Introduction to Cost &
1 Management Accounting
CHAPTER
MULTIPLE CHOICE QUESTIONS
1. ___________ provides information for income determination.
(a) Financial accounting (b) cost accounting
(c) management accounting (d) none of these
2. ________ helps in ascertaining costs beforehand.
(a) Financial accounting (b) cost accounting
(c) management accounting (d) none of these
3. ________ is anything for which a separate measurement is required.
(a) cost unit (b) cost object
(c) cost driver (d) cost centre
4. Cost accounting disclose ___________.
(a) The Financial position (b) profit/loss of a product, job or service
(c) effect and impact of cost on business (d) none of these
5. ________ is a post mortem of past costs.
(a) Financial accounting (b) cost accounting
(c) both (a) & (b) (d) none of these
6. ____________ aids in price fixation.
(a) Financial accounting (b) none of these
(c) management accounting (d) cost accounting
7. Which of the following is true about cost control?
(a) It is a corrective function (b) It challenges the set standards
(c) It ends when targets achieved (d) It is concerned with future
8. ________ includes financial and cost accounting, tax planning and tax accounting.
(a) Financial accounting (b) cost accounting
(c) management accounting (d) none of these
9. In automobile ___________ costing is used .
(a) Process (b) batch
(c) multiple (d) job
10. Service costing is used in industries producing ________ .
(a) Products (b) service
(c) both (a) & (b) (d) none of these
11. ________ costing is applicable to printers.
(a) Process (b) batch
(c) multiple (d) job
12. Which of these is not an objective of Cost Accounting?
(a) Ascertainment of Cost (b) Determination of Selling Price
(c) Cost Control and Cost reduction (d) Assisting Shareholders in decision making
13. Cost unit in power sector is:
(a) Kilometer (KM) (b) Kilowatt-hour (kWh)
(c) Number of electric points (d) Number of hours
14. __________ costing is a type or technique of costing.
(a) Marginal (b) batch
(c) multiple (d) job
15. ________ costing is a type or technique of costing.
(a) Absorption (b) batch
(c) multiple (d) job
16. ___________ is not the scope of Cost Accountancy.
(a) Ascertaining cost (b) cost accounting
(c) cost control (d) tax planning
17. Process costing method is suitable for ___________.
(a) Transport sector (b) Chemical industries
(c) Dam construction (d) Furniture making
18. Distinction between direct cost and indirect cost is an example of ___________ classification.
(a) By Element (b) By Function
(c) By Controllability (d) By Variability
19. The ordinary trading account is a locked storehouse of most valuable information to which cost
system is the ___________.
(a) Key (b) lock
(c) house (d) none of these
2 Cost & Management Accounting
20. The advantages of using IT in Cost Accounting does not include:
(a) Integration of various functions
(b) Stock needs to be reconciled with goods received note
(c) Reduction in multicity of documents
(d) Customized reports can be prepared
21. Cost accounting provides data for managerial ____________.
(a) Decision making (b) recruitment
(c) retrenchment (d) none of the above
22. A taxi provider charges minimum ₹80 thereafter ₹12 per kilometer of distance travelled, the
behavior of conveyance cost is:
(a) Fixed cost (b) Semi-variable cost
(c) Variable cost (d) Administrative cost
23. Cost accounting provides detailed information about ___________ of various products, processes,
services and operations.
(a) Costs (b) income
(c) either (a) or (b) (d) none of these
24. SK Ltd. has three production department, each department has two machines, which of the
following cannot be treated as a cost centre for cost allocation:
(a) Machines under the production department (b) Production departments
(c) Both production department and machines (d) SK Ltd.
25. The method of costing used in a refinery is ___________ costing.
(a) Batch (b) Process
(c) multiple (d) job
26. ________ costing is used in transport undertakings.
(a) Process (b) service
(c) multiple (d) job
27. The total variable cost ________ in total proportion to output.
(a) Increases (b) does not increase
(c) decreases (d) none of these
28. Variable cost per unit ____________.
(a) Increases (b) varies
(c) decreases (d) Remains constant
29. Sunk costs are ____________ for decision-making.
(a) Relevant (b) Irrelevant
(c) Useful (d) none of these
Introduction to Cost & Management Accounting 3
30. Which of the following is an example of functional classification of cost:
(a) Direct material cost (b) Fixed cost
(c) Administrative overheads (d) Indirect overheads
31. Fixed cost ________ in the same proportion in which output changes.
(a) Increases (b) changes
(c) does not change (d) none of these
32. Abnormal cost is ___________.
(a) Uncontrollable (b) controllable
(c) fixed (d) none of these
33. Variable cost increases with ___________ in output.
(a) Increase (b) decrease
(c) increase or decrease (d) none of these
34. Cost centre and cost unit are ___________.
(a) not the same (b) the same
(c) not related (d) none of these
35. Fixed cost per unit ___________ with rise in output and ___________ with fall in output.
(a) Decreases, increases (b) increases, decreases
(c) is constant, remains same (d) none of the above
36. A profit centre is a centre ___________.
(a) Where the manager has the responsibility of generating and maximizing profits
(b) Which is concerned with earning an adequate Return on Investment
(c) Both of the above
(d) Which manages cost
37. ___________ is the smallest segment of activity or area or responsibility for which costs are
accumulated.
(a) Cost Object (b) Cost driver
(c) Cost Centre (d) none of the above
38. Purchase of bonds, stock or real estate property will be covered under ___________ centre.
(a) Cost (b) Revenue
(c) Profit (d) Investment
39. Ticket counter at railway station will be covered under ____________ centre.
(a) Cost (b) Revenue
(c) Profit (d) Investment
4 Cost & Management Accounting
40. Decentralized branches of an organization will be covered under ____________ center.
(a) Cost (b) Revenue
(c) Profit (d) Investment
41. Mahartana, Navratna and Maniratna public sector undertaking (PSU) of central government will
be covered under ____________ center.
(a) Cost (b) Revenue
(c) Profit (d) Investment
42. Sales department of an organization will be covered under ____________ center.
(a) Cost (b) Revenue
(c) Profit (d) Investment
43. Describe the method of costing to be applied in case of Nursing Home:
(a) Operating Costing (b) Process Costing
(c) Contract Costing (d) Job Costing
44. Describe the cost unit applicable to the Bicycle industry:
(a) per part of bicycle (b) per bicycle
(c) per tonne (d) per day
45. Cost Unit is defined as:
(a) Unit of quantity of product, service or time in relation to which costs may be ascertained or
expressed
(b) A location, person or an item of equipment or a group of these for which costs are ascertained
and used for cost control.
(c) Centres having the responsibility of generating and maximizing profits
(d) Centres concerned with earning an adequate return on investment
Answer Key
1. (a) 2. (b) 3. (b) 4. (b) 5. (a) 6. (d) 7. (c) 8. (c) 9. (b) 10. (b)
11. (d) 12. (d) 13. (b) 14. (a) 15. (a) 16. (d) 17. (b) 18. (a) 19. (a) 20. (b)
21. (a) 22. (b) 23. (a) 24. (d) 25. (b) 26. (b) 27. (a) 28. (d) 29. (b) 30. (c)
31. (c) 32. (a) 33. (a) 34. (a) 35. (a) 36. (a) 37. (c) 38. (d) 39. (b) 40. (c)
41. (d) 42. (b) 43. (a) 44. (b) 45. (a)
Introduction to Cost & Management Accounting 5
