Cost Accounting Test 2 ( TWO ) For W.A.S.S.C.E & N.E.C.O Candidates (30 Questions) Trials

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1: Which of the following is a variable cost?

A) Rent B) Depreciation C) Direct labor D) Salary of the CEO

2: Which costing method allocates fixed and variable costs to products?

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

3: What is the main objective of cost-volume-profit (CVP) analysis?

A) To calculate total fixed costs B) To determine variable costs C) To analyze the relationships between costs, volume, and profits D) To allocate indirect costs

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

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

5: 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

6: 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

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

A) √(2SD / H) B) √(DS / H) C) √(2SDH) D) √(DSH)

8: What does the term "cost pool" refer to?

A) A group of similar products B) The total cost of production C) The accumulated costs in a cost center D) The total variable costs

9: Which method of cost allocation allocates costs based on the usage of specific activities?

A) Direct method B) Step-down method C) Activity-based costing (ABC) D) Absorption costing

10: Which costing method allocates all manufacturing costs to products?

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

11: What is the purpose of using a flexible budget?

A) To allocate fixed costs B) To calculate variable costs C) To adjust budgeted amounts based on actual activity levels D) To determine break-even points

12: What does the term "relevant range" refer to in cost accounting?

A) The range of production levels at which fixed and variable costs change B) The range of production levels that result in the highest profits C) The range of production levels where costs remain constant D) The range of production levels that should be avoided

13: Which method allocates costs based on the number of units produced?

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

14: 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

15: 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

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

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

17: 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

18: 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

19: 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

20: 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

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

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

22: In cost-volume-profit analysis, what does the term "contribution margin" refer to?

A) The difference between selling price and variable costs B) The difference between total revenue and total costs C) The difference between budgeted costs and actual costs D) The difference between fixed costs and variable costs

23: What does the term "cost allocation" mean?

A) The process of determining the selling price of a product B) The process of assigning indirect costs to cost objects C) The process of calculating fixed costs D) The process of determining variable costs

24: What is the purpose of a cost allocation method?

A) To calculate fixed costs B) To determine the selling price of a product C) To assign indirect costs to cost objects D) To determine variable costs

25: Which method of cost allocation allocates costs based on the benefits received by cost objects?

A) Direct allocation B) Activity-based costing (ABC) C) Step-down allocation D) Differential allocation

26: What is the main disadvantage of using the traditional costing method?

A) It is too complex to implement B) It does not consider variable costs C) It may allocate costs inaccurately D) It is only suitable for small businesses

27: Which costing method allocates costs based on the number of times a cost driver is used?

A) Direct allocation B) Step-down allocation C) Activity-based costing (ABC) D) Differential allocation

28: What is the primary focus of activity-based costing (ABC)?

A) Assigning direct costs to cost objects B) Allocating fixed costs to cost objects C) Assigning indirect costs based on cost drivers D) Allocating variable costs to cost objects

29: Which costing method allocates costs based on a predetermined overhead rate?

A) Activity-based costing (ABC) B) Variable costing C) Absorption costing D) Differential costing

30: In activity-based costing (ABC), what are cost drivers?

A) Fixed costs that drive business operations B) Indirect costs that are hard to allocate C) Factors that cause or influence the incurrence of costs D) Costs that are incurred by multiple departments