Cost Accounting in Business Management : Practice MCQ Questions & Answers with Explanations

The cost of future decisions

The cost that has already been incurred and cannot be recovered

The cost that will change based on decisions

The cost that can be avoided in the future

Absorption costing includes fixed costs in the cost of products; variable costing does not

Variable costing includes fixed costs in the cost of products; absorption costing does not

Absorption costing is used for external reporting; variable costing is used for internal decisions

There is no difference between the two

Pre-determined costs

Variable costs

Total fixed costs

Historical costs

Sales - Total fixed costs

Sales - Total variable costs

Sales - Cost of goods sold

Sales - Operating expenses

To determine the profit from a given sales volume

To calculate the total production costs

To determine the fixed cost per unit

To compute sales revenue

The total cost of a product

A unit or item to which costs are assigned

The raw materials used in production

The fixed costs of production

Long-term decision making

Pricing and product selection

Financial reporting

Internal tax calculations

Rent on a factory building

Salaries of senior management

Direct materials for production

Depreciation on factory machinery

By department or process

By specific product units

As they are incurred for each individual job

Based on the sales price

To determine the total manufacturing costs

To assign costs to specific products or departments

To calculate fixed costs

To compute the gross margin

The ability to generate profits from fixed costs

The ability to reduce costs through better resource management

The ability to increase sales through higher variable costs

The ability to allocate costs to departments

The total amount of fixed costs

The number of units that need to be sold to cover costs

The profit margin on each product

The best pricing strategy

Pricing based on direct materials cost

Pricing based on variable costs only

Pricing based on cost of production plus a markup

Pricing based on competition

Costs are assigned to specific jobs or orders

Costs are accumulated by department

Products are mass-produced in identical units

Costs are averaged across all units produced

Costs that remain constant with production levels

Costs that increase or decrease with production levels

Costs related to fixed assets

Costs related to selling expenses

Wages and salaries of workers directly involved in production

Salaries of management staff

The cost of electricity used in production

The cost of factory rent

A department responsible for generating profits

A unit or department where costs are tracked

A place where all fixed costs are recorded

A unit where costs are controlled and allocated

Setting a product price based on the company's cost structure

Determining the cost reduction required to achieve a desired profit margin

Pricing a product based on market demand

Calculating the cost of direct materials

The process of reducing fixed costs

Managing and reducing costs without affecting production

Assigning costs to each product

Allocating overhead costs to products

A method where only variable costs are assigned to products

A method that allocates both fixed and variable costs

A method that excludes fixed costs from product costing

A method used for external financial reporting