What are the main types of costs in accounting?

Understanding Cost Classification

Quiz
•
Others
•
Professional Development
•
Hard
Fahad Ahad
FREE Resource
15 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Sunk costs
Inflation costs
Opportunity costs
Fixed costs, variable costs, direct costs, indirect costs, operating costs, non-operating costs.
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Define fixed costs and provide an example.
Cost of raw materials for production
Employee salaries that change monthly
Utilities expenses that vary with usage
An example of fixed costs is the monthly rent for a business premises.
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What are variable costs and how do they differ from fixed costs?
Variable costs are always higher than fixed costs.
Variable costs fluctuate with production volume, while fixed costs remain constant.
Variable costs are unrelated to production volume and remain constant.
Fixed costs change with production levels, while variable costs do not.
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Explain the high-low method in cost estimation.
The high-low method focuses solely on fixed costs without considering variable costs.
The high-low method is used to predict future sales based on past performance.
The high-low method calculates total costs based on average activity levels.
The high-low method estimates costs by analyzing the highest and lowest activity levels and their associated costs to determine variable and fixed costs.
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
List the steps involved in the high-low method.
Identify high and low activity levels, determine costs, calculate variable cost per unit, calculate fixed costs, formulate cost equation.
Calculate average costs for all units
Ignore fixed costs in the analysis
Estimate total costs without activity levels
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
How do you calculate the variable cost per unit using the high-low method?
Variable cost per unit = (Cost at highest activity - Cost at lowest activity) / (Highest activity level - Lowest activity level)
Variable cost per unit = Cost at highest activity - Cost at lowest activity
Variable cost per unit = Total cost / Total units produced
Variable cost per unit = (Cost at lowest activity + Cost at highest activity) / 2
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is prime cost and what components does it include?
Prime cost includes overhead and marketing expenses.
Prime cost consists of fixed costs and variable costs.
Prime cost is the total cost of production including all indirect costs.
Prime cost includes direct materials and direct labor.
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