31. If an overhead cost of operating a machine is $500000 for 1000 hours, then cost allocation rate will be
A) $1500 per machine hour
B) $250 per machine hour
C) $500 per machine hour
D) $1000 per machine hour
✅ ANSWER: C
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.
32. System which measures budget, action and plan of each responsibility center is known as
A) budgeted accounting
B) action accounting
C) planned accounting
D) responsibility accounting
✅ ANSWER: D
System which measures budget, action and plan of each responsibility center is known as responsibility accounting. Responsibility Accounting is a system of control where responsibility is assigned for the control of costs. The persons are made responsible for the control of costs.
System which measures budget, action and plan of each responsibility center is known as responsibility accounting. Responsibility Accounting is a system of control where responsibility is assigned for the control of costs. The persons are made responsible for the control of costs.
33. Those cost which is incurred to prevent the labour turnover __________.
A) management cost
B) replacement cost
C) preventive cost
D) compensation cost
✅ ANSWER: C
Those cost which is incurred to prevent the labour turnover is known as preventive cost. These are costs which are incurred to prevent excessive labour turnover. The aim of these costs is to keep the workers satisfied so that they may not leave the factory.
Those cost which is incurred to prevent the labour turnover is known as preventive cost. These are costs which are incurred to prevent excessive labour turnover. The aim of these costs is to keep the workers satisfied so that they may not leave the factory.
34. If sales budget variance is $57000 and flexible budget amount is $97000, then static budget amount will be
A) $40,000
B) $154,000
C) $164,000
D) $124,000
✅ ANSWER: A
Static budget = Flexible budget – Sales budget variance
= $97000 – $57000 = $40,000
Static budget = Flexible budget – Sales budget variance
= $97000 – $57000 = $40,000
35. Planning of financial aid to coordinate; what is to be done for implementation of plan is classified as
A) budget
B) batching
C) complexity
D) process
✅ ANSWER: A
Planning of financial aid to coordinate; what is to be done for implementation of plan is classified as budget.
Planning of financial aid to coordinate; what is to be done for implementation of plan is classified as budget.
36. Method which allocates cost of support department to only operating departments is called
A) indirect method
B) direct method
C) step down method
D) reciprocal method
✅ ANSWER: B
Method which allocates cost of support department to only operating departments is called direct method. The direct allocation method is a technique for charging the cost of service departments to other parts of a business.
Method which allocates cost of support department to only operating departments is called direct method. The direct allocation method is a technique for charging the cost of service departments to other parts of a business.
37. Method of costing that supports creation of value for customer by accounting whole value stream, rather than individual departments or products is classified as
A) economic accounting
B) back-flush accounting
C) lean accounting
D) lead accounting
✅ ANSWER: C
Method of costing that supports creation of value for customer by accounting whole value stream, rather than individual departments or products is classified as lean accounting. Lean accounting is a financial management approach that supports the streamlined processes of lean manufacturing.
Method of costing that supports creation of value for customer by accounting whole value stream, rather than individual departments or products is classified as lean accounting. Lean accounting is a financial management approach that supports the streamlined processes of lean manufacturing.
38. Which of these is not a Material control technique:
A) ABC Analysis
B) Fixation of raw material levels
C) Maintaining stores ledger
D) Control over slow moving and non moving items
✅ ANSWER: C
Maintaining stores ledger is not a Material control technique. A stores ledger is a manual or computer record of the raw materials and production supplies stored in a production facility. It is maintained by the person responsible for these assets, such as the warehouse manager.
Maintaining stores ledger is not a Material control technique. A stores ledger is a manual or computer record of the raw materials and production supplies stored in a production facility. It is maintained by the person responsible for these assets, such as the warehouse manager.
39. starting point in operating budget is
A) cost budget
B) material list
C) revenue budget
D) list of investors
✅ ANSWER: C
Starting point in operating budget is revenue budget. Revenue budgets are forecasts of a company’s sales revenues and expenditures, including capital-related expenditures.
Starting point in operating budget is revenue budget. Revenue budgets are forecasts of a company’s sales revenues and expenditures, including capital-related expenditures.
40. Product which requires low amount of resources, but incur high per unit cost is classified as
A) expected under cost
B) expected over cost
C) product under costing
D) product over costing
✅ ANSWER: D
Product which requires low amount of resources, but incur high per unit cost is classified as product over costing. Product costing is also known as traditional costing. This method seeks to allocate all costs down to individual units of finished product.
Product which requires low amount of resources, but incur high per unit cost is classified as product over costing. Product costing is also known as traditional costing. This method seeks to allocate all costs down to individual units of finished product.