Classification of Cost
1) Cost classification can be done in
a) Two ways
b) Three ways
c) Four ways
d) Several ways
d) Several ways
2) Out-of pocket costs involve payment to:
a) Outsiders
b) Employees
c) Owners
d) Management
a) Outsiders
3) Classification of cost is useful:
a) To find gross profit
b) To find net profit
c) To identify costs
d) To identify efficiency
b) To identify cost
4) Warehouse rent is a part of:
a) Prime cost
b) Factory cost
c) Distribution cost
d) Production cost
C) Distribution cost
5) Telephone expense is an expense of:
a) Semi-variable expense
b) Fixed expense
c) Variable expense
d) Sundry expense
b) Fixed expense
6) The costs incurred to acquire or manufacture a product are known as:
a) Period costs
b) Product costs
c) Administrative Costs
d) Real costs
a) Period costs
7) Discretionary fixed costs, semi-variable cost, committed fixed costs are the classification of:
a) Variable cost
b) Fixed cost
c) Direct cost
d) Indirect cost
d) Indirect cost
8) Which of the following costs is not a period cost?
a) Advertising cost
b) Sales commission
c) Interest
d) Direct labor
d) Direct labor
9) The costs which are incurred directly for producing goods either manually or through machine are:
a) Prime cost
b) Production cost
c) Distribution cost
d) Selling cost
a) Prime cost
10) The costs which includes all costs associated with cost of formulating the policy and measures required for running the operations is called:
a) Production cost
b) Administration cost
c) Distribution cost
d) Selling cost
b) Administration cost
11) The cost which includes cost of all the activities which aid in the process of selling the goods is called:
a) Administration cost
b) Distribution cost
c) Selling cost
d) Production cost
c) Selling cost
12) Which of the following cost refers to changes in total costs that occur due to changes in volume of production or sales, product system, product mix or from the adoption of an alternative course of action?
a) Differential costs
b) Marginal costs
c) Absorption costs
d) Variable costs
13) The actual cost which are determined after their occurrence. These costs may be calculated using financial records and accounts is called:
a) Differential cost
b) Replacement cost
c) Historical cost
d) Sunk cost
c) Historical cost
14) The amount by which total costs change in response to increase or decrease in volume of output by one unit is known as:
a) Replacement cost
b) Marginal cost
c) Sunk cost
d) Shut-down cost
b) Marginal cost
15) The costs are incurred during a specified period of time and are not assigned to a product is called
a) Normal cost
b) Abnormal cost
c) Period cost
d) Product cost
c) Period cost
16) Joint Cost is suitable for:
a) Infrastructure Industry
b) Ornament Industry.
c) Oil Industry
d) Fertilizer Industry
c) Oil Industry
17) Salaries paid to managerial personnel and workers are included in:
a) Selling cost
b) Production cost
c) Administration cost
d) Distribution cost
c) Administration cost
18) The cost includes sales promotion costs, consumer services costs and selling
organizations is called:
a) Production cost
b) Administration cost
c) Distribution cost
d) Selling cost
d) Selling cost
19) The cost includes packing expenses and other expenses related to make the product available for distributing and dispatching is known as:
a) Selling cost
b) Production cost
c) Administration cost
d) Distribution cost
d) Distribution cost
20) The cost is incurred for the purpose of carrying out research in order to come up with new manufacturing processes is known as:
a) Selling cost
b) Research cost
c) Production cost
d) Administration cost
b) Research cost
21) The cost of converting research into practical mode is called:
a) Administration cost
b) Distribution cost
c) Research cost
d) Development cost
d) Development cost
22) The costs incurred in case of a new manufacturing unit are called:
a) Distribution cost
b) Research cost
c) Pre-production cost
d) Development cost
c) Pre-production cost
23) Which cost is not include in the classification of cost according to nature or behaviour?
a) Variable cost
b) Fixed cost
c) Semi-Variable cost
d) Sunk cost
d) Sunk cost
24) The costs are defined as the "cost which cannot be influenced by the action of a specified member of an undertaking" is called:
a) Controllable cost
c) Joint cost
b) Uncontrollable cost
d) Sunk cost
b) Uncontrollable cost
25) Which cost include in the classification of cost according to normality ?
a) Special cost
b) Opportunity cost
c) Abnormal cost
d) Marginal cost
c) Abnormal cost
26) The costs which are incurred for a given level of output under the given conditions. These costs are charged to costing profit and loss account is known as:
a) Opportunity cost
b) Normal cost
c) Abnormal cost
d) Joint cost
b) Normal cost
27) Which cost include in the classification of cost according to time or periodicity?
a) Historical cost
b) Future cost
c) Both a and b
d) Pre-determined cost
c) both (a) and (b)
28) Which cost include in the classification of cost according to association with product?
a) Product Cost
b) Period Cost
c) Both (a) and (b)
d) Direct cost
c) both (a) and (b)
29) Which cost is not include in the classification of cost according to relevance for decision making and control?
a) Marginal cost
b) Differential cost
c) Joint Cost
d) Historical cost
d) Historical cost
30) Interest on internally generated funds is an example of:
a) Differential cost
b) Joint cost
c) Common cost
d) Imputed cost
d) Imputed cost
31) The costs which are incurred even if the firm completely stops production are called:
a) Sunk cost
b) Shut-down cost
c) Incremental cost
d) Differential cost
b) shut-down cost
32) The amount of money required to replace an existing asset with an equally valued or similar asset at the current market price is known as:
a) Incremental cost
b) Differential cost
c) Replacement cost
d) Joint cost
c) Replacement cost
33) Which of the following is not true for variable costs?
a) Variable costs are the functions of output
b) Variable costs vary directly with the quantity produced
c) These become zero when the production is suspended
d) Variable costs are same with the quantity produced
d) Variable costs are same with the quantity produced
34) Abnormal cost is the cost:
a) Which normally incurred at a given level of output
b) Which is not normally incurred at a given level of output
c) Which is charged to customer
d) Which is included in the cost of the product
b) Which is not normally incurred at a given level of output
35) Which of the following statement is not related with the future cost?
a) The cost which are likely to be incurred in the future.
b) The cost which can be easily controlled by the management.
c) Important for control, projection, budgeting and appraisal.
d) The cost which can be directly traced back to acquire or manufacture a product.
d) The cost which can be directly traced back to acquire or manufacture a product.
36 ) Which of the following is not a correct statement for the product cost?
a) Product costs are the costs which are assigned to a particular product or a line of products
b) Under marginal costing, product cost would include variable manufacturing costs
c) Under absorption costing, product costs will include total manufacturing costs
d) The cost which are likely to be incurred in the future.
d) The cost which are likely to be incurred in the future.
37) Which of the following is feature of discretionary fixed costs?
a) The cost may arise out of regular decisions about the maximum outflow.
b) The costs have clear correlation between inputs and outputs.
c) Both (a) and (b)
d) The cost which is not controllable by the management.
a) The cost may arise out of regular decisions about the maximum outflow.
38) Which of the following point is consider for sunk costs?
a) Relevant for decision making
b) Irrelevant for decision making
c) Cost to be incurred in future
d) Future costs
b) Irrelevant for decision making
39) Non-controllable cost is the cost which:
a) Is not subject to control at any level of managerial supervision
b) Cannot be controllable during a particular financial year
c) Both (a) and (b)
d) Are likely to be non-controllable in the future.
c) Both (a) and (b)
40) Which of the following is not a correct statement?
a) Notional costs are the costs which are implicit in the product and are not physically recorded in the accounts.
b) Opportunity costs are the economic resources which are required to be given up for accepting one proposal over another.
c) Sunk costs are the costs which have already been incurred and cannot be recovered.
d) Replacement cost is the difference between purchase price and the salvage value of the asset.
d) Replacement cost is the difference between purchase price and the salvage value of the asset.
41) Match the following
I) Sunk Cost –A) Cost incurred on delivery truck
II) Joint Cost – B) Incurred due to possession of assets
III) Programmed Cost –C) Non-separable cost
IV) Committed Fixed Cost –D) Non-incremental cost
V) Distribution Cost–E) Incurred for long term survival
a) I-B, II-A, III-C, IV-E, V-D
b) I-D, II-C, III-E, IV-B, V-A
c) I-E, II-D, III-C, IV-B, V-A
d) I-E, II-C, III-B, IV-A, V-D
d) I-E, II-C, III-B, IV-A, V-D
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