Cost Accounting MCQS with Answers

Question 1

Cost accounting primarily serves the needs of:

Accepted Answer

Internal management

Answer

Shareholders

Answer

Tax authorities

Answer

Creditors

Question 2

Prime cost is the sum of:

Accepted Answer

Direct materials, direct labor, and direct expenses

Answer

Direct materials and direct labor

Answer

Indirect materials and indirect labor

Answer

Factory overheads and administration

Question 3

Which of the following is an example of a fixed cost?

Accepted Answer

Factory rent

Answer

Raw materials

Answer

Direct labor

Answer

Sales commissions

Question 4

Costs that change in direct proportion to changes in activity level are called:

Accepted Answer

Variable costs

Answer

Fixed costs

Answer

Semi-variable costs

Answer

Sunk costs

Question 5

A cost that has already been incurred and cannot be recovered is known as a:

Accepted Answer

Sunk cost

Answer

Opportunity cost

Answer

Marginal cost

Answer

Replacement cost

Question 6

The process of charging overheads to cost centers is known as:

Accepted Answer

Allocation and Apportionment

Answer

Allocation

Answer

Apportionment

Answer

Absorption

Question 7

Break-even point is the level of sales where:

Accepted Answer

Total revenue equals total costs

Answer

Total revenue equals total fixed costs

Answer

Total revenue equals total variable costs

Answer

Profit is maximized

Question 8

Opportunity cost is:

Accepted Answer

The value of the next best alternative forgone

Answer

A cost incurred in the past

Answer

A direct cost of production

Answer

An overhead cost

Question 9

Under marginal costing, inventory is valued at:

Accepted Answer

Variable production cost

Answer

Prime cost

Answer

Total production cost

Answer

Selling price

Question 10

Which of the following best describes 'overhead'?

Accepted Answer

All indirect costs

Answer

Direct labor and direct materials

Answer

Administrative salaries only

Answer

Selling expenses only

Question 11

The difference between Sales and Variable Cost is known as:

Accepted Answer

Contribution Margin

Answer

Net Profit

Answer

Gross Profit

Answer

Operating Profit

Question 12

Standard costing is a technique used for:

Accepted Answer

Cost control and variance analysis

Answer

Tax calculation

Answer

Reporting to shareholders

Answer

Calculating depreciation

Question 13

ABC in cost accounting stands for:

Accepted Answer

Activity-Based Costing

Answer

Always Better Control

Answer

Average Basic Cost

Answer

Annual Budget Control

Question 14

Which of the following is considered a direct labor cost?

Accepted Answer

Wages of a machine operator

Answer

Wages of a factory supervisor

Answer

Salary of the CEO

Answer

Wages of security staff

Question 15

Cost of Goods Sold (COGS) equals:

Accepted Answer

Both A and B

Answer

Opening Stock + Purchases - Closing Stock

Answer

Sales - Gross Profit

Answer

Purchases + Closing Stock