What is the primary objective of cost accounting?
A) To determine the profit of the company
B) To track and control costs for products and services
C) To prepare the company’s balance sheet
D) To calculate taxes
Which of the following is an example of a variable cost?
A) Rent
B) Salaries of permanent staff
C) Raw materials used in production
D) Insurance premiums
In cost accounting, fixed costs are:
A) Costs that change with the level of production
B) Costs that do not vary with the level of production
C) Directly related to the sale of products
D) Calculated after the production process
Which of the following is an example of a direct cost?
A) Depreciation on factory equipment
B) Wages of workers directly involved in production
C) Marketing expenses
D) Office supplies
What is a cost center in cost accounting?
A) A unit that generates revenue
B) A segment of the business that incurs costs but does not generate revenue
C) A place where inventory is stored
D) A group of employees working together to reduce costs
Which method is used to allocate fixed costs to products in a multi-product company?
A) Job-order costing
B) Process costing
C) Activity-based costing
D) Absorption costing
Which of the following is a purpose of cost accounting?
A) To determine the market value of assets
B) To help managers in decision-making
C) To prepare the income statement
D) To prepare the company’s tax return
What does “cost of goods sold” (COGS) represent?
A) The total cost of producing and selling products during a period
B) The fixed costs of a business
C) The expenses related to research and development
D) The wages of administrative employees
Which of the following is an indirect cost?
A) Direct labor
B) Direct materials
C) Factory supervisor’s salary
D) Sales commissions
In cost accounting, a job order costing system is best used by:
A) Companies producing standardized products
B) Companies manufacturing products in bulk
C) Service industries
D) Companies producing customized products
Which of the following costs is included in the calculation of the cost of goods manufactured (COGM)?
A) Selling expenses
B) Administrative expenses
C) Direct materials used
D) Taxes and interest
Which of the following is considered a sunk cost?
A) The cost of machinery that was purchased last year
B) Wages paid to temporary workers
C) Materials used in current production
D) Rent expense for the factory
Which of the following is NOT a type of cost behavior?
A) Fixed costs
B) Variable costs
C) Mixed costs
D) Standard costs
Which of the following statements is true about semi-variable costs?
A) They are both fixed and variable in nature
B) They do not change at all with the level of production
C) They are fixed at a particular level of production
D) They are incurred only at a fixed cost level
Which of the following is NOT considered a product cost?
A) Direct labor
B) Direct materials
C) Office rent
D) Manufacturing overhead
What is the main purpose of a break-even analysis in cost accounting?
A) To calculate the profit margin
B) To determine the fixed costs of the business
C) To identify the level of sales at which the business breaks even
D) To calculate the cost of inventory
Which of the following is an example of a controllable cost?
A) Rent on the office building
B) Direct labor in production
C) Depreciation of factory machinery
D) Property taxes on the company’s facility
Which of the following is true regarding cost-volume-profit (CVP) analysis?
A) It is used to calculate the total expenses of a company
B) It helps businesses determine the profitability at different levels of sales and production
C) It calculates the cost of capital
D) It helps in calculating the company’s overall tax liability
Which costing method assigns costs to units based on the total volume of production?
A) Job-order costing
B) Activity-based costing
C) Process costing
D) Standard costing
In cost accounting, “overhead costs” refer to:
A) Costs directly related to product manufacturing
B) Costs that cannot be traced directly to a specific product
C) Costs that vary with production levels
D) Costs that are always fixed in nature
What is the formula for calculating contribution margin?
A) Sales – Variable Costs
B) Sales – Fixed Costs
C) Revenue – Expenses
D) Sales – Cost of Goods Sold
Which of the following is a key feature of activity-based costing (ABC)?
A) It allocates overhead costs based on the production volume
B) It assigns costs based on activities that drive costs
C) It treats all costs as variable costs
D) It is used primarily for external financial reporting
What does the term “cost allocation” refer to?
A) The process of reducing costs
B) The process of assigning indirect costs to different departments or products
C) The process of calculating the total expenses of the company
D) The process of estimating future costs
What is the main difference between absorption costing and variable costing?
A) Absorption costing includes all manufacturing costs, while variable costing includes only variable manufacturing costs
B) Absorption costing is used for tax purposes, while variable costing is used for internal management
C) Absorption costing is used for job-order costing, while variable costing is used for process costing
D) There is no significant difference between the two methods
Which of the following is NOT a factor in determining the cost of a product?
A) Direct materials
B) Direct labor
C) Advertising costs
D) Manufacturing overhead
Which of the following is an example of a sunk cost in cost accounting?
A) Costs incurred in the past that cannot be recovered
B) Future costs that will affect decision-making
C) Costs directly related to production
D) Costs that can be controlled by management
What is the purpose of budgeting in cost accounting?
A) To reduce operating expenses
B) To allocate resources and estimate future costs
C) To prepare the company’s financial statement
D) To calculate taxes owed to the government
