Cost Accounting Test 1 (ONE ) For W.A.S.S.C.E & N.E.C.O Candidates (30 Questions) Trials

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1: What is the primary goal of cost accounting?

A) To maximize profits B) To minimize costs C) To accurately allocate costs D) To forecast sales

2: What is the difference between variable costs and fixed costs?

A) Variable costs change with production levels, while fixed costs remain constant B) Variable costs are always higher than fixed costs C) Fixed costs change with production levels, while variable costs remain constant D) Variable costs are related to manufacturing, while fixed costs are related to administrative expenses

3: What is the formula to calculate the contribution margin?

A) Sales - Fixed Costs B) Sales - Variable Costs C) Sales - Total Costs D) Sales + Variable Costs

4: What is the break-even point?

A) The point where total revenue equals total costs B) The point where total revenue exceeds total costs C) The point where fixed costs equal variable costs D) The point where variable costs exceed fixed costs

5: Which costing method assumes that all units produced are sold?

A) Absorption costing B) Variable costing C) Process costing D) Job costing

6: Which method allocates overhead based on the actual usage of resources?

A) Traditional costing B) Activity-based costing (ABC) C) Variable costing D) Job costing

7: What is the formula to calculate the predetermined overhead rate?

A) Estimated Overhead / Actual Activity B) Actual Overhead / Estimated Activity C) Estimated Activity / Actual Overhead D) Actual Activity / Estimated Overhead

8: What is the purpose of a cost allocation?

A) To increase overall costs B) To assign costs to different cost centers or products C) To decrease fixed costs D) To eliminate variable costs

9: What is the formula for calculating the average cost per unit?

A) Total Cost / Total Units Produced B) Total Cost / Total Units Sold C) Variable Cost / Fixed Cost D) Fixed Cost / Variable Cost

10: What is the concept of opportunity cost?

A) The cost of producing an additional unit B) The cost of giving up the next best alternative C) The cost of materials and labor D) The cost of fixed assets

11: What is the formula to calculate the contribution margin ratio?

A) (Sales - Variable Costs) / Sales B) (Sales - Fixed Costs) / Sales C) (Sales - Total Costs) / Sales D) (Sales + Variable Costs) / Sales

12: What is the concept of relevant costs?

A) Costs that have occurred in the past B) Costs that are not related to production C) Costs that are incurred in the future and can influence decision-making D) Costs that remain constant regardless of production levels

13: What is a cost driver in activity-based costing (ABC)?

A) A factor that increases fixed costs B) A factor that reduces variable costs C) A factor that causes overhead costs to change D) A factor that causes direct costs to change

14: What is the formula to calculate the fixed cost per unit?

A) Total Fixed Costs / Total Units Produced B) Total Fixed Costs / Total Units Sold C) Variable Cost / Fixed Cost D) Fixed Cost / Variable Cost

15: Which type of cost remains constant regardless of changes in production levels?

A) Variable cost B) Direct cost C) Indirect cost D) Fixed cost

16: What is the formula to calculate the cost of goods sold (COGS)?

A) Beginning Inventory + Purchases - Ending Inventory B) Beginning Inventory - Purchases + Ending Inventory C) Beginning Inventory + Purchases + Ending Inventory D) Beginning Inventory - Purchases - Ending Inventory

17: What is the formula to calculate the margin of safety?

A) Actual Sales - Break-Even Sales B) Actual Sales / Break-Even Sales C) Break-Even Sales - Actual Sales D) Break-Even Sales / Actual Sales

18: What is the formula for the payback period?

A) Initial Investment / Annual Cash Flows B) Annual Cash Flows / Initial Investment C) Initial Investment - Annual Cash Flows D) Annual Cash Flows - Initial Investment

19: What is the formula for the net present value (NPV)?

A) Initial Investment - Annual Cash Flows B) Annual Cash Flows - Initial Investment C) Initial Investment + Annual Cash Flows D) Annual Cash Flows + Initial Investment

20: What is the formula to calculate the return on investment (ROI)?

A) Net Income / Total Revenue B) Net Income / Initial Investment C) Total Revenue / Initial Investment D) Initial Investment / Net Income

21: What is the formula to calculate the payback period?

A) Initial Investment / Annual Cash Flows B) Annual Cash Flows / Initial Investment C) Initial Investment - Annual Cash Flows D) Annual Cash Flows - Initial Investment

22: What is the formula to calculate the return on investment (ROI)?

A) Net Income / Total Revenue B) Net Income / Initial Investment C) Total Revenue / Initial Investment D) Initial Investment / Net Income

23: What is the formula to calculate the break-even point in units?

A) Fixed Costs / Selling Price per Unit B) Selling Price per Unit / Fixed Costs C) Variable Costs / Selling Price per Unit D) Selling Price per Unit / Variable Costs

24: What is the formula to calculate the break-even point in sales?

A) Fixed Costs / Contribution Margin Ratio B) Contribution Margin Ratio / Fixed Costs C) Variable Costs / Contribution Margin Ratio D) Contribution Margin Ratio / Variable Costs

25: What is the formula to calculate the contribution margin per unit?

A) Selling Price per Unit - Variable Costs per Unit B) Variable Costs per Unit - Selling Price per Unit C) Selling Price per Unit + Variable Costs per Unit D) Variable Costs per Unit + Selling Price per Unit

26: Which type of cost varies in direct proportion to changes in production levels?

A) Fixed cost B) Direct cost C) Indirect cost D) Variable cost

27: What is the concept of cost allocation?

A) Assigning costs to different departments within a company B) Determining the total cost of a product C) Allocating fixed costs to variable costs D) Identifying costs that do not change with production levels

28: What is the formula to calculate the economic order quantity (EOQ)?

A) √(2SD / H) B) √(DS / H) C) √(2HD / S) D) √(HS / 2D)

29: Which method of inventory valuation assumes that the most recently purchased items are sold first?

A) FIFO (First-In-First-Out) B) LIFO (Last-In-First-Out) C) Weighted Average Cost D) Specific Identification

30: What is the formula to calculate the net present value (NPV)?

A) Initial Investment - Annual Cash Flows B) Annual Cash Flows - Initial Investment C) Initial Investment + Annual Cash Flows D) Annual Cash Flows + Initial Investment