Cost Accounting Review: Multiple Choice
What is the primary purpose of cost accounting?
a. Financial reporting
b. Cost control and decision-making
c. Marketing strategy
d. Human resource management
Which of the following is a variable cost?
a. Property taxes
b. Salary of a factory supervisor
c. Raw materials
d. Insurance premiums
What is the formula for calculating the contribution margin?
a. Sales Revenue - Variable Costs
b. Sales Revenue / Net Income
c. Fixed Costs - Variable Costs
d. Total Costs / Units Produced
Which cost is relevant for decision-making in the short term?
a. Sunk costs
b. Variable costs
c. Fixed costs
d. Opportunity costs
What is the purpose of a job order costing system?
a. To allocate costs to specific jobs or batches
b. To calculate contribution margin
,c. To determine fixed costs
d. To assess long-term investments
In activity-based costing (ABC), what is the key idea behind allocating overhead costs?
a. Based on direct labor hours
b. Equally across all products
c. Based on machine hours and other relevant cost drivers
d. Proportionate to the number of employees
What is the break-even point in terms of units sold?
a. When total revenue equals total variable costs
b. When total revenue exceeds total fixed costs
c. When total revenue equals total fixed costs
d. When total revenue equals total costs
How is the contribution margin ratio calculated?
a. Net Income / Sales Revenue
b. Contribution Margin / Total Revenue
c. Variable Costs / Sales Revenue
d. Fixed Costs / Total Revenue
Which costing method is used for products with similar characteristics produced in large quantities?
a. Job order costing
b. Process costing
c. Variable costing
d. Activity-based costing
What is the formula for calculating the predetermined overhead rate in a job order costing system?
a. Estimated Overhead / Estimated Activity
,b. Actual Overhead / Actual Activity
c. Estimated Overhead / Actual Activity
d. Actual Overhead / Estimated Activity
Answers:
b
c
a
b
a
c
c
b
b
a
Cost Accounting Review: Sample Questions
Which of the following is an example of a variable cost?
a. Rent
b. Direct labor
c. Property taxes
d. Straight-line depreciation
Answer: b
What is the primary objective of absorption costing?
, a. Focus on variable costs only
b. Allocate fixed and variable costs to units produced
c. Ignore indirect costs
d. Minimize production costs
Answer: b
In a process costing system, how are equivalent units calculated?
a. Beginning units in process + Units started and completed
b. Units completed and transferred out + Ending units in process
c. Units started and completed + Beginning units in process
d. Ending units in process + Units completed and transferred out
Answer: b
What is the purpose of a cost variance analysis?
a. To determine fixed costs
b. To identify areas of cost overruns or underruns
c. To calculate contribution margin
d. To assess long-term investments
Answer: b
Which cost is considered a period cost?
a. Direct materials
b. Direct labor
c. Selling expenses
d. Manufacturing overhead
What is the primary purpose of cost accounting?
a. Financial reporting
b. Cost control and decision-making
c. Marketing strategy
d. Human resource management
Which of the following is a variable cost?
a. Property taxes
b. Salary of a factory supervisor
c. Raw materials
d. Insurance premiums
What is the formula for calculating the contribution margin?
a. Sales Revenue - Variable Costs
b. Sales Revenue / Net Income
c. Fixed Costs - Variable Costs
d. Total Costs / Units Produced
Which cost is relevant for decision-making in the short term?
a. Sunk costs
b. Variable costs
c. Fixed costs
d. Opportunity costs
What is the purpose of a job order costing system?
a. To allocate costs to specific jobs or batches
b. To calculate contribution margin
,c. To determine fixed costs
d. To assess long-term investments
In activity-based costing (ABC), what is the key idea behind allocating overhead costs?
a. Based on direct labor hours
b. Equally across all products
c. Based on machine hours and other relevant cost drivers
d. Proportionate to the number of employees
What is the break-even point in terms of units sold?
a. When total revenue equals total variable costs
b. When total revenue exceeds total fixed costs
c. When total revenue equals total fixed costs
d. When total revenue equals total costs
How is the contribution margin ratio calculated?
a. Net Income / Sales Revenue
b. Contribution Margin / Total Revenue
c. Variable Costs / Sales Revenue
d. Fixed Costs / Total Revenue
Which costing method is used for products with similar characteristics produced in large quantities?
a. Job order costing
b. Process costing
c. Variable costing
d. Activity-based costing
What is the formula for calculating the predetermined overhead rate in a job order costing system?
a. Estimated Overhead / Estimated Activity
,b. Actual Overhead / Actual Activity
c. Estimated Overhead / Actual Activity
d. Actual Overhead / Estimated Activity
Answers:
b
c
a
b
a
c
c
b
b
a
Cost Accounting Review: Sample Questions
Which of the following is an example of a variable cost?
a. Rent
b. Direct labor
c. Property taxes
d. Straight-line depreciation
Answer: b
What is the primary objective of absorption costing?
, a. Focus on variable costs only
b. Allocate fixed and variable costs to units produced
c. Ignore indirect costs
d. Minimize production costs
Answer: b
In a process costing system, how are equivalent units calculated?
a. Beginning units in process + Units started and completed
b. Units completed and transferred out + Ending units in process
c. Units started and completed + Beginning units in process
d. Ending units in process + Units completed and transferred out
Answer: b
What is the purpose of a cost variance analysis?
a. To determine fixed costs
b. To identify areas of cost overruns or underruns
c. To calculate contribution margin
d. To assess long-term investments
Answer: b
Which cost is considered a period cost?
a. Direct materials
b. Direct labor
c. Selling expenses
d. Manufacturing overhead
