Cost Control and Reduction Quiz

What is the main objective of cost control?

• Increase product features

• Increase wages

• Ensure costs do not exceed set standards

• Increase production time

Which of the following is a prerequisite for effective cost control?

• Vague planning

• Flexible budgets

• Standard costing system

• Absence of feedback

Which tool is most commonly associated with cost control?

• Trend analysis

• Standard costing

• NPV analysis

• Ratio analysis

What is the main aim of cost reduction?

• Temporarily lower costs

• Reduce quality

• Achieve permanent reduction in unit costs without affecting quality

• Delay projects

Scope of cost reduction does not include:

• Improving product design

• Reducing process inefficiencies

• Lowering quality below acceptable levels

• Streamlining supply chain

Which area is a typical focus of cost reduction programs?

• Payroll processing only

• All functional areas - production, marketing, administration, etc.

• Advertising only

• Only R&D departments

Which of the following is true about cost control?

• It aims at permanent cost minimization

• It sets and monitors cost limits

• It eliminates standard costing

• It focuses on revenue generation

A major difference between cost control and cost reduction is:

• Control is reactive; reduction is proactive

• Control is permanent; reduction is temporary

• Control eliminates quality; reduction improves quality

• Control focuses on innovations

Pareto analysis is based on:

• 50/50 rule

• 20/80 rule

• 60/40 rule

• 10/90 rule

Pareto analysis helps in:

• Determining selling price

• Identifying and prioritizing key problem areas

• Increasing advertising budgets

• Recording journal entries