Understanding Cost Accounting

What does cost refer to in cost accounting?

• The amount of expenditure incurred on a specific thing

• The profit made from selling a product

• The total revenue generated by a business

• The amount of money saved by a company

What is the meaning of cost in simple terms?

• Resources sacrificed to achieve an objective

• The total income of a business

• The expenses incurred in marketing

• The profit margin on products sold

What does cost ascertainment involve?

• Determining the cost of a product using various methods

• Analyzing the profit margins of a business

• Calculating the total revenue generated

• Estimating future sales

What is the purpose of cost control?

• Monitoring and controlling costs

• Increasing the price of products

• Reducing the workforce

• Maximizing profits

What does cost reduction aim to achieve?

• Identifying ways to reduce costs without compromising quality

• Increasing the price of goods

• Hiring more employees

• Expanding the business

What is cost analysis used for?

• Analyzing different types of costs for decision-making

• Calculating total sales

• Estimating future profits

• Determining employee salaries

What is the definition of direct cost?

• Easily identified with a specific product

• Shared among multiple cost units

• Costs that cannot be controlled

• Costs that vary with production levels

What is an example of a fixed cost?

• Factory rent that remains the same

• Raw material costs that vary with production

• Wages of workers that change with output

• Advertising expenses that fluctuate

What does opportunity cost refer to?

• Income lost by choosing one option over another

• The total cost of production

• The fixed costs incurred by a business

• The variable costs associated with production

What is a cost centre?

• A department where costs are incurred and tracked

• A method of calculating costs

• A type of cost classification

• A financial report