All Practice Exams
100+ Free CA Inter Paper 4 Practice Questions
CA Intermediate Paper 4: Cost and Management Accounting practice questions are available now; exam metadata is being verified.
✓ No registration✓ No credit card✓ No hidden fees✓ Start practicing immediately
Not published per paper Pass Rate
100+ Questions
100% Free
1 / 100
Question 1
Score: 0/0
Which costing method assigns target cost by deducting a desired profit margin from a competitive market price?
A
B
C
D
to track
Same family resources
Explore More ICAI Chartered Accountancy (India)
Continue into nearby exams from the same family. Each card keeps practice questions, study guides, flashcards, videos, and articles in one place.
2026 Statistics
Key Facts: CA Inter Paper 4 Exam
100
Maximum Marks
ICAI New Scheme 2023
3 hrs
Exam Duration
ICAI
~30%
MCQ Weight
ICAI Exam Pattern
40%
Paper Pass Mark
ICAI Passing Criteria
100
Free Practice MCQs
OpenExamPrep
CA Intermediate Paper 4 (Cost and Management Accounting) is an ICAI Group II paper worth 100 marks over 3 hours, with approximately 30% compulsory MCQs (no negative marking) and 70% descriptive questions under the New Scheme 2023. It covers cost concepts, material, employee and overhead costing, activity based costing, the cost sheet, unit, job, batch, process, operation, joint, by-product and service costing, standard costing, marginal costing and budgetary control. Passing requires 40% in the paper and 50% aggregate across the group. This free bank offers 100 MCQs mapped to the official chapters.
Sample CA Inter Paper 4 Practice Questions
Try these sample questions to test your CA Inter Paper 4 exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.
1Under the ICAI cost accounting framework, what is the primary objective of cost accounting as distinct from financial accounting?
A.Ascertainment of cost and control of cost for managerial decision-making
B.Preparation of statutory financial statements for external stakeholders
C.Computation of taxable income under the Income-tax Act, 1961
D.Recording of transactions in compliance with the Companies Act, 2013
Explanation: Cost accounting focuses on ascertainment, allocation and control of cost to support internal managerial decisions, pricing, and cost reduction. Financial accounting, by contrast, is oriented toward external reporting and statutory compliance.
2Which of the following best describes a 'cost centre' under ICAI terminology?
A.A unit of product or service for which cost is computed
B.A location, person or item of equipment for which cost is ascertained and used for cost control
C.A department that generates revenue independently
D.A statement summarising total cost of production
Explanation: A cost centre is a location, person, item of equipment (or group of these) in respect of which costs are ascertained and used for the purpose of cost control. It is the smallest segment of activity for which costs are accumulated.
3Management accounting differs from cost accounting primarily because management accounting:
A.Is restricted only to the ascertainment of historical product cost
B.Is mandatory under the Companies (Cost Records and Audit) Rules
C.Uses cost data along with other financial and non-financial information for planning and decision-making
D.Records only past transactions in a double-entry system
Explanation: Management accounting is broader: it draws on cost accounting data plus other financial and non-financial information to assist management in planning, controlling and decision-making. Cost accounting is one input feeding management accounting.
4A cost that does not change in total within a relevant range despite changes in the level of activity is termed:
A.Variable cost
B.Semi-variable cost
C.Marginal cost
D.Fixed cost
Explanation: A fixed cost remains constant in total over a relevant range of activity, even though its per-unit amount falls as output rises. Examples include factory rent and supervisory salaries.
5Which classification of cost is most relevant for decision-making because it represents the benefit foregone by choosing one alternative over another?
A.Opportunity cost
B.Sunk cost
C.Conversion cost
D.Prime cost
Explanation: Opportunity cost is the value of the benefit sacrificed when one course of action is chosen over the next best alternative. It is highly relevant for decision-making though it is not recorded in the books of account.
6Prime cost is defined as the sum of:
A.Direct labour and factory overheads
B.Direct material, direct labour and direct expenses
C.Direct material and works overheads
D.All direct and indirect costs of production
Explanation: Prime cost equals direct material cost plus direct (productive) labour cost plus direct expenses. It represents the total of all directly traceable production costs before overheads are added.
7The Economic Order Quantity (EOQ) for a material is computed where annual demand is 24,000 units, ordering cost is Rs 60 per order and carrying cost is Rs 2 per unit per annum. The EOQ is:
A.1,000 units
B.1,600 units
C.1,200 units
D.2,400 units
Explanation: EOQ = sqrt(2 x Annual demand x Ordering cost / Carrying cost per unit) = sqrt(2 x 24,000 x 60 / 2) = sqrt(1,440,000) = 1,200 units. EOQ minimises the total of ordering and carrying costs.
8Under the FIFO method of pricing material issues, the closing stock is valued at:
A.Prices of the earliest purchases
B.Weighted average of all purchases
C.Standard price fixed in advance
D.Prices of the most recent purchases
Explanation: Under First-In-First-Out, the earliest-received materials are issued first, so the closing stock comprises the most recently purchased units and is valued at the latest (most recent) prices.
9The re-order level of a material is best computed as:
A.Maximum usage x Maximum lead time
B.Minimum usage x Minimum lead time
C.Average usage x Average lead time
D.Maximum usage x Minimum lead time
Explanation: Re-order level = Maximum usage x Maximum re-order (lead) period. Setting the level at the highest expected consumption during the longest lead time ensures stock does not run out before fresh supply arrives.
10Labour turnover measured under the 'Separation Method' is calculated as:
A.(Number of replacements / Average number of workers) x 100
B.(Number of separations / Average number of workers) x 100
C.(Number of accessions / Average number of workers) x 100
D.(Separations + Replacements) / Average number of workers
Explanation: Under the separation method, labour turnover = (Number of separations during the period / Average number of workers during the period) x 100. It measures the rate at which workers leave the organisation.
About the CA Inter Paper 4 Practice Questions
Verified exam format metadata for CA Intermediate Paper 4: Cost and Management Accounting is pending. The practice questions above remain available while official exam length, timing, passing score, fee, and administrator details are reviewed.