Cost Accounting Questions and Answers in Quiz Form 7 for Practice

91. What does the "contribution margin ratio" indicate?

1. The percentage of fixed costs covered by each sale
2. The amount of profit each sale generates after covering variable costs
3. The total cost of fixed assets
4. The percentage of profit from the sales price

92. What is "financial break-even" analysis used for?

1. To determine when a company will achieve zero profit
2. To calculate the break-even point for fixed and variable costs
3. To assess the viability of new projects
4. To analyze market conditions

93. What is the difference between "marginal costing" and "absorption costing"?

1. Marginal costing includes fixed costs; absorption costing does not
2. Marginal costing is used for financial reporting; absorption costing is used for decision making
3. Marginal costing considers only variable costs; absorption costing includes both fixed and variable costs
4. There is no difference

94. What does "zero-based budgeting" involve?

1. Starting from scratch and justifying all costs
2. Allocating budgets based on the previous year's costs
3. Estimating costs based on historical data
4. Using projected sales data to calculate budgets

95. What is "job costing" used for?

1. To accumulate costs for a specific job or order
2. To calculate total costs for mass production
3. To determine the overall costs for a product line
4. To estimate fixed costs for a period

96. What does "cost accounting" focus on?

1. Analyzing costs for pricing decisions and budgeting
2. Reporting financial results to shareholders
3. Managing cash flow for operations
4. Calculating taxes owed

97. What is "cost behavior"?

1. The way in which a cost changes with the level of activity
2. The way in which a cost affects revenue generation
3. The fixed nature of certain costs
4. The variance in costs from month to month

98. What does "activity-based costing" (ABC) identify?

1. The total costs of labor
2. The specific activities that drive costs
3. The variable cost per unit
4. The cost per unit for each department

99. What is a "fixed cost"?

1. A cost that does not change with the level of production
2. A cost that increases with production
3. The total cost of materials used
4. A cost that changes based on market demand

100. What is "cost-plus pricing"?

1. A pricing strategy where a markup is added to the cost of production
2. A strategy to set a price based on competition
3. A strategy to use marginal costs in pricing decisions
4. A method of reducing overhead costs