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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-5

Each section contains 100 MCQs on Costing .
61
If difference between costs linked to highest and lowest observation of cost driver is $36000 and observation of cost driver is 30 machine hours, then slope coefficient would be
Discuss
Answer & Solution
Answer: Option A
Solution:
Slope coefficient = Difference between costs linked to highest and lowest observation of cost driver ÷ Observation of cost driver
= $36000 ÷ 30 = $1,200
62
In quantitative analysis of estimating cost function, last and foremost step is to
Discuss
Answer & Solution
Answer: Option B
Solution:
In quantitative analysis of estimating cost function, last and foremost step is to evaluate evaluate cost driver. A cost driver is the unit of an activity that causes the change in activity's cost.
63
Work measurement method of cost estimation is also called
Discuss
Answer & Solution
Answer: Option B
Solution:
Work measurement method of cost estimation is also called industrial engineering method. Industrial engineering method is a physical way of examining the relationship between cost drivers and costs by analyzing the inputs coming into the company, the outputs that are created, and the work that goes into the process.
64
Function which is used to measure decline in per unit cost of different business functions is classified as
Discuss
Answer & Solution
Answer: Option B
Solution:
Function which is used to measure decline in per unit cost of different business functions is classified as experience curve. Experience curve refers to a diagrammatic representation of the inverse relationship between the total value-added costs of a product and the company experience in manufacturing and marketing it.
65
Worse fit between estimated cost and actual observations is shown on regression line with
Discuss
Answer & Solution
Answer: Option A
Solution:
Worse fit between estimated cost and actual observations is shown on regression line with larger residual terms.
66
Slope coefficient of linear cost function is
Discuss
Answer & Solution
Answer: Option A
Solution:
Slope coefficient of linear cost function is zero.
67
Learning curve models include
Discuss
Answer & Solution
Answer: Option D
Solution:
Learning curve models include cumulative average time learning model and incremental unit time learning model.
68
For slope coefficient b, value of estimated coefficient is considered as
Discuss
Answer & Solution
Answer: Option C
Solution:
For slope coefficient b, value of estimated coefficient is considered as t-value. In statistics, the t-statistic is the ratio of the departure of the estimated value of a parameter from its hypothesized value to its standard error.
69
Cause and effect relationship between activity and costs is result of
Discuss
Answer & Solution
Answer: Option D
Solution:
Cause and effect relationship between activity and costs is result of contractual agreement, knowledge of operations and measureable unit relationship.
70
To decide whether cost is variable cost or fixed cost with respect to some specific activity depends upon
Discuss
Answer & Solution
Answer: Option C
Solution:
To decide whether cost is variable cost or fixed cost with respect to some specific activity depends upon time horizon. Time horizon is the length of time over which an investment is made or held before it is liquidated. Time horizons can range from seconds in the case of a day trader, all the way up to decades for a buy-and-hold investor or an individual who is investing in a retirement plan.