Campus Classrooms
Important Theory Questions
1. Define Cost Accounting. Explain its objectives, advantages and
importance in business.
2. Differentiate between Financial Accounting and Cost Accounting.
3. Explain the following with suitable examples:
a) Cost Centre
b) Cost Unit
c) Out of Pocket Costs
4. What is Cost Sheet? Explain its various components.
5. Define Material Cost. Discuss the different methods of pricing
materials issued to production.
6. What do you mean by labour turnover? What is Labour Cost?
Explain the various methods of remuneration of labour.
7. What are the causes of idle time? How is the cost of idle time treated
in cost accounts?
8. What is the difference between time-keeping and time- booking?
Explain methods of time-keeping and time-booking.
9. Define Overheads. Explain the classification of overheads.
10. Distinguish between allocation and apportionment of overhead.
Mention also the basis of apportionment of expenses explain with
suitable example.
11. Describe administrative overheads and briefly discuss the
treatment of such overheads in cost accounts.
12. What do you understand by “operating cost”? Describe its
essential features and state where it can be usefully implemented.
13. Discuss the methods of absorption of overheads.
14. What is Job Costing? Explain the procedure for the preparation
of Job Cost Sheet.
15. Define Process Costing. Explain its advantages and
disadvantages.
16. What are the similarities and dissimilarities between Job costing
and Contract costing?
17. Discuss the various methods of costing like Marginal Costing,
Standard Costing, and Historical Costing.
Cost Accounting
Campus Classrooms
18. Explain the concept of Budgetary Control. Discuss its advantages
and limitations.
19. Define Variance Analysis. Discuss the causes of material and
labour variances.
20. What is the difference between Fixed Cost and Variable Cost?
Give examples of each.
21. “Variable cost may be direct or indirect.” Is it true? If so illustrate
giving two examples.
22. Discuss the concept of Break-Even Analysis. How is it useful for
decision-making in business?
23. Explain the term 'Reconciliation of Cost and Financial Accounts.'
Why is it necessary?
24. Define Cost of Production Report. Explain its preparation and
uses.
25. What is the importance of material cost control in manufacturing
businesses?
26. Discuss the various methods of pricing materials issued to
production. Which method do you think is most suitable for a
manufacturing company and why?
27. Explain the concept of Economic Order Quantity (EOQ). How
does EOQ help in minimizing inventory costs?
28. What is ABC analysis? How can it be used to manage inventory
effectively?
29. Discuss the concept of Just-In-Time (JIT) inventory management.
What are the advantages and disadvantages of implementing JIT?
30. Define Material Requisition Note (MRN). Explain its importance
in controlling material usage and costs.
31. What is meant by 'Material Mix Variance'? How is it calculated
and interpreted?
32. Explain the concept of 'Lead Time' in the context of material
procurement. How can lead time be reduced to improve inventory
management?
33. Discuss the importance of proper inventory valuation in cost
accounting. What are the different methods of inventory valuation?
Cost Accounting
Campus Classrooms
34. How does material wastage impact the cost of production?
Suggest some measures to reduce material wastage in manufacturing
processes.
35. Explain normal loss, abnormal loss and abnormal gains with
accounting treatment in process costing.
36. What is integrated accounting? State the advantages and
disadvantages of integrated accounts.
Cost Accounting
