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.

321. Conversion cost includes cost of converting……… into ……

Raw material, WIP
Raw material, Finished goods
WIP, Finished goods
Finished goods, Saleable goods
✅ The correct answer is B.
Conversion cost includes cost of converting Raw material into Finished goods. There are two main components of conversion costs: direct labor and manufacturing overheads.

323. Method of estimation of cost function, by making opinions and analysis about cost and cost drivers is classified as

conference method
inference method
pricing method
manufacturing method
✅ The correct answer is A.
Method of estimation of cost function, by making opinions and analysis about cost and cost drivers is classified as conference method. The conference method is an approach to cost estimation that pools together data, analyses, and knowledge from expert sources in order to make decisions about costs.

325. Calculate the labour turnover rate according to Separation method from the following: No of workers on the payroll: – At the beginning of the month: 500 – At the end of the month: 600 During the month, 5 workers left, 20 workers were discharged and 75 workers were recruited Of these, 10 workers were recruited in the vacancies of those leaving and while the rest were engaged for an expansion scheme

4.55%
1.82%
6%
3%
✅ The correct answer is A.
Separation method = No of worker separated during the period/Average no of workers at same period × 100

No of worker separated during the period = 25

Average no of workers = (500+600)/2= 550

∴25/ 550 × 100

=4.55%

328. Process of assigning indirect costs to any specific cost object is known as

economic cost
cost tracing
cost allocation
non-economic costs
✅ The correct answer is C.
Process of assigning indirect costs to any specific cost object 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.