Managerial Accounting (Cost Accounting) MCQs

1. Which cost is directly traceable to a specific product or service?
(A) Fixed cost
(B) Indirect cost
(C) Direct cost
(D) Overhead cost

2. A budget that adjusts for changes in activity levels is known as:
(A) Static budget
(B) Master budget
(C) Flexible budget
(D) Operational budget

3. The formula for the predetermined overhead rate is:
(A) Estimated overhead ÷ Actual activity level
(B) Estimated overhead ÷ Estimated activity level
(C) Actual overhead ÷ Actual activity level
(D) Actual overhead ÷ Estimated activity level

4. Opportunity cost refers to:
(A) Costs that have been incurred and cannot be changed
(B) Costs incurred to earn revenue
(C) The benefit foregone by choosing an alternative
(D) None of the above

5. The cost that remains constant per unit but varies in total is called:
(A) Fixed cost
(B) Mixed cost
(C) Variable cost
(D) Step cost

6. Which costing method uses multiple cost pools and activity rates to allocate overhead?
(A) Absorption costing
(B) Traditional costing
(C) Activity-based costing
(D) Direct costing

7. A cost that has already been incurred and cannot be recovered is:
(A) Fixed cost
(B) Sunk cost
(C) Variable cost
(D) Opportunity cost

8. Contribution margin ratio is calculated as:
(A) Contribution margin ÷ Total sales
(B) Fixed costs ÷ Contribution margin
(C) Contribution margin ÷ Total costs
(D) Sales ÷ Total costs

9. What is the term for costs that remain constant within a certain range of activity?
(A) Variable costs
(B) Fixed costs
(C) Semi-variable costs
(D) Direct costs

10. Direct labor is classified as a:
(A) Fixed cost
(B) Variable cost
(C) Period cost
(D) Sunk cost

11. Which cost classification is used for decision-making purposes?
(A) Historical costs
(B) Relevant costs
(C) Fixed costs
(D) Sunk costs

12. The point where total revenues equal total costs is known as:
(A) Operating income
(B) Contribution margin
(C) Break-even point
(D) Margin of safety

13. The primary objective of cost accounting is to:
(A) Prepare financial statements
(B) Compute income tax
(C) Determine product costs
(D) Manage cash flow

14. What is a characteristic of a period cost?
(A) It is associated with inventory
(B) It is included in manufacturing overhead
(C) It is expensed in the period incurred
(D) It is part of the cost of goods sold

15. Which method of cost accounting is most suitable for a factory producing identical units of a product?
(A) Job order costing
(B) Process costing
(C) Activity-based costing
(D) Standard costing

16. The term “cost behavior” refers to:
(A) The function of costs to generate revenue
(B) The way costs change in response to changes in activity level
(C) The allocation of costs to products or services
(D) None of the above

17. In cost-volume-profit analysis, the “contribution margin” is:
(A) The amount remaining after deducting fixed costs from revenues
(B) The amount remaining after deducting variable costs from revenues
(C) Total revenues minus total expenses
(D) None of the above

18. Which cost is excluded in calculating prime costs?
(A) Direct labor
(B) Direct materials
(C) Manufacturing overhead
(D) None of the above

19. A budget prepared for a single level of activity is called a:
(A) Flexible budget
(B) Static budget
(C) Incremental budget
(D) Zero-based budget

20. If sales increase, the total variable costs will:
(A) Remain constant
(B) Increase
(C) Decrease
(D) Depend on fixed costs