1. Which of the following is a primary objective of cost accounting?
A) To determine the selling price of products
B) To determine the cost of production and assist in pricing decisions
C) To calculate taxes payable
D) To prepare financial statements
Answer: B) To determine the cost of production and assist in pricing decisions
2. What is the meaning of ‘Cost’ in cost accounting?
A) Money spent for procuring raw materials
B) The value of resources used to produce goods or services
C) The price paid for selling goods
D) The total revenue from selling products
Answer: B) The value of resources used to produce goods or services
3. Which of the following is an example of a direct material cost?
A) Factory rent
B) Wood used in furniture manufacturing
C) Salaries of sales personnel
D) Office stationery
Answer: B) Wood used in furniture manufacturing
4. Which of the following is an indirect cost in manufacturing?
A) Raw materials
B) Direct wages
C) Factory rent
D) Production supplies
Answer: C) Factory rent
5. The cost of raw materials used in production is classified as:
A) Direct Material Cost
B) Direct Labour Cost
C) Indirect Material Cost
D) Direct Expense
Answer: A) Direct Material Cost
6. Which of the following is NOT considered a direct labour cost?
A) Wages of workers directly involved in production
B) Salaries of supervisors working in the production area
C) Wages of machine operators
D) Wages of factory workers producing the goods
Answer: B) Salaries of supervisors working in the production area
7. Which of the following is a characteristic of overhead costs?
A) Can be directly traced to a product
B) Involves both fixed and variable components
C) Is related only to the purchase of raw materials
D) Can be entirely classified as direct costs
Answer: B) Involves both fixed and variable components
8. Which of the following is an example of a direct expense?
A) Cost of special tools used for a specific project
B) Factory rent
C) Depreciation on machines
D) Office salaries
Answer: A) Cost of special tools used for a specific project
9. Which of the following costs is categorized as an indirect labour cost?
A) Wages of assembly line workers
B) Wages of factory supervisors
C) Wages of machine operators
D) Wages of workers directly involved in production
Answer: B) Wages of factory supervisors
10. Which of the following is NOT typically included in the cost of production?
A) Direct materials
B) Direct labour
C) Depreciation on office equipment
D) Factory overheads
Answer: C) Depreciation on office equipment
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