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WorksheetsIntroduction to Cost Accounting
Total questions: 20
Worksheet time: 29mins
Cost Accounting is...
the ascertainment of cost for an activity or a product
the recording of all the expenses incurred for an activity or a product
the recording of all the direct costs incurred for an activity or a product
the recording of all the revenue incurred for an activity or a product
What are the elements of production costs?
Raw materials, sales commissions, distribution costs.
Direct materials, direct labour, manufacturing overhead.
Indirect materials, indirect labour, administrative expenses.
Labour costs, marketing expenses, research and development.
Which of the items below are classifications of costs?
Nature
Function
Behaviour
All of the above
What is the difference between fixed costs and variable costs?
Fixed costs change with production levels, variable costs do not
Variable costs change with production levels, fixed costs do not
Both fixed and variable costs change with production levels
Neither fixed nor variable costs change with production levels
What are conversion costs?
Conversion costs are solely the costs of marketing and sales.
Conversion costs are the sum of direct labour and manufacturing overhead costs.
Conversion costs only include raw material costs.
What are the primary purposes of cost accounting?
To determine the selling price of products.
To control and reduce costs.
To provide information for financial reporting.
All of the above.
Which of the following is an example of a direct cost?
Rent for the factory building.
Raw materials used in production.
Utilities for the office.
Administrative salaries.
How do you calculate prime cost?
Prime cost is calculated as the sum of direct materials, direct labour and direct expenses costs.
Which of the following is considered as a production overhead?
Direct materials used in production.
Factory rent.
Research and development costs.
Sales commissions.
Which one of the items below is NOT an objective of cost accounting?
To determine the cost of an activity or a product
Planning and control
Interpreting the business result
Decision making
Production costs __________
are incurred in producing a product or providing a service.
can be traced to a specific cost object.
are differentiated according to the original form of the costs.
are costs that do not contribute directly to the manufacturing cost.
The quantitative unit measurement of products or services where the cost can be related refers to the term __________
Unit cost
Cost unit
Costing
Cost
Costs that possess characteristics of both fixed and variable costs are called __________
Mixed cost
Step cost
Variable cost
Fixed cost
Cost centres are __________
units of product or service for which costs are ascertained
amounts of expenditure attributable to various activities
functions or locations for which costs are ascertained and related to cost units
a section of an organisation for which budgets are prepared and control exercised
Which of the following elements of a manufacturing account matches the definition below?
The raw materials actually used to manufacture the product (e.g. cloth used to produce shirts, flour used to produce bread)
Direct materials
Direct wages
Indirect materials
Direct expenses
The following graph represents which type of cost?
Fixed cost
Variable cost
Semi-variable cost
Stepped cost
Which of the following are types of responsibility centers?
Process, Production and Service
Cost, Profit and Investment
Administrative, Sales and Finance
Store, Canteen and Maintenance
This cost remains fixed within a specified activity level but will increase at some critical point.
Step Cost
Fixed Cost
Semi-variable cost
Variable cost
A company has to pay RM10,000 per unit royalty to the designer of a product which it manufactures and sells. The royalty charge would be classified as a __________
Direct expense
Production overhead
Administrative overhead
Selling overhead
Cost that cannot be taken into consideration for any present and future decision.
Variable Cost
Controllable Cost
Period Cost
Relevant Cost
