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.

281. In normal costing, budgeted rate is multiplied to an actual quantity, which have been used as allocation base to calculate

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budget overhead applied
manufacturing overhead applied
labour overhead applied
none of above
✅ The correct answer is B.
In normal costing, budgeted rate is multiplied to an actual quantity, which have been used as allocation base to calculate manufacturing overhead applied.

283. “A ltd is a manufacturing company that has no production resource limitations for the foreseeable future. The Managing Director has asked the company mangers to coordinate the preparation of their budgets for the next financial year. In what order should the following budgets be prepared? (1) Sales budget (2) Cash budget (3) Production budget (4) Purchase budget (5) Finished goods inventory budget”

by
(2), (3), (4), (5), (1)
(1), (5), (3), (4), (2)
(1), (4), (5), (3), (2)
(4), (5), (3), (1), (2)
✅ The correct answer is B.
The order in which the budget should be prepared are Sales budget, Finished goods inventory Production budget, Purchase budget and Cash budget.

284. Allotment of whole item of cost to a cost centre or cost unit is known as:

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Cost Apportionment
Cost Allocation
Cost Absorption
Machine hour rate
✅ The correct answer is B.
Allotment of whole item of cost to a cost centre or cost unit is known as Cost Allocation. Cost allocation is the process of identifying, aggregating, and assigning costs to cost objects. A cost object is any activity or item for which you want to separately measure costs.

285. First step in estimation of cost function by using quantitative analysis is to

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choose price estimation method
choose dependent variable
choose independent variable
choose cost estimation method
✅ The correct answer is B.
First step in estimation of cost function by using quantitative analysis is to choose dependent variable. A dependent variable is what you measure in the experiment and what is affected during the experiment. The dependent variable responds to the independent variable. It is called dependent because it “depends” on the independent variable.

286. In estimation of cost functions, variations in a single activity level represents the

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related total costs
related fixed cost
related variable cost
related per unit cost
✅ The correct answer is A.
In estimation of cost functions, variations in a single activity level represents the related total costs. Total cost refers to the aggregation of all types of costs related to a cost object, which means fixed costs, variable costs, and mixed costs.

288. An amount of spoilage that is natural in any particular production process is classified as

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normal scrap
normal spoilage
abnormal spoilage
weighted spoilage
✅ The correct answer is B.
An amount of spoilage that is natural in any particular production process is classified as normal spoilage. Normal spoilage refers to the inherent worsening of products during the production or inventory processes of the sales cycle.

290. FIFO is ________.

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Fast Investment in Future Order
First In First Out
Fast In Fast Out
Fast Issue Of Fast Order
✅ The correct answer is B.
“FIFO” stands for first-in, first-out, meaning that the oldest inventory items are recorded as sold first but do not necessarily mean that the exact oldest physical object has been tracked and sold. In other words, the cost associated with the inventory that was purchased first is the cost expensed first.