Cost Concept MCQs

The idea of cost is critical in Economics. It alludes to how much instalment was made to secure any labour and products. More straightforwardly, the idea of cost is a monetary valuation of assets, materials, dangers, time and utilities consumed to buy labour and products. According to a market analyst's perspective, the expense of assembling any labour and products is regularly supposed to be the idea of the chance expense.

Cost Concept MCQs: This section contains multiple-choice questions and answers on the Cost Concept. It will help the students to prepare well for their exams.

List of Cost Concept MCQs

1. What is the Cost Concept?

  1. Financial Valuation of resources
  2. Authentic Payments made by an entrepreneur
  3. Costs related to a certain product
  4. Expenses that cannot be traced back

Answer: A) Financial Valuation of resources


Cost Concept refers to the amount of payment made to acquire goods or the financial valuations of goods and resources.

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2. What are Outlay Costs?

  1. Fuel payments or Electricity Bills
  2. The cost made for a certain product
  3. Costs that are non-traceable
  4. The cost that combines profit and loss

Answer: A) Fuel payments or Electricity Bills


Outlay Costs are the costs that are made to vendors or service providers for consultation or services provided by them.

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3. What are Accounting Costs?

  1. Cost related to a certain production method.
  2. Costs that affect total profitability.
  3. Payments made in cash by entrepreneur
  4. Costs that cannot be sustained.

Answer: C) Payments made in cash by entrepreneur


Accounting cost is the recorded expense of action. A bookkeeping cost is recorded in the records of a business, so the expense shows up in an element's budget summaries.

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4. What are Economic Costs?

  1. Changes in the future costs
  2. Amount spent on research
  3. Combination of profit and loss
  4. Costs that are non-traceable

Answer: C) Combination of profit and loss


An economic cost is the worth you surrender when you pick one monetary action throughout the following best monetary movement, like purchasing an item or beginning a business.

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5. Rent is considered as a part of which cost?

  1. Economic Costs
  2. Primary Costs
  3. Factory Costs
  4. Distribution Costs

Answer: D) Distribution Costs


Distribution cost is the aggregate of that large number of costs that are caused by the maker of an item to make conceivable the conveyance of the item from its area to the area of the end client.

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6. All direct costs combined are known as?

  1. Direct Costs
  2. Prime Costs
  3. Works Cost
  4. Cost of production

Answer: B) Prime Costs


A prime expense is the absolute immediate expenses of creation, including unrefined components and work. Circuitous expenses, like utilities, director compensations, and conveyance costs, are excluded from prime expenses.

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7. Batch Costing is used by which kind of companies?

  1. Pharmaceuticals Company
  2. Food Industry
  3. Hotel Industry
  4. Restaurants

Answer: A) Pharmaceuticals Company


Batch costing alludes to the costing of occupations that are executed against explicit orders while in group costing things are made for stock. A completed item might require various parts for gathering and might be fabricated in practical bunch parcels.

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8. Oil Refining companies use which form of costing process?

  1. Batch Costing
  2. Direct Costing
  3. Process Costing
  4. Works Cost

Answer: C) Process Costing


Oil Refining companies use Process Costing for bookkeeping. Process costing is a bookkeeping strategy ordinarily utilized by organizations that efficiently manufacture practically the same or indistinguishable items or units of the result.

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9. Cost Classification is done in how many ways?

  1. One
  2. Two
  3. Three
  4. Numerous

Answer: D) Numerous


Cost classification should be possible in more than one way. Cost grouping in financial matters could include classifications of fixed, variable, opportunity, creation and sunk costs. Then again, bookkeeping expenses can be named either immediate or aberrant for a business.

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10. Does shutdown Cost arise at the time of?

  1. Incorporation of the company
  2. The shutdown of the company
  3. Death of a partner
  4. None of the above

Answer: B) The shutdown of the company


A shutdown cost is a degree of tasks at which an organization encounters no advantage for proceeding with activities and consequently chooses to close down for a brief time or at times forever.

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