Cost Accounting MCQ Multiple Choice Questions Answers

Q: 61. What is "variable costing" used for?

Correct Answer is: To make internal management decisions

Q: 62. Which of the following is NOT a feature of job order costing?

Correct Answer is: Used for large-scale mass production

Q: 63. What is "activity-based costing" (ABC) used to allocate?

Correct Answer is: Both direct and indirect costs based on activities

Q: 64. The "high-low method" is used to estimate:

Correct Answer is: Variable costs and fixed costs

Q: 65. Which of the following is a "discretionary cost"?

Correct Answer is: Research and development expenses

Q: 66. What does the "contribution margin ratio" represent?

Correct Answer is: The percentage of each sales dollar that contributes to covering fixed costs

Q: 67. What is "process costing" used for?

Correct Answer is: To assign costs to identical units produced in a continuous process

Q: 68. Which of the following is a direct cost?

Correct Answer is: Direct materials

Q: 69. What is the "cost driver" in activity-based costing (ABC)?

Correct Answer is: A factor that causes the cost of an activity to change

Q: 70. What does "absorption costing" include in the cost of a product?

Correct Answer is: Both fixed and variable manufacturing costs

61. What is "variable costing" used for?

To determine the selling price of products
To allocate fixed costs to products
To calculate total production costs
To make internal management decisions

62. Which of the following is NOT a feature of job order costing?

Used for large-scale mass production
Costs are assigned to specific jobs or orders
Products are unique and customized
It is typically used in service industries

63. What is "activity-based costing" (ABC) used to allocate?

Only variable costs
Both direct and indirect costs based on activities
Fixed costs
Direct materials costs

64. The "high-low method" is used to estimate:

Variable costs and fixed costs
Total production costs
Depreciation on machinery
The cost of labor

65. Which of the following is a "discretionary cost"?

Salaries of production workers
Research and development expenses
Direct materials used in production
Depreciation of factory equipment

66. What does the "contribution margin ratio" represent?

The percentage of each sales dollar that contributes to covering fixed costs
The fixed cost percentage in product costing
The ratio of variable costs to sales revenue
The break-even point in units

67. What is "process costing" used for?

To assign costs to unique jobs
To assign costs to each individual product
To assign costs to identical units produced in a continuous process
To allocate fixed costs across departments

68. Which of the following is a direct cost?

Direct materials
Factory overhead
Office rent
Sales staff salaries

69. What is the "cost driver" in activity-based costing (ABC)?

A factor that causes the cost of an activity to change
The fixed cost of production
The direct labor cost for a product
The total sales for a period

70. What does "absorption costing" include in the cost of a product?

Only direct labor and direct materials
Only variable manufacturing costs
Both fixed and variable manufacturing costs
Only fixed costs

71. What is "fixed cost per unit" in the context of cost accounting?

Fixed costs divided by the total number of units produced
Variable costs divided by the number of units sold
The cost of production that varies with output
The total fixed cost for a production period

72. In "job order costing," the "job cost sheet" is used to:

Track the direct labor cost
Record all costs associated with a specific job
Assign overhead costs to products
Calculate the total production cost for the period

73. What is "cost control"?

The process of reducing fixed costs
Monitoring costs and ensuring they stay within the budget
The allocation of overhead costs
A method to calculate gross profit margin

74. What is the "contribution margin" of a product?

The total sales revenue minus the variable costs
The total fixed costs minus the sales revenue
The fixed costs per unit produced
The total manufacturing cost per unit

75. What does the term "budgetary control" involve?

Establishing budgets and comparing actual performance against these budgets
Allocating fixed costs to different departments
Tracking sales revenue and production costs
Estimating future production costs

76. What is the "cost-plus pricing" method used for?

To calculate the selling price of a product by adding a markup to the cost
To determine the cost of raw materials
To set a price based on competition
To establish the fixed cost of a product

77. In cost accounting, what is "inventory costing"?

The method of allocating production costs to inventory
The process of tracking raw material costs
The method of allocating fixed costs to products
The method of pricing goods for sale

78. What is a "controllable cost" in cost accounting?

Costs that can be influenced or controlled by a manager
Costs that remain constant regardless of the decision
Costs that are fixed for a given period
Costs that cannot be influenced

79. In job order costing, how are costs assigned to each job?

Based on average costs
Based on a predetermined rate
Directly traced to the job
Using standard cost methods

80. What is "marginal cost"?

The additional cost incurred to produce one more unit
The total cost of production
The cost of direct materials
The total fixed costs for a given period

81. What is the difference between "direct materials" and "direct labor"?

Direct materials are variable costs, while direct labor is a fixed cost
Direct materials are raw materials used in production, while direct labor is the cost of workers directly involved in production
Direct labor is indirect, while direct materials are direct costs
Direct materials are used for internal purposes, while direct labor is used for production

82. What does "variable cost per unit" refer to?

The cost that remains constant regardless of the number of units produced
The cost that increases as production increases
The cost associated with fixed costs
The cost per unit for labor and materials

83. In cost accounting, "allocation" refers to:

The process of assigning costs to products, departments, or activities
The determination of the fixed costs for a given product
The calculation of direct labor costs
The estimation of sales revenue

84. What is the "cost of goods manufactured"?

The total cost of all products sold
The cost of raw materials used in production
The total costs incurred to produce goods during a specific period
The fixed cost of production

85. The term "marginal costing" refers to:

Including both fixed and variable costs in product costing
Assigning fixed costs to products
Calculating the additional cost of producing one more unit
Allocating the total cost of production across all units

86. The "direct method" of cost allocation involves:

Allocating costs based on specific activities
Assigning all fixed costs to products
Assigning overhead costs directly to products without using any allocation basis
Allocating costs based on the volume of production

87. In cost accounting, what is a "cost driver"?

A factor that causes costs to vary
The fixed cost of production
A unit of production
A manager responsible for controlling costs

88. What is the primary objective of cost accounting?

To determine the total profit from operations
To analyze and control the costs of production
To prepare financial statements
To calculate gross revenue

89. What is the "cost of capital"?

The cost of borrowing funds
The total cost of production
The cost of equity investments
The rate of return required by investors

90. What does the term "overhead" refer to in cost accounting?

The total direct costs of production
Indirect costs of production
Costs that cannot be traced to any product
Direct labor costs