Business Costing Principles Quiz

What are some examples of direct costs in a manufacturing company?

• Executive salaries and bonuses

• raw materials and labor for production

• Office rent and utilities

• Marketing and advertising expenses

How do direct costs differ from indirect costs?

• Direct costs are expenses that can be directly attributed to a specific cost object.

• Direct costs are fixed expenses that do not change with the level of production.

• Direct costs are not related to the production of goods or services.

• Direct costs are expenses that cannot be directly attributed to a specific cost object.

Why is it important for a business to accurately track direct costs?

• To have a better understanding of customer preferences

• To determine the weather products are still popular in the market.

• To track employee attendance

• To understand the true cost of producing goods or services and make informed business decisions.

All of the following are objectives of costing except

• controlling expenditure

• planning and budgeting for the future

• Raw materials, production equipment, direct labor

• To assist management in decision making

How do indirect costs impact the overall cost of production?

• They increase the overall cost of production.

• They have no impact on the overall cost of production.

• They only impact the cost of labor.

• They decrease the overall cost of production.

Which of the following is NOT a feature of Management Accounting

• For internal use only

• Not a statutory requirement

• For external use only

• Records detailed information about cost for specific products

What are fixed costs and examples of it.

• A fixed cost is one which does not change as output changes. For example Raw Material and Labour Cost

• A fixed cost changes when output changes. For example Raw material and Labour Cost

• A fixed cost is one which does not change as output changes. For example Insurance and Rent

• A fixed cost changes when output changes. For example Insurance and Rent

How do variable costs behave in relation to production levels?

• They remain constant

• They fluctuate randomly

• They decrease with production levels

• They increase with production levels

What is a unit cost ?

• The total cost of making all your products

• The cost of producing a single product

• The number of products you own

• The cost of making a group of products

Which method of pricing do we find the total cost then mark up by a specific percentage (%)

• Mark-up Pricing

• Premium Pricing

• Margin Pricing

• Cost-plus pricing