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

The level of sales

The level of production or activity

The amount of inventory

The fixed costs

To compare actual costs with budgeted costs

To calculate gross margin

To allocate fixed costs to products

To compute contribution margin

The cost associated with producing goods of high quality

The costs of quality control and inspection

The cost of defects, repairs, and scrap

All of the above

A cost that changes with the level of production

A cost that does not change with production level

A fixed cost that is independent of output

The direct cost of labor

Depreciation on old machinery

Direct materials for a specific product

Salaries of the permanent staff

Rent for the factory

Rent for factory premises

Direct labor

Direct materials

Sales commission

Costs that are incurred in the past and cannot be changed

Costs that are avoidable and differ between alternatives

Fixed costs that remain the same regardless of production level

Costs that are not considered in the decision-making process

Fixed costs / Contribution margin per unit

Sales price per unit - Variable cost per unit

Total fixed costs / Sales price per unit

Contribution margin per unit / Fixed costs

The raw materials waiting to be processed

The goods that are partially completed during the production process

Finished goods ready for sale

The cost of direct labor

Setting a product price based on the cost of production plus a markup

Setting a price based on competitor prices

Setting a price based on the perceived value to the customer

Setting a price based on market demand

Only variable costs are assigned to products

Fixed costs are not considered in product costing

It provides better information for decision-making

It is used for external financial reporting

A method that assigns both fixed and variable manufacturing costs to the cost of a product

A method that assigns only variable costs to the cost of a product

A method that calculates the cost of labor and materials only

A method that calculates profit based on sales revenue

The percentage of each sales dollar that contributes to covering fixed costs

The ratio of direct labor costs to total production costs

The fixed cost per unit produced

The proportion of direct material cost in the production process

Used for mass production of identical products

Costs are accumulated for each department

Unit costs are averaged over a period of time

Costs are assigned to specific jobs

To assign costs to inventory using the average cost per unit

To determine the total cost of production

To allocate overhead costs to products

To calculate the cost of direct labor

A department or function within an organization that is responsible for generating revenue

A unit or department where costs are incurred and measured

The process of allocating fixed costs to products

The overall cost of manufacturing

The total cost incurred to produce goods during a specific period

The total cost of goods sold

The cost of raw materials purchased

The cost of selling and distribution

Sales price per unit - Variable cost per unit

Sales price per unit - Fixed cost per unit

Selling cost per unit - Direct materials cost

Contribution margin ratio - Variable cost

It decreases as production volume increases

It increases as production volume increases

It remains constant regardless of production volume

It is affected by changes in the cost of raw materials

To control costs by comparing actual performance with budgeted performance

To calculate break-even points

To allocate overhead costs

To manage direct costs effectively