Cost Accounting Questions and Answers | Online Quiz for Practice

46. What does the term "variable cost" refer to?

1. Costs that remain constant with production levels
2. Costs that increase or decrease with production levels
3. Costs related to fixed assets
4. Costs related to selling expenses

47. What is the main feature of "job order costing"?

1. Costs are assigned to specific jobs or orders
2. Costs are accumulated by department
3. Products are mass-produced in identical units
4. Costs are averaged across all units produced

48. What is "cost-plus pricing"?

1. Pricing based on direct materials cost
2. Pricing based on variable costs only
3. Pricing based on cost of production plus a markup
4. Pricing based on competition

49. The "break-even analysis" helps determine:

1. The total amount of fixed costs
2. The number of units that need to be sold to cover costs
3. The profit margin on each product
4. The best pricing strategy

50. The term "operating leverage" refers to:

1. The ability to generate profits from fixed costs
2. The ability to reduce costs through better resource management
3. The ability to increase sales through higher variable costs
4. The ability to allocate costs to departments

51. What is the main objective of cost allocation?

1. To determine the total manufacturing costs
2. To assign costs to specific products or departments
3. To calculate fixed costs
4. To compute the gross margin

52. In a "process costing system," costs are accumulated:

1. By department or process
2. By specific product units
3. As they are incurred for each individual job
4. Based on the sales price

53. Which of the following is an example of a "controllable cost"?

1. Rent on a factory building
2. Salaries of senior management
3. Direct materials for production
4. Depreciation on factory machinery

54. In cost accounting, "marginal costing" is used for:

1. Long-term decision making
2. Pricing and product selection
3. Financial reporting
4. Internal tax calculations

55. The term "cost object" refers to:

1. The total cost of a product
2. A unit or item to which costs are assigned
3. The raw materials used in production
4. The fixed costs of production

56. What is a "cost-volume-profit (CVP) analysis" used for?

1. To determine the profit from a given sales volume
2. To calculate the total production costs
3. To determine the fixed cost per unit
4. To compute sales revenue

57. What is the formula for calculating contribution margin?

1. Sales - Total fixed costs
2. Sales - Total variable costs
3. Sales - Cost of goods sold
4. Sales - Operating expenses

58. In "standard costing," which of the following is compared to actual costs?

1. Pre-determined costs
2. Variable costs
3. Total fixed costs
4. Historical costs

59. What is the difference between "absorption costing" and "variable costing"?

1. Absorption costing includes fixed costs in the cost of products; variable costing does not
2. Variable costing includes fixed costs in the cost of products; absorption costing does not
3. Absorption costing is used for external reporting; variable costing is used for internal decisions
4. There is no difference between the two

60. The term "sunk cost" refers to:

1. The cost of future decisions
2. The cost that has already been incurred and cannot be recovered
3. The cost that will change based on decisions
4. The cost that can be avoided in the future