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.

222. Types of spoilage include

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normal spoilage
abnormal spoilage
weighted spoilage
both a and b
✅ The correct answer is D.
Types of spoilage include normal spoilage and abnormal spoilage.
Normal spoilage is the kind of spoilage that happens during the production process that business owners can say is normal and acceptable.
Abnormal spoilage, on the other hand, is spoilage that is beyond the normal point wherein the level is unexpectedly high. It may be due to defective machinery, sub-standard quality of materials, and even incompetent operators.

223. First ranked product, in incremental revenue allocation method, is classified as

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primary product
First incremental product
Second incremental product
Third incremental product
✅ The correct answer is A.
First ranked product, in incremental revenue allocation method, is classified as primary product. Primary products are goods that are available from cultivating raw materials without a manufacturing process.

225. In linear cost function, which is y = a + bx, y is classified as

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predicted fixed cost
predicted variable cost
predicted cost
predicted price
✅ The correct answer is C.
In linear cost function, which is y = a + bx, y is classified as predicted cost. It is the estimation of future cost levels based on historical cost behaviour characteristics, using such statistical techniques as linear regression.

226. Costs associated with storage of finished goods such as spoilage, obsolescence and insurance of goods are classified as

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carrying costs
purchasing costs
stock-out costs
ordering costs
✅ The correct answer is A.
Costs associated with storage of finished goods such as spoilage, obsolescence and insurance of goods are classified as carrying costs. Carrying costs are the costs of holding inventory and include maintenance, specifically in regard to perishable items, and storage costs.

227. The amount paid to sub-contractor is ________.

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subtracted from the contract price
debited to contract a/c
credited to contract a/c
added with the contract price
✅ The correct answer is B.
The amount paid to sub-contractor is debited to contract a/c. Contract means a big job in which work is done at site and not in factory premises. The cost of each contract is ascertained. Thus in this method of costing, each contract is a cost unit and an account is opened for each contract in the books of contractor to ascertain profit/loss thereon.

230. Out of the following, what is not the work of purchase department:

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Receiving purchase requisition
Exploring the sources of material supply
Preparation and execution of purchase orders
Accounting for material received
✅ The correct answer is D.
Accounting for material received is not the work of purchase department. Most major companies and even some government organizations have a purchasing or procurement department as part of everyday operations. These departments provide a service that is the backbone of many manufacturing, retail, military and other industrial organizations.