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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-8 section-3

Each section contains 100 MCQs on Costing .
71
In ‘make or buy’ decision, it is profitable to buy from outside only when the supplier’s price is below the firm’s own ______________.
Discuss
Answer & Solution
Answer: Option B
Solution:
In ‘make or buy’ decision, it is profitable to buy from outside only when the supplier’s price is below the firm’s own Variable Cost. A variable cost is a corporate expense that changes in proportion to production output. Variable costs increase or decrease depending on a company's production volume; they rise as production increases and fall as production decreases.
72
A budget which is prepared in a manner so as to give the budgeted cost for any level of activity is known as:
Discuss
Answer & Solution
Answer: Option D
Solution:
A budget which is prepared in a manner so as to give the budgeted cost for any level of activity is known as Flexible budget. A flexible budget is a budget that adjusts or flexes with changes in volume or activity. The flexible budget is more sophisticated and useful than a static budget. (The static budget amounts do not change.
73
_________ is also known as working capital ratio.
Discuss
Answer & Solution
Answer: Option A
Solution:
Current ratio is also known as working capital ratio. The working capital ratio is commonly used to assess a company's financial performance. Low working capital ratio values, near one or lower, can indicate serious financial problems with a company. The working capital ratio reveals whether the company has enough short-term assets to pay off its short-term debt.
74
___________ is a summary of all functional budgets in a capsule form.
Discuss
Answer & Solution
Answer: Option B
Solution:
Master Budget is a summary of all functional budgets in a capsule form. Master Budget, in a broader sense, is a summary budget incorporating all financial budgets in a capsule form.
75
_____________ is a detailed budget of cash receipts and cash expenditure incorporating both revenue and capital items.
Discuss
Answer & Solution
Answer: Option A
Solution:
Cash Budget is a detailed budget of cash receipts and cash expenditure incorporating both revenue and capital items. A cash budget is an estimation of the cash inflows and outflows for a business over a specific period of time. This budget is used to assess whether the entity has sufficient cash to operate.
76
Statutory cost audit are applicable only to:
Discuss
Answer & Solution
Answer: Option B
Solution:
Statutory cost audit are applicable only to Company. A statutory audit is a legally required review of the accuracy of a company's or government's financial statements and records.
77
"For the financial year ended as on March 31, 20XX the figures extracted from the balance sheet of Xerox Limited as under:
Opening Stock Rs 29,000; Purchases Rs 2,42,000; Sales Rs 3,20,000; Gross Profit 25% of Sales.
Stock Turnover Ratio will be" :-
Discuss
Answer & Solution
Answer: Option A
Solution:
Inventory turnover ratio = cost of goods sold / average inventory at cost
cost of goods sold is 25% of sales i.e 320000 * 25 % = 8000
average inventory at cost = 31000 - 29000 = 1000.
Stock turnover ratio = 8000/1000 = 8 times.
78
If credit sales for the year is Rs 5,40,000 and Debtors at the end of year is Rs 90,000 the Average Collection Period will be
Discuss
Answer & Solution
Answer: Option B
Solution:
Rs. 540000 divided by Rs. 90,000 = 6 times per year. Since there were 365 days during the recent year, the average collection period is 365 days divided by the turnover ratio of 6 = 60.8333 days or 61 days.
79
The summarized balance sheet of Rakesh udyog Limited shows the balances of previous and current year of provision for taxation Rs 50,000 and Rs 65,000. If taxed paid during the current year amounted to Rs 70,000 then amount charge from Profit and Loss Account will be:
Discuss
Answer & Solution
Answer: Option B
Solution:
Amount charged from profit and loss account
= Rs. 70000 + Rs. 65000 - Rs. 50000
= Rs. 85000.
80
The summarized balance sheet of Autolight Limited shows the balances of previous and current year of retained earnings Rs 25,000 and Rs 35,000. If dividend paid during the current year amounted to Rs 5,000 then profit earned during the year will be:
Discuss
Answer & Solution
Answer: Option C
Solution:
Profit earned during the year
= 5000 + 35000 - 25000
= Rs. 15000.