Costing MCQs

Question 1

Warehousing cost is an item of:

Accepted Answer

distribution overhead

Answer

office overhead

Answer

material cost

Answer

works overhead

Question 2

Sale of investment in marketable securities implies

Accepted Answer

no flow of funds

Answer

a sources of funds

Answer

an application of funds

Answer

None of these

Question 3

If the beginning balance in raw materials inventory is Rs. 5,000, the ending balance is Rs. 3,500 and material of Rs. 60,000 was purchased, what is the amount of materials transferred to work-in-processinventory during the period?

Accepted Answer

Rs. 61,500

Answer

Rs. 58,500

Answer

Rs. 60,000

Answer

Rs. 68,500

Question 4

Fancy packing is an example of . . . . . . . . expenses.

Accepted Answer

selling

Answer

distribution

Answer

administration

Answer

factory

Question 5

Average unit cost for each process is calculated by dividing the . . . . . . . . by . . . . . . . .

Accepted Answer

Total process cost, number of units in process

Answer

Total cost, number of units

Answer

Total process cost, number of finished goods

Answer

Total cost, number of units produced

Question 6

Highest in First Out (HIFO) method of issue of material is useful when the

Accepted Answer

Price of material is fluctuating

Answer

Price of material is increasing

Answer

Price of material is decreasing

Answer

Price of material is stable

Question 7

Material usage variance is computed by:

Accepted Answer

(SQ - AQ) × SP

Answer

SQ - AQ

Answer

AQ/SQ

Answer

SP × AQ

Question 8

Who proposed a model to apply economic order quantity concept of inventory management to determine the optimum cash holding in a firm?

Accepted Answer

William J. Baumol

Answer

Keith V. Smith

Answer

Miller and Orr

Answer

J. M. Keynes

Question 9

Which of the following is not a cash outflow for the firm?

Accepted Answer

Depreciation

Answer

Taxes

Answer

Interest payments

Answer

Dividends