UNIT ‐ 6
MODULE ‐ 10
STANDARD COSTING
Multiple Choice
Questions
1. According to __________ standard costing is, “the preparation and use of
standard costs, their comparison with actual cost and the analysis of
variances to their causes and points of incidence.”
a. James
b. ICWA London
c. ICWAI
d. Batty
2. Standard costing makes the work of valuation of inventory easier, because
inventory is valued at…
a. Original cost
b. Predetermined price
c. Market price
d. Average price
3. Standard costing technique is not ideal for small concerns because it is…
a. Too technical
b. An expenditure technique
c. Complicated
d. None of these
4. It is easy to distinguish variances as controllable and uncontrollable. The
statement is…
a. True
b. False
c. Partially true
d. Partially false
5. The standard costing technique is unsuitable for…
a. Trading business
b. Manufacturing sector
c. Job order business
d. Wholesaler
6. Revision of standards cannot be eliminated because of…
a. Change in government policy
b. Change in business condition
c. Change in management
d. Change in business
7. Estimated costs.________ the purpose of cost control.
a. Serve
b. Sometimes serve
c. Do not serve
d. None of these
8. According to _______ standard cost is “a predetermined cost which is
calculated from management’s standards of efficient operation and the
relevant necessary expenditure.”
a. James
b. ICWA London
c. ICWAI
d. Batty
9. Standard costs are determined on…
a. Zero base
b. The basis of trade cycle
c. Scientific basis
d. None of these
10.Cost estimates are made on the basis of…
a. Past experience
b. Future anticipation
c. Both
d. Intention
11. In _______ targets are predetermined and actual performances is
compared with targets.
a. Budgetary control
b. Both Budgetary control and standard costing
c. Standard costing
d. Marginal costing
12.The basis for budgets and standards is (are)…
a. Past records
b. Technical information
c. Both
d. None of these
13.The variance analysis is used in…
a. Marginal costing
b. Budgetary control
c. Standard costing
d. Ratio analysis
14.The other name for ideal standard is…
a. Theoretical standard
b. Expected standard
c. Normal standard
d. Basic standard
15.In ideal standard, there is a room for…
a. Wastage
b. Idle time
c. Some inefficiency
d. None of these
16.The standard which is expected to be achieved during the budget period is
called as…
a. Basic standard
b. Expected standard
c. Normal standard
d. None of these
17.Which of the following standard is unaltered over a period of time?
a. Basic standard
b. Expected standard
c. Normal standard
d. None of these
18.Which standard is ideal for fixed expenses?
a. Basic standard
b. Ideal standard
c. Normal standard
d. Expected standard
19.The standards should be set for…
a. Direct material
b. Direct labor
c. Overheads
d. All of the above
20.Who will be the coordinator for standards committee?
a. Chief engineer
b. General manager
c. Cost accountant
d. Finance controller
21.The standard cost card shows the details of…
a. Materials
b. Labor
c. Production process
d. All of the above
22.Standard costing is helping the management in…
a. Increasing the overall efficiency
b. Cost reduction
c. Increasing production efficiency
d. None of these
23.Time and motion study is widely adopted in setting u_________ standard.
a. Material cost
b. Material price
c. Labor cost
d. All of these
24.Standard for various overhead is based on…
a. The past performance
b. Budget output
c. Forecast
d. All of the above
25.Standard costs are…
a. Continuous cost
b. Normal cost
c. Past cost
d. Reasonably attainable cost
26.Which one is ideal for cost control purpose?
a. Normal cost
b. Standard cost
c. Average cost
d. Continuous costing
