Cost Accounting and Variance Analysis Quiz

What is the formula for Return on Equity (ROE)?

• Net Income ÷ Total Assets

• Net Income ÷ Stockholders’ Equity

• Net Income ÷ Sales

• Equity ÷ Total Liabilities

If a company earns $100,000 in net income and has $500,000 in total assets, what is its Return on Assets (ROA)?

• 20%

• 5%

• 10%

• 15%

Return on Sales is calculated using which of the following formulas?

• Net Income ÷ Equity

• Sales ÷ Net Income

• Net Income ÷ Sales

• Assets ÷ Sales

One benefit of outsourcing is:

• Reducing underutilized staff

• Increasing fixed costs

• Creating more internal audits

• Increasing managerial layers

What is a major risk of outsourcing?

• Higher overhead costs

• Reduced quality control

• Increased training expenses

• Increased tax rates

A manufacturing cell made up of multiple machines offers:

• High output with little flexibility

• Flexible automation

• Inflexible task assignment

• More direct labor

Which of the following is not a product cost?

• Factory supervisor salary

• Manufacturing overhead

• Administration building custodian wages

• Direct labor

The cost of electricity used in a manufacturing plant is classified as:

• Direct labor

• Manufacturing overhead

• Selling expense

• Administrative cost

What do we call the wages paid to line workers?

• Direct labor

• Factory overhead

• Indirect wages

• Conversion cost

Which of the following best defines a direct material cost?

• Cost of auditing supplies

• Cost of components used in manufacturing

• Supervisory salaries

• Packaging materials for shipping