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100+ Free CMA Inter Paper 8: Cost Accounting Practice Questions

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Key Facts: CMA Inter Paper 8: Cost Accounting Exam

100

Marks in the Paper

ICMAI Syllabus 2022

3 hrs

Exam Duration

ICMAI Syllabus 2022

40%

Minimum Paper Pass Mark

ICMAI Examination Rules

CAS 1-24

Cost Accounting Standards

ICMAI CASB

Group I

Intermediate Group

ICMAI Syllabus 2022

ICMAI CMA Intermediate Paper 8: Cost Accounting (CA) is a 100-mark, 3-hour Group I paper under Syllabus 2022. The syllabus runs from cost-accounting fundamentals and cost ascertainment of material (CAS-6), employee (CAS-7) and overhead costs, through the Cost Accounting Standards (CAS-1 to CAS-24) and cost book-keeping, into methods of costing (job, batch, contract, process, operating) and cost accounting techniques (marginal costing, with standard costing and budgeting). The exam is descriptive/objective written rather than a pure MCQ test; passing requires 40% in the paper and 50% aggregate in the group. This free prep set offers 100 MCQs mapped to those domains.

Sample CMA Inter Paper 8: Cost Accounting Practice Questions

Try these sample questions to test your CMA Inter Paper 8: Cost Accounting exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1In cost accounting, the aggregate of direct material cost, direct labour cost and direct expenses is known as:
A.Prime cost
B.Works cost
C.Cost of production
D.Cost of sales
Explanation: Prime cost is the sum of all direct costs: direct materials + direct labour + direct (chargeable) expenses. It is the first element built up in a cost sheet before factory overheads are added.
2Which of the following is the PRIMARY objective of cost accounting?
A.To prepare statutory financial statements for shareholders
B.To compute income tax liability
C.To value goodwill on amalgamation
D.To ascertain cost and aid cost control and decision-making
Explanation: Cost accounting exists to ascertain the cost of products/services, control costs, and provide data for managerial decision-making, pricing, and planning. Financial reporting is the realm of financial accounting.
3A cost that does not change in total within a relevant range of activity, but changes per unit as output changes, is a:
A.Variable cost
B.Semi-variable cost
C.Step cost
D.Fixed cost
Explanation: A fixed cost stays constant in total over the relevant range (e.g., factory rent), so the cost per unit falls as output rises and rises as output falls. Variable cost behaves the opposite way.
4Which statement correctly distinguishes cost accounting from financial accounting?
A.Cost accounting is mandatory for all companies; financial accounting is optional
B.Cost accounting records only cash transactions
C.Financial accounting classifies cost by element, function and behaviour
D.Cost accounting reports primarily to internal management; financial accounting reports primarily to external stakeholders
Explanation: Financial accounting produces general-purpose statements for external users (investors, creditors, regulators), while cost accounting generates detailed cost data mainly for internal management to control costs and make decisions.
5A cost incurred in the past that cannot be changed by any future decision is termed a:
A.Sunk cost
B.Opportunity cost
C.Imputed cost
D.Replacement cost
Explanation: A sunk cost is an already-incurred, unrecoverable cost; because it is irrelevant to future choices, it should be ignored in decision-making. Opportunity and imputed costs are relevant for decisions.
6Classifying costs as production, administration, selling and distribution is a classification by:
A.Element
B.Behaviour
C.Function
D.Controllability
Explanation: Functional classification groups costs by the business function they relate to: production, administration, selling, and distribution. This drives the build-up in a cost sheet.
7A responsibility centre whose manager is accountable for both costs and revenues but NOT for investment is a:
A.Cost centre
B.Investment centre
C.Revenue centre
D.Profit centre
Explanation: A profit centre is responsible for revenues and the costs of generating them, so its performance is judged by profit. An investment centre additionally controls capital invested.
8Which of the following is NOT an element of cost?
A.Material
B.Labour
C.Expenses
D.Profit
Explanation: The three elements of cost are material, labour and expenses; each can be direct or indirect. Profit is the surplus of sales over total cost and is not itself an element of cost.
9A cost unit is best described as:
A.A location where costs are collected
B.A person responsible for cost control
C.A document recording cost transactions
D.A unit of product or service in terms of which cost is ascertained
Explanation: A cost unit is a quantitative unit of product or service (e.g., per tonne, per litre, per passenger-km) to which costs are related for ascertainment. A cost centre, by contrast, is a location or function.
10Conversion cost is defined as:
A.Direct material + direct labour
B.Prime cost + administration overhead
C.Direct material + factory overhead
D.Direct labour + factory overhead
Explanation: Conversion cost is the cost of converting raw material into finished goods, i.e., direct labour plus factory (manufacturing) overheads. It excludes direct material.

About the CMA Inter Paper 8: Cost Accounting Exam

CMA Inter Paper 8 (Cost Accounting) is a Group I paper of the ICMAI CMA Intermediate Course under Syllabus 2022. It tests cost concepts and ascertainment of material, labour and overhead costs, Cost Accounting Standards, cost book-keeping, methods of costing (job, batch, contract, process, operating), and techniques such as marginal and standard costing and budgeting, over a 100-mark, three-hour written examination.

Assessment

Question count not published by the exam provider

Time Limit

3 hours (180 minutes)

Passing Score

40% in the paper and 50% aggregate in the group

Exam Fee

No separate per-paper fee; bundled in CMA Intermediate registration and per-group examination fees set by ICMAI (The Institute of Cost Accountants of India (ICMAI))

CMA Inter Paper 8: Cost Accounting Exam Content Outline

Section A

Cost Accounting Fundamentals

Cost concepts and classification, objectives and scope, cost units and centres, responsibility centres, and the distinction between cost and financial accounting.

Section A

Material Cost

Material procurement and stores control, issue pricing (FIFO, LIFO, weighted average), EOQ, stock levels, ABC analysis, losses and scrap, and CAS-6 treatment of taxes and freight.

Section A

Employee (Labour) Cost

Time keeping and booking, incentive schemes (Halsey, Rowan, Taylor), overtime and idle time, labour turnover, and employee cost under CAS-7.

Section A

Overheads

Allocation, apportionment, re-apportionment of service departments, absorption rates, over and under absorption, supplementary rates, and CAS-3 production overheads.

Section A

Cost Book-Keeping

Integrated and non-integrated cost ledgers, control and adjustment accounts, journal entries, Cost Accounting Standards (CAS-1 to CAS-24), and cost-financial profit reconciliation.

Section B

Methods of Costing

Job, batch and EBQ, contract costing (work certified, retention, notional profit), process costing (normal/abnormal loss and gain, equivalent units, joint and by-products), and operating/service costing.

Section C

Cost Accounting Techniques

Marginal costing, contribution, P/V ratio, break-even, margin of safety, make-or-buy and special-order decisions, standard-costing variances, and budgeting/budgetary control.

How to Pass the CMA Inter Paper 8: Cost Accounting Exam

What You Need to Know

  • Passing score: 40% in the paper and 50% aggregate in the group
  • Assessment: Question count not published by the exam provider
  • Time limit: 3 hours (180 minutes)
  • Exam fee: No separate per-paper fee; bundled in CMA Intermediate registration and per-group examination fees set by ICMAI

Keys to Passing

  • Work through all 100 available questions
  • Review every answer and explanation
  • Track weak areas and revisit them
  • Use our AI tutor for tough concepts

CMA Inter Paper 8: Cost Accounting Study Tips from Top Performers

1Practise numerical problems daily; Paper 8 rewards speed and accuracy in process accounts, contract costing, and variances.
2Memorise the key formulas (EOQ, EBQ, reorder/maximum levels, Halsey, Rowan, P/V ratio, break-even) and the variance formulae.
3Learn the Cost Accounting Standards CAS-1 to CAS-24 by their subject, focusing on CAS-1, CAS-3, CAS-6, and CAS-7.
4Work through past ICMAI question papers and suggested answers to learn the expected presentation of working notes.
5Use a clear format for cost sheets and process accounts so partial marks are not lost on presentation.
6Maintain an error log tagging mistakes by method, formula, or careless arithmetic and revise it before the exam.

Frequently Asked Questions

What is CMA Inter Paper 8 Cost Accounting?

Paper 8 is the Cost Accounting (CA) paper in Group I of the ICMAI CMA Intermediate Course under Syllabus 2022. It is a 100-mark, three-hour written examination covering cost ascertainment, Cost Accounting Standards, methods of costing, and costing techniques such as marginal and standard costing.

Is CMA Inter Paper 8 an MCQ exam?

No. The official ICMAI Paper 8 examination is a descriptive/subjective written paper, though Section A often includes objective or MCQ-type questions. ICMAI also publishes an objective question bank, and this free set offers 100 MCQs to test conceptual and numerical understanding for practice.

What are the main topics in CMA Inter Paper 8?

The syllabus covers cost-accounting fundamentals, cost ascertainment of material, labour and overhead costs, the Cost Accounting Standards (CAS-1 to CAS-24), cost book-keeping, methods of costing (job, batch, contract, process, operating), and cost accounting techniques including marginal costing, standard costing, and budgeting.

What is the passing criterion for CMA Inter Paper 8?

Under ICMAI rules a candidate must secure at least 40% marks in the individual paper and 50% aggregate across the group to pass. There is no negative marking for the descriptive examination.

How long is the CMA Inter Paper 8 exam?

Paper 8 is a 100-mark examination conducted over three hours (180 minutes). Effective time management is important because the paper combines theory questions with numerical problems on costing methods and variances.

Which Cost Accounting Standards are relevant for Paper 8?

The ICMAI Cost Accounting Standards CAS-1 to CAS-24 are examinable, with frequent focus on CAS-1 (classification of cost), CAS-3 (production and operation overheads), CAS-6 (material cost), and CAS-7 (employee cost).

How should I prepare for CMA Inter Paper 8?

Build conceptual clarity from the ICMAI study notes, then practise extensive numerical problems on material pricing, labour incentives, overhead absorption, process accounts, contract costing, and marginal and standard costing, supported by MCQ drills and past-paper attempts.