacturing overhead.