Methods of Costing

1. Which costing method is typically used for industries where production is

continuous and homogeneous?
a) Job costing
b) Batch costing
c) Process costing
d) Contract costing
2. In which method of costing are costs accumulated for each batch of goods
produced?
a) Unit costing
b) Job costing
c) Batch costing
d) Process costing
3. Which method of costing is suitable for construction projects that last several
months or years?
a) Job costing
b) Contract costing
c) Process costing
d) Operation costing
4. When is single output/unit costing most appropriate?
a) For customized products
b) For mass production of a single product
c) For projects with unique specifications
d) For processes with multiple stages
5. Which costing method involves tracking costs for specific customer orders?
a) Batch costing
b) Process costing
c) Job costing
d) Contract costing
6. Which method is used to allocate costs in service sectors like hospitals or law
firms?
a) Batch costing
b) Contract costing
c) Operation costing
d) Costing of service sectors
7. In operation costing, how are costs typically accumulated?
a) By individual jobs
b) By specific batches
c) By processes or operations
d) By service departments
8. Which costing method is best for industries like chemicals, textiles, and food
processing?
a) Job costing
b) Process costing
c) Batch costing
d) Contract costing
9. In which costing method are costs assigned to each step or stage of production?
a) Operation costing
b) Job costing
c) Process costing
d) Batch costing
10. What is the primary advantage of using job costing?
a) Simplifies cost allocation for continuous production
b) Accurately tracks costs for individual projects or jobs
c) Reduces the need for inventory tracking
d) Enhances cost control for homogeneous products
11. Which of the following is not a characteristic of batch costing?
a) Costs are accumulated for a batch of products
b) Used for products produced in large quantities
c) Suitable for continuous, homogeneous production
d) Each batch is treated as a separate cost unit
12. Which method of costing would be most appropriate for a car manufacturing
company producing different models with various features?
a) Job costing
b) Batch costing
c) Process costing
d) Contract costing

1. Which costing method is often used in industries where products are

manufactured to customer specifications?
a) Process costing
b) Job costing
c) Unit costing
d) Operation costing
2. What is a primary feature of process costing?
a) Costs are assigned to each job individually
b) Costs are averaged over units produced
c) Costs are accumulated for specific batches
d) Costs are allocated based on service departments
3. Which method of costing is most suitable for industries such as shipbuilding and
construction?
a) Job costing
b) Process costing
c) Contract costing
d) Batch costing
 4. In which method of costing are costs assigned to a specific contract or project
over its duration?
a) Unit costing
b) Job costing
c) Batch costing
d) Contract costing
5. Which method of costing is used when products go through various operations or
processes?
a) Job costing
b) Batch costing
c) Process costing
d) Operation costing
6. In job costing, what does each job represent?
a) A batch of identical products
b) A continuous flow of production
c) A specific customer order
d) A service department
7. Which costing method would be used in the production of pharmaceutical drugs,
where each batch is tested for quality?
a) Job costing
b) Batch costing
c) Process costing
d) Contract costing
8. What is the key characteristic of contract costing?
a) It is used for short-term projects
b) It involves allocating costs to continuous production processes
c) It is used for long-term projects with specific requirements
d) It involves accumulating costs for similar units of output
9. Which costing method would be most appropriate for an oil refinery?
a) Job costing
b) Batch costing
c) Process costing
d) Contract costing
10. In batch costing, how are costs accumulated?
a) For each job individually
b) For a continuous production process
c) For each batch of products
d) For each service department
11. Which method of costing assigns costs to individual units produced?
a) Job costing
b) Unit costing
c) Batch costing
d) Process costing
 12. What is the primary advantage of process costing in industries with
homogeneous products?
a) It simplifies the cost allocation process
b) It tracks costs for specific customer orders
c) It reduces the need for inventory tracking
d) It allocates costs to individual jobs

Methods of Costing

1. Which costing method is best for tracking costs in a manufacturing environment

where different products are produced simultaneously?
a) Job costing
b) Batch costing
c) Process costing
d) Operation costing
2. In job costing, overhead costs are typically applied using a predetermined
overhead rate. This rate is based on:
a) Actual overhead costs
b) Estimated overhead costs
c) Actual direct labor costs
d) Estimated direct materials costs
3. Which costing method is often used in the food and beverage industry, where
each batch can be slightly different?
a) Job costing
b) Batch costing
c) Process costing
d) Contract costing
4. In which method of costing are costs accumulated and assigned to specific
processes or departments rather than individual units or batches?
a) Job costing
b) Batch costing
c) Process costing
d) Contract costing
5. What is a key feature of contract costing in terms of revenue recognition?
a) Revenue is recognized at the completion of each job
b) Revenue is recognized upon completion of the entire contract
c) Revenue is recognized continuously over the duration of the contract
d) Revenue is recognized when the customer pays
6. Which costing method is typically used for services like repair and maintenance
jobs?
a) Job costing
b) Batch costing
c) Process costing
d) Unit costing
7. Which method of costing involves the assignment of costs to different operations
or departments through which a product passes?
a) Job costing
b) Operation costing
c) Batch costing
d) Process costing
8. Which costing method would be suitable for a company producing custom
furniture?
a) Job costing
b) Batch costing
c) Process costing
d) Contract costing
9. In process costing, what happens to the costs incurred in one process?
a) They are assigned to individual jobs
b) They are carried forward to the next process
c) They are accumulated for each batch
d) They are immediately expensed
10. Which costing method is used when products are produced in a continuous flow
and are indistinguishable from each other?
a) Job costing
b) Batch costing
c) Process costing
d) Contract costing
11. What is a common use of unit costing in manufacturing?
a) For allocating costs to custom orders
b) For determining the cost per unit in mass production
c) For assigning costs to long-term projects
d) For tracking costs in service departments
12. Which costing method is commonly used in industries like steel, cement, and
paper manufacturing?
a) Job costing
b) Batch costing
c) Process costing
d) Contract costing