Cost Accounting

What is the primary goal of cost accounting?

• To maximize sales revenue
• To capture and report costs associated with business operations
• To manage employee payroll
• To prepare tax returns for the government

Which of the following is NOT a benefit of cost accounting?

• Improving efficiency
• Setting prices
• Reducing employee turnover
• Identifying overspending

Why is budgeting important in cost accounting?

• It helps in setting employee salaries
• It determines the price of products
• It tracks sales revenue
• It provides data for realistic financial planning

What is the main benefit of understanding costs for management?

• To enhance marketing strategies
• To make informed decisions about operations
• To reduce the number of employees
• To increase employee satisfaction

Which type of cost remains constant regardless of production levels?

• Variable Costs
• Mixed Costs
• Fixed Costs
• Direct Costs

How do variable costs behave as production levels increase?

• They decrease
• They remain unchanged
• They become fixed
• They increase

In the context of cost accounting, what are direct costs?

• Costs that cannot be traced to a specific product
• Costs that can be directly traced to a specific product or service
• Costs that are fixed regardless of production
• Costs that vary with production levels

What is the purpose of cost allocation?

• To assign indirect costs to products or departments
• To calculate total revenue
• To reduce overall production costs
• To determine selling prices for products

Which costing method is best suited for mass production of similar products?

• Job Order Costing
• Standard Costing
• Process Costing
• Activity-Based Costing

What is the total cost for a bakery that incurs $1,000 in fixed costs and $600 in variable costs?

• $2,200
• $1,000
• $600
• $1,600