Cost Concept, Analysis and Classifications MCQs

Cost Concept, analysis and classifications MCQs test consists of 14 questions, every question has 4 or 5 answers with one correct option. You need to choose the correct answer to move to the next MCQs. Multiple choice questions test for the Chapter Cost concepts, analysis and classifications will be helpful for the students to prepare their objective exams, clear their concepts and to get ready to appear in interviews.

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1. Which cost system description applies to the manufacture of 20 engraved doors for the new clubhouse at a golf course?

Contract

Process

Batch

Service

2. An important feature of a cost centre is that:

It uses only monetary information

It has clearly defined boundaries

It must be one specific location only

It must be an area of a business through which products pass

3. Prime cost may be correctly defined as:

The sum of direct materials and direct labor cost with all other costs excluded.

The total of all cost items which can be directly charged to product units.

The total cost incurred in producing a finished unit.

The sum of the large cost items in a product cost.

4. Which of the following is a cost behavior-oriented approach to production costing?

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Absorption Costing

Marginal Costing

Process Costing

Job Order Costing

5. In a process costing system, the unit cost is computed for a:

Job

Department

Batch of goods

Category of goods

6. The cost of goods sold under a periodic cost accumulation system is equal to the:

Cost of goods available for less ending finished goods inventory.

Cost of goods available for sale plus beginning finished goods inventory.

Cost of goods manufactured plus beginning finished goods inventory.

Cost of goods sold manufactured less beginning finished goods inventory.

7. The cost of goods manufactured, under a periodic cost accumulation system, is equal to the:

Beginning finished goods inventory plus purchase.

Beginning work-in-process plus cost of goods in process during the year.

Cost of goods put into production plus beginning work-in-process less ending work-in-process.

Cost of goods sold less beginning work-in-process.

8. For external financial statement purpose, inventories must be reported at:

Standard Costs

Actual Costs

Period Costs

Direct Costs

9. The term “Conversion costs” refers to:

Manufacturing costs incurred to produce units of output.

All costs associated with manufacturing other than direct labor costs and raw material costs.

Costs which are associated with marketing, shipping, warehousing and billing activities.

The sum of direct labor cost and all factory overhead costs.

The sum of raw material costs and direct labor costs.

10. The term “Prime COsts” refers to:

Also Check: Cost of goods sold statement and income statement MCQs

Manufacturing costs incurred to produce unit of output.

All costs associated with manufacturing other than direct labor costs and raw material costs.

Costs which are predetermined and should be attained.

The sum of direct labor costs and all factory overhead costs.

The sum of direct material costs and direct labor costs.

11. The term “variable costs” refers to:

All costs which are likely to respond to the amount of attention devoted to them by a specified manager.

All costs which are associated with marketing, shipping, warehousing and billing activities.

All costs which do not change in total for a given period of time and relevant range but become progressively smaller on a per unit basis as volume increases.

All manufacturing costs incurred to produce units of output.

All costs which fluctuate in total in response to small change in the rate of utilization of capacity.

12. The term “Cost” refers to:

An asset that has given benefit and is now expired.

The price of product sold or services rendered.

The value of the sacrifice made to acquire goods or services.

An asset that has not given benefit and is now expired.

The present value of future benefits.

13. The term “Sunk Costs” refers to:

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Past costs that are now irrevocable.

Costs that are directly influenced by unit manager.

Costs that should be incurred in a particular production process.

Costs that may be eliminated if some economic activity is changed or deleted.

Benefits lost from rejecting the next best alternative.

14. The process of charging factory overhead to work-in-process based on a predetermined application rate multiplied by actual input is known as:

Normal costing

Standard costing

Actual costing

Product costing

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