Cost and Managerial Accounting Important MCQ

Q1. “Direct material , Direct labor and direct expenses combinely called “
Select one:
Answer – Prime Cost


“Expenditure incurred on material, labor, machinery, production and inspection are summed up to find the”
Select one:

Answer  –

“If profit is 1,00,000 and Profit volume ratio is 40% then what will be margin of safety: “

Select one:

Answer  – 40,000

“In cinema halls, composite cost unit is”
Select one:

Answer – A seat per show

Explanation here:

  • In cinema halls, composite cost unit is a seat per show.
  • Generally, a composite is a thing which is made up of several elements.
  • In the same way, in cinemas, composite cost unit is the cost of seat and show.
  • Whereas, cost of screening, salary of staff, rent of cinema hall is only one cost unit.
  • Generally, the cost of composite unit is in between Rs: 70 to Rs: 200.
  • The cost may be high in big theaters, malls, INOX.

So, in cinema halls, a seat per show is known as composite cost unit.

Q5. When absorbed overheads are rs.23,540 and actual overheads are rs.22,400, there is absorb

A.) Under absorption of rs.1,140.

B) Under absorption of rs.45,940.

C.) Over absorption of rs.1,140.

D.) Over absorption of rs.45940.

Solution :-

Given that,

→ Absorbed overheads = Rs.23,540.

→ Actual overheads = Rs.22,400 .


→ 23540 > 22400


→ Absorbed overheads > Actual overheads.

Now, we know that :-

  • If the absorbed overheads are higher than the actual overheads incurred, it is called over absorption.


→ over absorption of = Absorbed overheads + Actual overheads.

→ over absorption of = 23540 + 22400

→ over absorption of = Rs.45,940.

Hence, Option (D) over absorption of Rs.45940 is correct Answer.

A manager who is responsible for only cost of company belongs to
Select one:

Answer – Cost center

Q7. Abnormal loss is charged to
Select one:

8. At break even point fixed cost equal to

Select one:
Answer –

Q9. At EQO

Select one:


Break even point is point where
Select one:

Q11. Cost estimation include(s) the following expenditure(s)
(A) Pattern making
(B) Tool making
(C) Selling expenses
(D) all of the above

Q12. Cost of Normal wastage is bear by

Select one:


Cost of preparing drawings for the manufacture of a particular product is
Select one:

Q14. Costing is specialized branch of accounting which deals with:
a. Classification, recording, allocation, and control of asset
b. Classification, processing, allocation and directing
c. Classification, recording, planning and control of asset
d. Classification, recording, allocation and directing

Q15. Danger level= Normal consumption X .

Select one:


Depreciation on delevery van is
Select one:


EOQ is always better
Select one:


Fixed cost + Variable cost =
Select one:


In ABC analysis of inventory the value Category A is
Select one:


In case of transport company which method of costing is better
Select one:


Labor price variance also called
Select one:


Labour Turnover means
Select one:


Margin of safety is
Select one:

Q24. Over-absorption of factory overheads, due to inefficiency of management, should be disposed of by

Select one:


Over-absorption of factory overheads, due to inefficiency of management, should be disposed of by

Select one:


Profit volume ratio can be calculated:
Select one:



Provision for doubt full debts is part of
Select one:

28. Provision for doubt full debts is part of
Select one:


Re order level=
Select one:


Salary paid to accountant is part of
Select one:


The cost data provide invaluable information for taking the following managerial decision(s)

(A) To make or buy

(B) To own or hire fixed asset

(C) Determining the expansion or contraction policy

(D) All of the above

Q32. The following is cost of direct materials
(A) Freight charges
(B) Grease
(C) Coolant
(D) Cotton waste


The payment made to the following is cost of direct labour.
Select one:


The stage of production at which separate products are identified is known as ______________
Select one:


Variable cost means
Select one:


Where units are identified then which method of inventory valuation is better
Select one:


Which factor that cause change in cost of activity:
Select one:


Which of the following calculate the actual cost of product:
Select one:


Which of the following is control technique of material control
Select one:


Which of the following is cost of indirect materials
Select one:


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