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Question Bank

CA Intermediate Cost and Management Accounting Exam Paper 3 - English

Duration: 30 · Questions: 30 · Max Marks: 30 · Language: 1

View CA Intermediate - Cost and Management Accounting 2026 Exam Page

Cost and Management Accounting

1
What is the primary purpose of Cost Accounting?
  1. A.Ascertainment and control of costs
  2. B.Financial reporting to external users
  3. C.Tax planning and compliance
  4. D.Investment decisions
2
Which of the following best describes Management Accounting?
  1. A.A process primarily focused on historical data
  2. B.A system for external reporting only
  3. C.Providing information to managers for decision making, planning, and control
  4. D.A legally mandated reporting system
3
What is 'Costing' defined as?
  1. A.The technique and process of ascertaining costs
  2. B.The process of cost ascertainment
  3. C.The application of costing principles
  4. D.The recording of all expenses incurred
4
Which of these is NOT an objective of Cost Accounting?
  1. A.Ascertainment of cost
  2. B.Ensuring the company makes a profit
  3. C.Cost control and cost reduction 1
  4. D.Determination of selling price
5
Management Accounting information is primarily directed towards whom?
  1. A.Internal users like managers
  2. B.Shareholders and investors
  3. C.Government authorities
  4. D.Creditors and lenders
6
Which of the following is a key difference between Cost Accounting and Management Accounting?
  1. A.Cost Accounting is broader in scope than Management Accounting
  2. B.Management Accounting uses principles of Cost Accounting
  3. C.Cost Accounting is primarily future-oriented
  4. D.Management Accounting is mandatory
7
What is a 'Cost Unit'?
  1. A.A location for which cost is ascertained
  2. B.A factor that causes a change in the cost
  3. C.The total cost of production
  4. D.A unit of product, service, or time in relation to which costs are ascertained
8
What is a 'Cost Centre'?
  1. A.The total cost incurred by a department
  2. B.A unit of output for which cost is calculated
  3. C.A location, person, or item of equipment for which costs may be ascertained and used for cost control
  4. D.The selling price of a product
9
Which of the following is an example of a direct material cost?
  1. A.Salary of a factory supervisor
  2. B.Wood used in furniture manufacturing
  3. C.Rent of the factory
  4. D.Lubricants used in machinery
10
What are 'Overheads'?
  1. A.Total direct costs
  2. B.Total indirect costs
  3. C.Prime cost
  4. D.Total cost of sales
11
How is Prime Cost calculated?
  1. A.Direct Material + Direct Labour
  2. B.Direct Material + Direct Labour + Direct Expenses
  3. C.Direct Material + Factory Overheads
  4. D.Direct Labour + Factory Overheads
12
What does 'Conversion Cost' include?
  1. A.Direct Material Cost and Direct Labour Cost
  2. B.Direct Labour Cost and Factory Overheads
  3. C.Direct Material Cost and Factory Overheads
  4. D.Prime Cost and Selling Overheads
13
Which of the following is a characteristic of a fixed cost?
  1. A.It varies directly with the level of activity
  2. B.It remains constant per unit of output
  3. C.It includes both fixed and variable components
  4. D.It remains constant in total regardless of the level of activity within a relevant range
14
What is a 'Variable Cost'?
  1. A.A cost that varies directly in proportion to changes in the volume of output
  2. B.A cost that remains fixed in total
  3. C.A cost that contains both fixed and variable elements
  4. D.A cost that is always indirect
15
What is a 'Semi-variable Cost'?
  1. A.A cost that is fixed up to a certain level and then becomes variable
  2. B.A cost that increases in steps
  3. C.A cost that has both fixed and variable components, varying with activity but not in direct proportion
  4. D.A cost that can be controlled
16
Telephone expenses, where there is a fixed rental charge and a variable charge per call, are an example of what type of cost?
  1. A.Fixed Cost
  2. B.Semi-variable Cost
  3. C.Variable Cost
  4. D.Step Cost
17
Which of the following is generally considered a controllable cost by a departmental manager?
  1. A.Rent of the factory building
  2. B.Cost of materials consumed by the department
  3. C.Salary of the Managing Director
  4. D.Share of corporate office expenses allocated to the department
18
What is a 'Sunk Cost'?
  1. A.A cost that has already been incurred and cannot be recovered
  2. B.A cost that is relevant for decision making
  3. C.A cost that is yet to be incurred
  4. D.The cost of an alternative foregone
19
What is 'Opportunity Cost'?
  1. A.The actual cost incurred in the past
  2. B.A cost that does not involve any cash outflow
  3. C.The value of the benefit sacrificed in favour of an alternative course of action
  4. D.The fixed portion of a semi-variable cost
20
Which cost is also known as 'Relevant Cost'?
  1. A.A future cost that differs between alternatives
  2. B.A cost that is the same for all alternatives
  3. C.A past cost
  4. D.A non-cash cost
21
What are 'Imputed Costs' or 'Notional Costs'?
  1. A.Costs that involve immediate cash payment
  2. B.Variable costs per unit
  3. C.Costs that are not actually incurred but are considered for decision making
  4. D.Historical costs
22
Rent on owned building is an example of what type of cost?
  1. A.Out-of-pocket cost
  2. B.Imputed cost
  3. C.Sunk cost
  4. D.Variable cost
23
Which of the following is a primary element of cost?
  1. A.Production overheads
  2. B.Direct labour
  3. C.Administration overheads
  4. D.Selling overheads
24
Factory overheads are also known as what?
  1. A.Selling overheads
  2. B.Works overheads or Manufacturing overheads
  3. C.Distribution overheads
  4. D.Office overheads
25
Which of these costs is part of Selling and Distribution Overheads?
  1. A.Advertising expenses
  2. B.Salary of factory supervisor
  3. C.Factory rent
  4. D.Raw material purchase cost
26
Research and Development costs related to improving an existing product are treated as what?
  1. A.Direct material cost
  2. B.Production overheads
  3. C.R&D Overheads
  4. D.Selling overheads
27
What is 'Cost Control'?
  1. A.The process of finding new ways to produce goods at lower costs
  2. B.The guidance and regulation of costs by executive action
  3. C.The ascertainment of costs after they have been incurred
  4. D.The process of improving product quality
28
What is 'Cost Reduction'?
  1. A.Achieving a permanent and real reduction in the unit cost of goods or services without impairing suitability
  2. B.Controlling costs within budgetary limits
  3. C.Postponing expenditure
  4. D.Ascertaining costs accurately
29
Which statement best describes the nature of Cost Reduction?
  1. A.It is dynamic and challenges existing standards
  2. B.It is a preventive function focusing on achieving pre-set targets
  3. C.It is a corrective function
  4. D.It aims at adhering to standards
30
Which of the following is a technique of Cost Reduction?
  1. A.Value Analysis
  2. B.Budgetary Control
  3. C.Standard Costing
  4. D.Cost Ascertainment