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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-7 section-4

Each section contains 100 MCQs on Costing .
61
Reorder point is divided by number of sold units for per unit of time to calculate
Discuss
Answer & Solution
Answer: Option C
Solution:
Reorder point is divided by number of sold units for per unit of time to calculate purchase order lease time.
62
Buying of goods or materials for production in a way that they are delivered directly on manufacturing facility of company is called
Discuss
Answer & Solution
Answer: Option C
Solution:
Buying of goods or materials for production in a way that they are delivered directly on manufacturing facility of company is called just in time purchasing. Just-in-time purchasing (JIT purchasing) is a cost accounting purchasing strategy. You purchase goods so that they're delivered just as they're needed to meet customer demand.
63
Purchase order lead time is multiplied to number of units is sold per unit of time to calculate
Discuss
Answer & Solution
Answer: Option D
Solution:
Purchase order lead time is multiplied to number of units is sold per unit of time to calculate reorder point. The reorder point (ROP) is the level of inventory which triggers an action to replenish that particular inventory stock.
64
Costs of issuing purchase orders, making of delivery records for tracking payments and costs of inspection of items are classified as
Discuss
Answer & Solution
Answer: Option B
Solution:
Costs of issuing purchase orders, making of delivery records for tracking payments and costs of inspection of items are classified as ordering costs. Ordering costs are the expenses incurred to create and process an order to a supplier.
65
Relevant ordering costs are added into relevant carrying costs to calculate
Discuss
Answer & Solution
Answer: Option A
Solution:
Relevant ordering costs are added into relevant carrying costs to calculate relevant total costs. Relevant cost is a managerial accounting term that describes avoidable costs that are incurred when making business decisions.
66
If purchase order lead time is 35 minutes and number of units sold per time is 400 units, then reorder point will be
Discuss
Answer & Solution
Answer: Option A
Solution:
Reorder point = Number of units sold × Purchase order lead time
= 400 × 35 = 14000 units
67
Relationship between cost and cost drivers is
Discuss
Answer & Solution
Answer: Option B
Solution:
Relationship between cost and cost drivers is not stationary. A Cost Driver is that factor or variable which has a cause and effect relationship with the total cost. The cost driver is the 'cause' and the 'cost incurred' is the effect of it.
68
Cost function, in which cost does not change with any change in level of activity is a part of
Discuss
Answer & Solution
Answer: Option D
Solution:
Cost function, in which cost does not change with any change in level of activity is a part of step cost functions. A step cost is a cost that does not change steadily with changes in activity volume, but rather at discrete points.
69
Cost pattern, when production inputs are to be used in discrete functions, but quantities are fractional, will be categorized as
Discuss
Answer & Solution
Answer: Option A
Solution:
Cost pattern, when production inputs are to be used in discrete functions, but quantities are fractional, will be categorized as continuously variable cost function. A variable cost is a corporate expense that changes in proportion to production output.
70
Range, in which relationship exists between level of activity or total cost is called
Discuss
Answer & Solution
Answer: Option B
Solution:
Range, in which relationship exists between level of activity or total cost is called relevant range. Relevant range is a level of volume or activity within which a company is expected to operate.