Cost Accounting online MCQ practice set

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Exam Question

The cost which reflects the policies of the top management which result in periodic appropriations are called as

1. Future cost
2. Discretionary cost
3. Committed cost
4. Programmed cost

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Answer 4. Programmed cost

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Exam Question

The rate used in addition to the original rates for ascertaining the true profit for adjusting the under or over absorption of overheads is known as

1. Blanket rate
2. Moving average rate
3. Supplementary overhead rate
4. Multiple overhead rate

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Answer 3. Supplementary overhead rate

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Exam Question

A company has a budgeted level of fixed overheads of £385,000 and the overhead recovery rate is £4.25 per machine hour, What is the number of machine hours we expect to use?

1. 90,600
2. 4,250
3. 385,000
4. 1,636,25

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Answer 1. 90,600

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Exam Question

All of the following statements are correct except that

1. activity-based costing has been widely adopted in service industries
2. the objective of installing ABC in service firms is different than it is in a manufacturing firm
3. A larger proportion of overhead costs are company-wide costs in service industries
4. the general approach to identifying activities and activity cost pools is the same in a service company as in a manufacturing company

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Answer 2. the objective of installing ABC in service firms is different than it is in a manufacturing firm

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Exam Question

Which of the following statements is not true of pricing of inventories?

1. In FIFO method, the issue of material from the stores will be in the order which it was received
2. In LIFO method, the material issued will be priced based on the material that has been purchased recently
3. Under current price method, material is priced at the value that is realizable at the time of issue
4. Under standard price method, material is priced based on the current market price

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Answer 4. Under standard price method, material is priced based on the current market price

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Exam Question

The weighted average method of stock valuation would be most appropriate for:

1. A food retailer
2. A motor components retailer
3. A building contractor
4. A chemical manufacturer

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Answer 3. A building contractor

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Exam Question

Which of the following statements is false?

1. In an inflationary period the FIFO method of inventory pricing tends to inflate reported profits
2. LIFO method of inventory pricing causes reported profits to be low in an inflationary period
3. The weighted average cost method of inventory pricing tends to smooth out price luctuations
4. None of the above

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Answer 4. None of the above

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Exam Question

Depreciation charged on Plant and Machinery is

1. Future cost
2. Discretionary cost
3. Committed cost
4. Programmed cost

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Answer 3. Committed cost

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Exam Question

The following are the causes of labour efficiency variance except

1. Defective tools, equipment and materials
2. Defective supervision
3. Bad workmanship due to dissatisfaction among the workers
4. Employing people of different grades than planned

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Answer 4. Employing people of different grades than planned

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Exam Question

In allocating factory service department costs to producing departments, which of the following items would most likely be used as an activity base?

1. Units of electric power consumed
2. Direct materials usage
3. Units of finished goods shipped to customers
4. Units of product sold

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Answer 2. Direct materials usage

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Exam Question

Which of the following can improve break-even point?

1. Increase in fixed cost
2. Increase in sale price
3. Increase in sales volume
4. Increase in production volume

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Answer 2. Increase in sale price

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Exam Question

If actual units produced are lower than the budgeted level of production which of the following types of cost would you expect to be lower than the budget?

1. Variable costs per unit
2. Fixed costs per unit
3. Total fixed costs
4. Total variable costs

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Answer 4. Total variable costs

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Exam Question

Target pricing

1. Is a pricing strategy used to create competitive advantage
2. Considers the variable costs and excludes fixed costs
3. Is often used when costs are difficult to control
4. Is more appropriate when applied to mature and long-established products

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Answer 1. Is a pricing strategy used to create competitive advantage

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Exam Question

Cost apportionment involves:

1. The sharing out of costs to products
2. The sharing out of common costs to departments
3. The allocation of direct costs to departments
4. The sharing out of overheads to service departments

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Answer 2. The sharing out of common costs to departments

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Exam Question

The most fundamental responsibility center affected by the use of market-based transfer prices is

1. Cost center
2. Profit center
3. Investment center
4. Production center

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Answer 3. Investment center

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Exam Question

Which of the following statements is true for a firm that uses variable costing?

1. Profits fluctuate with sales
2. An idle facility variation is calculated
3. Product costs include variable administrative costs
4. Product costs include variable selling costs

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Answer 1. Profits fluctuate with sales

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Exam Question

A semi variable cost would:

1. Be more than zero if no products were made and would then increase in direct proportion to output
2. Be zero if output were zero and would change erratically as output increased
3. Be zero when output is zero and would increase in direct proportion to output
4. Be a fixed amount when output was zero and would not increase in direct proportion to output

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Answer 1. Be more than zero if no products were made and would then increase in direct proportion to output

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Exam Question

Which of the following is a limitation of activity-based costing?

1. More cost pools
2. Less control over overhead costs
3. Poorer management decisions
4. Some arbitrary allocations continue

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Answer 1. More cost pools

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Exam Question

Storekeeping expenses are to be apportioned on the basis of

1. Direct labor hours of each product
2. Number of units manufactured of each product
3. Number of material requisitions
4. Sales price of each product

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Answer 3. Number of material requisitions

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Exam Question

Which of the following is an unsatisfactory method of dealing with reciprocal service costs?

1. Ignore the service department costs
2. Use mathematical apportionment techniques
3. Apportion the service costs over production departments only
4. Use a specified order of apportioning service department costs

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Answer 1. Ignore the service department costs

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