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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-6 section-4

Each section contains 100 MCQs on Costing .
51
An average inventory in units is multiplied with annual relevant carrying cost of each unit to calculate
Discuss
Answer & Solution
Answer: Option B
Solution:
An average inventory in units is multiplied with annual relevant carrying cost of each unit to calculate annual relevant carrying costs. Carrying costs are the costs of holding inventory and include maintenance, specifically in regard to perishable items, and storage costs.
52
A push through system, according to which goods are manufactured for finished inventory solely, on basis of forecasted demand can be classified as
Discuss
Answer & Solution
Answer: Option B
Solution:
A push through system, according to which goods are manufactured for finished inventory solely, on basis of forecasted demand can be classified as materials requirement planning. Material requirements planning (MRP) is a system for calculating the materials and components needed to manufacture a product.
53
Relevant incremental costs are added into relevant opportunity cost of capital to calculate
Discuss
Answer & Solution
Answer: Option B
Solution:
Relevant incremental costs are added into relevant opportunity cost of capital to calculate relevant inventory carrying costs. Inventory carrying cost is the cost of holding goods in stock. Expressed usually as a percentage of the inventory value and includes cost of capital, warehousing, depreciation, insurance, taxation, obsolescence, and shrinkage.
54
If economic order quantity for one year is 15000 packages and demand in units for one year are 1500 units, then number of deliveries in a year will be
Discuss
Answer & Solution
Answer: Option C
Solution:
Number of deliveries = Economic order quantity ÷ Demand in units
= 15000 ÷ 1500 = 10
55
Number of purchase orders for each year is multiplied to relevant ordering cost for each purchase order to calculate
Discuss
Answer & Solution
Answer: Option C
Solution:
Number of purchase orders for each year is multiplied to relevant ordering cost for each purchase order to calculate annual relevant ordering costs. Ordering costs are the expenses incurred to create and process an order to a supplier.
56
Costing system, which omits some of journal entries in accounting system is known as
Discuss
Answer & Solution
Answer: Option C
Solution:
Costing system, which omits some of journal entries in accounting system is known as back flush costing. Backflush costing is a product costing system generally used in a just-in-time (JIT) inventory environment.
57
Decision model to calculate optimal quantity of inventory to be ordered is called
Discuss
Answer & Solution
Answer: Option B
Solution:
Decision model to calculate optimal quantity of inventory to be ordered is called economic order quantity. Economic Order Quantity (EOQ) is a production formula used to determines the most efficient amount of goods that should be purchased based on ordering and carrying costs.
58
Stage in manufacturing cycle at which journal entries are made in system of accountancy is known as
Discuss
Answer & Solution
Answer: Option D
Solution:
Stage in manufacturing cycle at which journal entries are made in system of accountancy is known as trigger point. Trigger points are established to align with a company's Vital Factors, the specific, key indicators of a business' health.
59
If required rate of return is 12% and per unit cost of units purchased is $35, then relevant opportunity cost of capital will be
Discuss
Answer & Solution
Answer: Option C
Solution:
Relevant opportunity cost of capital = Cost of units purchased × Rate of return
= $35 × 12% = $4.20
60
Method of costing that supports creation of value for customer by accounting whole value stream, rather than individual departments or products is classified as
Discuss
Answer & Solution
Answer: Option C
Solution:
Method of costing that supports creation of value for customer by accounting whole value stream, rather than individual departments or products is classified as lean accounting. Lean accounting is a financial management approach that supports the streamlined processes of lean manufacturing.