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Costing MCQ Questions and Solutions with Explanations | Commerce

Costing MCQ Questions and answers with easy and logical explanations. Commerce provides you all type of quantitative and competitive aptitude mcq questions with easy and logical explanations. Costing MCQ is important for exams like B.COM, M.COM, BBA, BBM, CA, CS, CMA, CPA, CFA, UPSC, NET, Banking and other commerce department exam. Page-2 section-3

Each section contains 100 MCQs on Costing .
11
ABC analysis is an inventory control technique in which:
Discuss
Answer & Solution
Answer: Option C
Solution:
ABC analysis is an inventory control technique in which Inventory is classified into A, B and C Category with A being the lowest quantity, highest value.
12
Which one out of the following is not an inventory valuation method?
Discuss
Answer & Solution
Answer: Option D
Solution:
EOQ is not an inventory valuation method. Economic order quantity (EOQ) is the ideal order quantity a company should purchase for its inventory given a set cost of production, a certain demand rate, and other variables.
13
In case of rising prices (inflation), FIFO method will:
Discuss
Answer & Solution
Answer: Option B
Solution:
In case of rising prices (inflation), FIFO method will provide highest value of closing stock and profit. The FIFO method is the standard inventory method for most companies. FIFO gives a lower-cost inventory because of inflation; lower-cost items are usually older.
14
In case of rising prices (inflation), LIFO will:
Discuss
Answer & Solution
Answer: Option A
Solution:
In case of rising prices (inflation), LIFO will provide lowest value of closing stock and profit. Since LIFO (last-in, first out) is moving the recent/higher costs to the cost of goods sold, the older/lower costs remain in inventory. The higher cost of goods sold generally results in smaller amounts of gross profit, net income taxable income, income tax payments, and certain financial ratios.
15
"Calculate Re-order level from the following:
Consumption per week: 100-200 units
Delivery period: 14-28 days"
Discuss
Answer & Solution
Answer: Option B
Solution:
Maximum consumption per week = 200 unit Maximum delivery time = 28 days = 4 week Re-order level = 200 x 4 = 800 units.
16
"Calculate EOQ (approx) from the following details:
Annual Consumption: 24000 units
Ordering cost: Rs 10 per order
Purchase price: Rs 100 per unit
Carrying cost: 5%"
Discuss
Answer & Solution
Answer: Option A
No explanation is given for this question. Let's Discuss on Board
17
"Calculate the value of closing stock from the following according to FIFO method:
1st January, 20XX: Opening balance: 50 units @ Rs 4

Receipts:
5th January, 20XX: 100 units @ Rs 5
12th January, 20XX: 200 units @ Rs 4.50

Issues:
2nd January, 20XX: 30 units
18th January, 20XX: 150 units"
Discuss
Answer & Solution
Answer: Option A
Solution:
Calculation of Closing Stock:
1st January, 20XX: Opening balance: 50 units @ Rs 4 = 50 × 4 = Rs. 200
Issue: 2nd January, 20XX: 30 units = 30 × 4 = Rs. 120
Remaining Stock = (50 - 30) × 4 = Rs. 80
Reciept: 5th January, 20XX: 100 units @ Rs 5 = 100 × 5 = Rs. 500
Reciept: 12th January, 20XX: 200 units @ Rs 4.50 = 200 × 4.5 = Rs. 900
Remaining Stock = Rs. 80 + Rs. 500 + Rs. 900 = Rs. 1480
Issue: 18th January, 20XX: 150 units = (20 × 4) + (100 × 5) + (30 × 4.5) = Rs. 80 + Rs. 500 + Rs. 135 = Rs. 715
Remaining Stock = (200 - 30) × 4.5 = Rs. 765.
18
"Calculate the value of closing stock from the following according to LIFO method:
1st January, 20XX: Opening balance: 50 units @ Rs 4

Receipts:
5th January, 20XX: 100 units @ Rs 5
12th January, 20XX: 200 units @ Rs 4.50

Issues:
2nd January, 20XX: 30 units
18th January, 20XX: 150 units"
Discuss
Answer & Solution
Answer: Option B
Solution:
Calculation of Closing Stock:
1st January, 20XX: Opening balance: 50 units @ Rs 4 = 50 × 4 = Rs. 200
Issue: 2nd January, 20XX: 30 units = 30 × 4 = Rs. 120
Remaining Stock = (50 - 30) × 4 = Rs. 80
Reciept: 5th January, 20XX: 100 units @ Rs 5 = 100 × 5 = Rs. 500
Reciept: 12th January, 20XX: 200 units @ Rs 4.50 = 200 × 4.5 = Rs. 900
Remaining Stock = Rs. 80 + Rs. 500 + Rs. 900 = Rs. 1480
Issue: 18th January, 20XX: 150 units = (150 × 4.5) = Rs. 675
Remaining Stock = (50 × 4.5) + (100 × 5) + (20 × 4) = Rs. 805.
19
"Calculate the value of closing stock from the following according to Weighted Average method:
1st January, 20XX: Opening balance: 50 units @ Rs 4

Receipts:
5th January, 20XX: 100 units @ Rs 5
12th January, 20XX: 200 units @ Rs 450

Issues:
2nd January, 20XX: 30 units
18th January, 20XX: 150 units"
Discuss
Answer & Solution
Answer: Option C
No explanation is given for this question. Let's Discuss on Board
20
Cost of abnormal wastage is:
Discuss
Answer & Solution
Answer: Option B
Solution:
Cost of abnormal wastage is charged to the profit & loss account. It is in excess of the standard percentage of wastage set up to account for the normal wastage. The cost of abnormal waste should be excluded from the total cost and charged to Costing Profit and Loss Account. If any value is realized from the waste, the Process Account concerned may be credited.