Standard Costing MCQs
Variance Analysis MCQs
Multiple Choice Questions and Answers (MCQs)
For B.Com, BBA, MBA, M.Com, CMA, CS and CA IPCC
Choose the correct option:
1. Standard costing is a
technique of:
a)
Planning business activities
b)
Cost
Control
c)
Staffing
d)
Motivating
2. Standard costing is a
yard stick for:
a) Measuring efficiency
b)
Controlling prices
c)
Reducing losses of business
d)
Planning business activities
3. The difference between actual cost and standard cost is known as:
a)
Profit
b)
Loss
c)
Standard cost
d) Variance
4. Standard costing
involves:
a)
Preparation and use of standard costs
b)
Comparison of standard with actual
c)
Analysis of variances
d)
All
of the above
5. Standard costing
technique is unsuitable for:
a)
Job order industries
b)
Non-standard product manufacturers
c)
Service industries
d) All of the above
6. Standard costing is suitable
for industries which are:
a)
Producing standard products
b)
Producing goods of repetitive nature
c)
Sugar, Textiles, Fertilizers, steel industries
d) All of the above
7. Which of the following
is an advantage of standard costing?
a)
Promoting and measuring efficiencies.
b)
Controlling and reducing costs.
c)
Helps in fixation of selling prices.
d) All of the above.
8. Which of the following
is not an advantage of standard costing system?
a)
Costly technique
b)
Difficult to establish standard
c)
Unsuitable for Job-order and service industries.
d) All of the above
9. Basic standard is
established for a:
a)
Long period.
b)
Short period
c)
Current period
d)
Indefinite
period
10. Excess of actual cost
over standard cost is known as
a)
Abnormal effectiveness
b) Unfavourable variance
c)
Favourable variance
d)
None of these
11. Standards cost is used
a)
To ascertain the breakeven point
b)
To establish cost-volume profit relationship
c) As a basis for price fixation and cost control
through variance analysis
d)
None of the above
12. From cost control
point of view the standard most commonly used is:
a) Expected standard
b)
Theoretical standard
c)
Normal standard
d)
Basic standard
13. Three types of
standards are
a)
Current standard
b)
Basic standard
c)
Normal standard
d) All of the above
14. For the purpose of
Proof, Material Cost Variance is equal to:
a)
Material Usage = Variance + Material Mix variance
b) Material Price Variance + Material Usage
Variance
c)
Material Price Variance + Material yield variance
d)
Material Mix Variance + Material Yield Variance
15. Cost variance is the
difference between:
a)
The standard cost and marginal cost
b)
The standards cost and budgeted cost
c) The standards cost and the actual cost
d)
None of these
16. Which of the following is not
the main component of standard cost?
a)
Standard Rate
b)
Standard output
c)
Actual Yield
d)
All
of the above
17. Standard costing is not
applicable in:
a)
Job order industries
b)
Non-standard product manufacturers
c)
Service industries
d) All of the above
18. Which of the following
statement is true?
a)
In order to calculate costs, a company should use
either standard costing or budgetary control but not both of these techniques.
b) Idle time variance is always unfavorable.
c)
Overheads volume variable is always favourable.
d)
Overhead expenditure variance plus overheads
efficiency variance is equal to overheads budget variance for variable
overheads.
19. Which of the following
statement is correct?
a)
Standard cost is an estimated or predetermined cost of
performing an operation or producing a good or service, under normal
conditions.
b)
Standard costing is a control technique that reports
variances by comparing actual costs to pre-set standards so facilitating action
through management by exception.
c) Both a & b
d)
None of the above
20. What is the correct test of
material variances?
a)
mcv = mpv + mmv
b)
mcv = mmv + muv
c) mcv = mpv + muv
d)
mcv = mmv + myv
21. What is the correct test of
material variances?
a)
muv = mpv + mmv
b)
muv = mmv + muv
c) muv = mmv + myv
d)
muv = mmv + myv
22. Which of the following
variance arises when more than one material is used?
a)
Material Cost Variance
b)
Material Price Variance
c)
Material Usage Variance
d) Material Mix Variance
23. Cost control is also known as:
a) Cost Management
b) Cost containment
c) Both a & b
d) None of the above
24. Which is not a reason for an
idle time variance?
a)
Strikes and lockouts
b)
Power failures
c)
Machine breakdown
d) Uncontrollable loss of time
25. Which of the following cannot
be a reason of unfavorable direct materials price variance?
a)
Actual loss is more than estimated loss.
b)
Actual rate is less than standard rate.
c) Both a & b
d) None of the above
Also Read Management Accounting MCQs (Chapter wise MCQs)
Marginal and Absorption Costing MCQs
MCQ on Budget and Budgetary Control
Financial Statement and Financial Statements Analysis MCQs
Fill in the blanks:
1.
Standard cost is a predetermined cost.
2.
Material Cost Variance = Material Price Variance +
Material Mix variance + Material yield variance.
3.
The purpose of standard costing is to control cost
and promote efficiency.
4.
The difference between actual cost and standard cost
is known as Variance.
5.
MCV = MPC + MUV.
6.
MUV = MMV + MYV.
7.
Favourable variance arises when actual costs are less
than standard cost.
8.
Adverse variance arises when actual revenue is less
than standard revenue.
9.
Standard time is decided by time and motion
study.
10.
Standard cost when fixed is recorded on standard card.
11.
The cost of product as determined under standard cost
system is predetermined cost.
12.
Direct Labour Cost Variance = Standard Cost for actual
production x actual Cost of Production.
13.
Standard means a criterion or a yardstick against
which actual activity can be compared to determine the difference between
two.
14.
Idle time variance = Idle time x standard
rate.
15.
Management by exception is exercising control
over Unfavourable items.
16.
Control in standard costing is achieved by variance
analysis.
17.
Variance analysis helps the management in controlling performance.
18.
Standard costing is helping the management in fixation
of selling price.
19.
Standard costing is the preparation of standard costs
and their comparison with actual cost and the analysis of variance.
20.
The difference between the actual quantity and the
standard quantity, multiplied by the standard price is the material usage
variance.
21.
There are two types of standard used in
the process of establishment of standard costing system.
22.
Cost control is also known as cost management.
23.
The difference between the actual price and the
standard price, multiplied by the actual quantity of materials purchased is the
material price variance.
24. Material
price, mix, usage and revised quantity variances are measured on input
basis, whereas material yield variance is measured on output basis.
25.
Labour cost variance is equal to standard labour cost for actual output minus actual
labour cost for actual output.
State whether the following statements are true or false:
1.
Standard cost and estimated cost are
different. True
2.
The technique of standard costing may not be applicable in case of
small
industries. True
3.
Standard costing is a method of cost
ascertainment. False
4.
Variances are calculated for both material and
labour. True
5.
Manufacturers normally establish standard costs for cost control. True
6.
Standard cost is most suitable to job order
industries. False
7.
Relevant costs are historical in
nature. False
8.
Standards cost, once fixed cannot be
altered. True
9.
Historical costs are not relevant for decision
making. True
10.
Fixing standards is the work of industrial engineer or the
production people and not of cost accountant. False
11.
Material cost variance and labour cost variance are always
equal. False
12.
Marginal Cost = Total Cost – Variable
Cost. False,
Fixed Cost
13.
Labour cost variance can be proved with: LCV = LEV + LRV + Idle
Time variance. True
14.
Standard costing is a technique which aims at cost control. True
15.
The objective of standard costing is to control cost through
setting standards. True
16.
The difference between actual cost and standard cost
is known as differential cost. False
17.
Standard costing technique is not ideal for small concerns because
it is costly. True
18.
Favourable labour efficiency variance indicates better
productivity. True
19.
Standard costs are always determined in advance. True
20. Standard costing is more widely applied in manufacturing industries. True
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