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.
Job costing
Contract costing
Process costing
Specific order costing
✅ The correct answer is A.
Job costing method of costing can be used in furniture manufacture industry. A job card is made for each work or job. This method of costing is used in the factories which produce the machine tool and other engineering products, furniture projects, hardware and interior decoration. This method of costing is also called a piece of work costing or terminal costing.
110
125
60
70
✅ The correct answer is C.
Predicted cost = Observed cost value – Disturbance error
= 85 – 25 = 60
discrete curve
fixed curve
mixed curve
experience curve
✅ The correct answer is D.
A concept used to define learning curve in broader application is called experience curve. Experience curve refers to a diagrammatic representation of the inverse relationship between the total value-added costs of a product and the company experience in manufacturing and marketing it.
debited to contract a/c
credited to contract a/c
debited to contractor a/c
debited to profit and loss a/c
✅ The correct answer is B.
Work uncertified is credited to contract a/c. The cost of work uncertified represents the cost of work which has already been. completed, but for that the contractor has not received completion certificate from the contractee’s surveyor or architect.
summarize flow of output
compute output in units
summarize total costs
compute cost for each equivalent unit
✅ The correct answer is C.
Third step in process costing system is to summarize total costs. Process costing is a method of assigning production costs to units of output.
units of labour
unit of production
time horizon
units of inventory
✅ The correct answer is C.
To decide whether cost is variable cost or fixed cost with respect to some specific activity depends upon time horizon. Time horizon is the length of time over which an investment is made or held before it is liquidated. Time horizons can range from seconds in the case of a day trader, all the way up to decades for a buy-and-hold investor or an individual who is investing in a retirement plan.
direct overheads
overhead costs
factory overhead
manufacturing overhead cost
✅ The correct answer is D.
Conversion cost is subtracted from direct manufacturing labour cost is to calculate the manufacturing overhead cost. Conversion costs is a term used in cost accounting that represents the combination of direct labor costs and manufacturing overhead costs.
past cost
incurred cost
actual cost
budgeted cost
✅ The correct answer is D.
In accounting, cost which is predicted to be incurred or future cost is known as budgeted cost. A budgeted cost is a forecasted future expense that the company is expected to incur in the future.
$87,500
$97,500
$67,500
$57,500
✅ The correct answer is A.
Selling price variance = Actual result × Actual units sold
= $250 × 350 = $87,500
57
43
67
47
✅ The correct answer is B.
In regression analysis, if observed cost value is 50 and predicted cost value is 7, then disturbance term will be 43.
Disturbance term = Observed cost value – Predicted cost value
= 50 – 7 = 43.