Cost Accounting Quiz Challenge

1. What is the primary objective of cost accounting?
a) Maximizing profits
b) Reducing costs
c) Providing financial reports
d) Facilitating decision-making

2. Which of the following is an example of a variable cost?
a) Rent
b) Depreciation
c) Direct materials
d) Salaries of top-level managers

3. The formula to calculate the contribution margin is:
a) Sales – Variable costs
b) Sales – Fixed costs
c) Total costs – Variable costs
d) Total costs – Fixed costs

4. What is the purpose of a cost allocation method?
a) To assign costs to different departments
b) To determine the selling price of a product
c) To calculate total revenue
d) To estimate future costs

5. Which costing method assigns both fixed and variable costs to products or services?
a) Absorption costing
b) Marginal costing
c) Activity-based costing
d) Standard costing

6. Which of the following is an example of an opportunity cost?
a) Cost of raw materials
b) Cost of direct labour
c) Cost of lost sales due to limited production capacity
d) Cost of indirect materials

7. What does the term “break-even point” represent?
a) The point where total costs equal total revenue
b) The point where fixed costs equal variable costs
c) The point where total costs exceed total revenue
d) The point where total revenue exceeds total costs

8. Which of the following statements is true about overhead costs?
a) They are always fixed costs.
b) They can be easily traced to a specific product or service.
c) They include indirect materials and indirect labour.
d) They are not considered in cost accounting.

9. Which cost accounting technique involves estimating costs based on historical data and adjusting them for future conditions?
a) Standard costing
b) Target costing
c) Activity-based costing
d) Absorption costing

10. What is the formula to calculate the predetermined overhead rate?
a) Estimated overhead costs / Actual activity level
b) Actual overhead costs / Estimated activity level
c) Actual overhead costs / Actual activity level
d) Estimated overhead costs / Estimated activity level

Answers

1. d) Facilitating decision-making
2. c) Direct materials
3. a) Sales – Variable costs
4. a) To assign costs to different departments
5. a) Absorption costing
6. c) Cost of lost sales due to limited production capacity
7. a) The point where total costs equal total revenue
8. c) They include indirect materials and indirect labor.
9. a) Standard costing
10. d) Estimated overhead costs / Estimated activity level

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