Costing MCQ Questions and Solutions with Explanations

1

An acquisition cost of raw material is to be used in manufacturing, and becoming a component of cost object is classified as

A) direct material costs B) indirect material costs C) direct labour costs D) indirect labour costs

Discuss

Answer & Solution

Answer: Option A

Solution:

An acquisition cost of raw material is to be used in manufacturing, and becoming a component of cost object is classified as direct material costs. Direct materials cost the cost of direct materials which can be easily identified with the unit of production. For example, the cost of glass is a direct materials cost in light bulb manufacturing.

2

Wages and other benefits, provided to assembly line workers and operators of machine are classified under

A) work in process costs B) finished costs C) direct manufacturing labour costs D) indirect manufacturing labour costs

Discuss

Answer & Solution

Answer: Option D

Solution:

Wages and other benefits, provided to assembly line workers and operators of machine are classified under indirect manufacturing labour costs. Indirect manufacturing costs are production costs that cannot be directly associated with a produced unit.

3

Conversion cost is subtracted from manufacturing overhead cost is to calculate the

A) manufacturing labour costs B) direct labour costs C) direct manufacturing labour costs D) indirect manufacturing labour costs

Discuss

Answer & Solution

Answer: Option C

Solution:

Conversion cost is subtracted from manufacturing overhead cost is to calculate the direct manufacturing labour costs. Conversion costs is a term used in cost accounting that represents the combination of direct labor costs and manufacturing overhead costs.

4

Labour which works as forklift truck, plant guards and rework labour is classified as

A) prime overhead B) conversion overhead C) factory overhead D) manufacturing overhead

Discuss

Answer & Solution

Answer: Option D

Solution:

Labour which works as forklift truck, plant guards and rework labour is classified as manufacturing overhead. Manufacturing overhead is all indirect costs incurred during the production process. This overhead is applied to the units produced within a reporting period.

5

Inventory of final goods that are not yet sold is called

A) finished goods inventory B) indirect material inventory C) direct materials inventory D) work in process inventory

Discuss

Answer & Solution

Answer: Option A

Solution:

Inventory of final goods that are not yet sold is called finished goods inventory. Finished goods inventory refers to the number of manufactured products in stock that are available for customers to purchase.

6

Costs which are considered as expenses in accounting period are also known as

A) inventory costs B) period costs C) timed costs D) labour overheads

Discuss

Answer & Solution

Answer: Option B

Solution:

Costs which are considered as expenses in accounting period are also known as period costs. A period cost is any cost that cannot be capitalized into prepaid expenses, inventory, or fixed assets.

7

Health care premium for workers and pension costs are included in

A) payroll fringe costs B) health costs C) premium costs D) workers costs

Discuss

Answer & Solution

Answer: Option A

Solution:

Health care premium for workers and pension costs are included in payroll fringe costs. A fringe benefit rate is a percentage that results from dividing the cost of an employee's fringe benefits by the wages paid to the employee for the hours actually worked.

8

All costs, which are assigned to manufactured products for specific calculations are classified as

A) contracting costs B) product cost C) government costs D) marketing costs

Discuss

Answer & Solution

Answer: Option B

Solution:

All costs, which are assigned to manufactured products for specific calculations are classified as product cost. Product cost refers to the costs incurred to create a product. These costs include direct labor, direct materials, consumable production supplies, and factory overhead.

9

If direct material cost is $5500 and prime cost is $25000, then direct manufacturing labour would be

A) $19,500 B) $30,500 C) $45,500 D) $22,500

Discuss

Answer & Solution

Answer: Option A

Solution:

Direct manufacturing labour = Prime cost - Direct material cost
= $25000 - $5500 = $19,500

10

Direct manufacturing labour costs is $40000 and manufacturing overhead cost is $7000, then conversion cost would be

A) $47,000 B) $33,000 C) $57,000 D) $18,000

Discuss

Answer & Solution

Answer: Option A

Solution:

Conversion cost = Direct manufacturing labour costs + Manufacturing overhead cost
= $40000 + $7000 = $47,000

Costing MCQ Questions and Solutions with Explanations | Commerce