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Cost and Management Accounting MCQs for CA Inter
Chapter-wise Cost and Management Accounting MCQs with answers and explanations. Try the sample questions below, then practise a set of 10 with instant right/wrong.
Practise 10 Costing MCQsSample Cost and Management Accounting MCQs with answers
Q1 · Material Cost
Which method of inventory valuation issues the materials at the most recent purchase price?
- (a) First In First Out (FIFO)
- (b) Last In First Out (LIFO)
- (c) Weighted Average Method
- (d) Simple Average Method
Show answer ↓
Answer: (b) Last In First Out (LIFO)
(b) is correct: LIFO issues the most recently purchased materials first. FIFO issues the oldest stock first, which is the closest wrong option.
Q2 · Material Cost
Which of the following is the primary objective of material control?
- (a) Maximising the number of purchase orders placed each month
- (b) Ensuring uninterrupted production while minimising the total cost of inventory
- (c) Increasing the value of closing stock to show higher profits
- (d) Eliminating the need for any store records
Show answer ↓
Answer: (b) Ensuring uninterrupted production while minimising the total cost of inventory
(b) is correct: material control aims to keep production running without stock-outs while keeping inventory carrying and ordering costs low. (c) is the closest wrong option, since inflating stock is a misstatement, not a control objective.
Q3 · Material Cost
Which of the following is an element of inventory carrying cost?
- (a) Cost of placing purchase orders
- (b) Cost of goods damaged in transit
- (c) Cost of storage space and insurance on stock held
- (d) Cost of receiving and inspecting materials
Show answer ↓
Answer: (c) Cost of storage space and insurance on stock held
(c) is correct: storage, insurance, interest on capital blocked and obsolescence are carrying costs. (a) and (d) are ordering or procurement costs, which are a different category.
Q4 · Material Cost
A company's economic order quantity (EOQ) is 1,000 units. If annual demand doubles and all other factors remain constant, the new EOQ will be:
- (a) 2,000 units
- (b) 1,414 units
- (c) 500 units
- (d) 4,000 units
Show answer ↓
Answer: (b) 1,414 units
(b) is correct: EOQ is proportional to the square root of demand, so doubling demand gives 1,000 x square root of 2, approximately 1,414 units. (a) assumes EOQ is directly proportional to demand, which is the closest wrong option.
Q5 · CH - 2 Material Cost
Opening stock of raw material is ₹40,000 and closing stock is ₹60,000. Material consumed during the year is ₹3,00,000. What is the Inventory Turnover Ratio?
- (a) 5 times
- (b) 7.5 times
- (c) 6 times
- (d) 3 times
Show answer ↓
Answer: (c) 6 times
(c) is correct: Average stock = (40,000 + 60,000) ÷ 2 = ₹50,000, so the ratio = 3,00,000 ÷ 50,000 = 6 times. 5 times wrongly uses the closing stock instead of the average stock.
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