Definition of cost Accounting :Cost accounting is a branch of accounting that deals with the process of identifying, measuring, analyzing, and allocating the costs of goods or services produced by a business. It involves the recording of all costs incurred during the production process, including direct and indirect costs, and provides valuable information to management for decision-making purposes.
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Which of the
following is NOT a primary objective of cost accounting?
A) To
determine the cost of goods and services
B) To
provide information for decision making
C) To
determine the profitability of a company
D) To
maintain accounting records for financial reporting purposes
Answer: D
Which of the
following is a fixed cost?
A) Direct
materials cost
B) Direct
labor cost
C) Rent
expense
D) Sales
commissions
Answer: C
Which of the
following methods of inventory costing assumes that the first units purchased
are the first units sold?
A) LIFO
B) FIFO
C) Weighted
average
D) Specific
identification
Answer: B
Which of the
following is an indirect cost?
A) Direct
materials cost
B) Direct
labor cost
C) Rent
expense
D) Sales
commissions
Answer: C
Feature of a
job order cost system?
A) It is
used by service companies
B) It is
used by companies that produce identical units of product
C) It tracks
the cost of each individual unit of product or service
D) It is not
used to determine the cost of goods sold
Answer: C
Select the
statements is true about variable costs?
A) They
remain constant on a per-unit basis
B) They vary
in total with changes in activity level
C) They are
always a fixed amount
D) They are
not affected by changes in activity level
Answer: B
Select the
right option about absorption costing?
A) It only
includes variable manufacturing costs in product costs
B) It
includes all manufacturing costs, both fixed and variable, in product costs
C) It only
includes fixed manufacturing costs in product costs
D) It does
not include any manufacturing costs in product costs
Answer: B
Right example
of a cost driver?
A) Direct
materials cost
B) Direct
labor cost
C) Number of
machine hours
D) Sales
revenue
Answer: C
Best example
of a period cost?
A) Direct
materials cost
B) Direct
labor cost
C) Rent
expense
D)
Depreciation expense on manufacturing equipment
Answer: C
Which of the
following is a method of allocating overhead costs to products or services?
A) Direct
costing
B)
Absorption costing
C) Variable
costing
D) Standard
costing
Answer: B
Cost-volume-profit
(CVP) analysis?
A) It is
used to determine the sales mix of a company
B) It is
used to determine the contribution margin of a company
C) It is
used to determine the break-even point of a company
D) It is
used to determine the absorption rate of a company
Answer: C
Sunk cost?
A) The cost
of raw materials used in manufacturing a product
B) The cost
of shipping finished goods to customers
C) The cost
of a machine used in manufacturing that is no longer useful
D) The cost
of labor used to manufacture a product
Answer: C
Direct cost?
A) Rent
expense
B)
Advertising expense
C) Direct
materials cost
D) Insurance
expense
Answer: C
Which of the
following is a type of cost that varies with changes in the volume of activity?
A) Fixed
cost
B) Variable
cost
C) Mixed
cost
D) Step cost
Answer: B
Material
Cost MCQs
Which of the
following is not included in material cost?
a) Direct
material
b) Indirect
material
c) Labour
cost
d) Freight
charges
Answer: c) Labour
cost
Material
cost is a part of which type of cost?
a) Fixed
cost
b) Variable
cost
c) Direct
cost
d) Indirect
cost
Answer: c) Direct
cost
The cost of
scrap material is included in which type of material cost?
a) Direct
material cost
b) Indirect
material cost
c) Prime
cost
d)
Conversion cost
Answer: a) Direct
material cost
Which of the
following is an example of indirect material cost?
a) Raw
material used in the manufacturing process
b) Packaging
material used for finished goods
c) Material
used for repairs and maintenance
d) All of
the above
Answer: b) Packaging
material used for finished goods
Material
requisition form is used for which purpose in cost accounting?
a) To record
the quantity of material used
b) To order
material from suppliers
c) To record
the purchase of material
d) To record
the sale of finished goods
Answer: a) To
record the quantity of material used
The cost of
goods sold formula includes which of the following costs?
a) Direct
material cost
b) Direct
labour cost
c)
Manufacturing overhead cost
d) All of
the above
Answer: d) All
of the above
Which of the
following is an example of a variable material cost?
a)
Depreciation of machinery
b) Rent of
factory building
c) Cost of
raw material used
d) Salary of
factory supervisor
Answer: c)
Cost of raw material used
The concept
of economic order quantity is related to which of the following?
a) Material
cost
b) Labour
cost
c)
Manufacturing overhead cost
d) None of
the above
Answer: a) Material
cost
Which of the
following is not a component of material cost variance?
a) Direct
material price variance
b) Direct
material usage variance
c) Direct
labour efficiency variance
d) All of
the above are components of material cost variance
Answer: c) Direct
labour efficiency variance
Which of the
following is a method of controlling material cost?
a) ABC
analysis
b)
Break-even analysis
c) CVP
analysis
d) None of
the above
Answer: a) ABC
analysis
A material
requisition form includes which of the following information?
a) Quantity
of material requested
b) Cost of
material requested
c)
Department requesting the material
d) All of
the above
Answer: d) All
of the above
The process
of comparing the actual material cost with the budgeted material cost is known
as:
a) Material
usage variance
b) Material
price variance
c) Material
cost variance
d) None of
the above
Answer: c) Material
cost variance
Fixed
material cost?
a) Cost of
raw material used
b) Freight
charges on incoming material
c) Cost of
packaging material used
d) Rent of
warehouse for storing raw material
Answer: d) Rent
of warehouse for storing raw material
Labor
cost
The cost of
labor can be classified as:
a) Direct
labor cost
b) Indirect
labor cost
c) Both a
and b
d) None of
the above
Answer: c) Both
a and b
Direct labor
cost?
a) Salaries
of factory supervisors
b) Wages of
machine operators
c) Rent of
the factory building
d) Cost of
electricity used in the factory
Answer: b) Wages
of machine operators
Indirect
labor costs include:
a) Wages of
machine operators
b) Salaries
of factory supervisors
c) Cost of
electricity used in the factory
d) None of
the above
Answer: b) Salaries
of factory supervisors
The wages
paid to a machine operator who is working on a product is an example of:
a) Direct
labor cost
b) Indirect
labor cost
c) Both a
and b
d) None of
the above
Answer: a)
Direct labor cost
The wages
paid to a security guard in the factory is an example of:
a) Direct
labor cost
b) Indirect
labor cost
c) Both a
and b
d) None of
the above
Answer: b) Indirect
labor cost
A company
has incurred $100,000 in direct labor costs and $50,000 in indirect labor
costs. Calculate the total labor cost for the company?
a) $50,000
b) $100,000
c) $150,000
d) $200,000
Answer: c)
$150,000
The hourly
wage rate paid to a worker is $20. If the worker works for 8 hours a day, what
is the daily labor cost for the company?
a) $20
b) $80
c) $160
d) $200
Answer: b) $80
The payroll
taxes and benefits paid by the company on behalf of its employees are examples
of:
a) Direct
labor costs
b) Indirect
labor costs
c) Overhead
costs
d) None of
the above
Answer: b) Indirect
labor costs
A company
incurred $10,000 in payroll taxes and benefits for its employees. What is the
total labor cost for the company if its direct labor cost is $50,000?
a) $10,000
b) $40,000
c) $50,000
d) $60,000
Answer: d) $60,000
Which of the
following is an example of an activity that would be included in the overhead
cost pool?
a) Machine
maintenance
b) Direct
materials cost
c) Direct
labor cost
d) None of
the above
Answer: a) Machine
maintenance
The cost of
training new employees would be classified as:
a) Direct
labor cost
b) Indirect
labor cost
c) Overhead
cost
d) None of
the above
Answer: b) Indirect
labor cost
Which of the
following is an example of a variable labor cost?
a) Salary of
a factory supervisor
b) Hourly
wage of a machine operator
c) Cost of
training new employees
d) None of
the above
Answer: b) Hourly
wage of a machine operator
Fixed labor
cost?
a) Overtime
pay for workers
b) Hourly
wage of a machine operator
c) Cost of
training new employees
d) None of
the above
Answer: c) Cost
of training new employees
Direct vs
Overhead Costs
Direct
expenses and overhead costs in cost accounting:
Which of the
following expenses is considered a direct expense?
A) Rent
B) Raw
materials
C)
Depreciation
D)
Electricity
Answer: B)
Raw materials
Which of the
following expenses is considered an overhead cost?
A) Labor
cost
B) Packaging
materials
C)
Depreciation on plant and machinery
D) Direct
material cost
Answer: C) Depreciation
on plant and machinery
Which of the
following expenses is considered a direct expense for a car manufacturer?
A)
Advertising expenses
B) Salaries
of salespeople
C) Raw
materials for car parts
D)
Depreciation on office equipment
Answer: C) Raw
materials for car parts
Which of the
following expenses is considered an overhead cost for a bakery?
A) Flour
cost
B) Wages of
bakers
C) Rent for
the bakery
D) Cost of
baking soda
Answer: C) Rent
for the bakery
Which of the
following expenses is considered a direct expense for a software company?
A) Cost of
internet connection
B) Cost of
software development tools
C) Salary of
the CEO
D)
Depreciation on office furniture
Answer: B) Cost
of software development tools
Which of the
following expenses is considered an overhead cost for a restaurant?
A) Cost of
meat
B) Wages of
chefs
C) Rent for
the restaurant
D) Cost of
spices
Answer: C) Rent
for the restaurant
Which of the
following expenses is considered a direct expense for a construction company?
A) Cost of
construction equipment
B) Rent for
the office building
C) Salary of
the project manager
D) Cost of
office supplies
Answer: A) Cost
of construction equipment
Which of the
following expenses is considered an overhead cost for a law firm?
A) Legal
research expenses
B) Wages of
lawyers
C) Rent for
the law office
D) Cost of
legal software
Answer: C) Rent
for the law office
Which of the
following expenses is considered a direct expense for a clothing manufacturer?
A) Salary of
the designer
B) Rent for
the manufacturing facility
C) Cost of
fabric
D) Cost of
electricity
Answer: C) Cost
of fabric
Which of the
following expenses is considered an overhead cost for a retail store?
A) Cost of
inventory
B) Wages of
salespeople
C) Rent for
the store
D) Cost of
packaging materials
Answer: C) Rent
for the store
Which of the
following expenses is considered a direct expense for a landscaping company?
A) Rent for
the office
B) Cost of
lawn mowers
C) Salary of
the administrative assistant
D) Cost of
office supplies
Answer: B) Cost
of lawn mowers
Which of the
following expenses is considered an overhead cost for a hotel?
A) Cost of
food and beverages
B) Wages of
housekeeping staff
C) Rent for
the hotel building
D) Cost of
laundry detergent
Answer: C) Rent
for the hotel building
Which of the
following expenses is considered a direct expense for a furniture manufacturer?
A) Salary of
the accountant
B) Cost of
wood
C) Rent for
the warehouse
D) Cost of
office furniture
Answer: B) Cost
of wood
Which of the
following expenses is considered an overhead cost for a hospital?
A) Wages of
nurses
B) Cost of
medical supplies
C) Rent for
the hospital building
D) Cost of
electricity
Answer: C) Rent
for the Hospital building