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Cost Classification (MCQ) Sample

1. A direct cost is a cost that is easily traceable to a cost object. An indirect cost is not easily traceable to a cost object. 2. Variable costs change with changes in activity or volume. Fixed costs do not change with changes in activity or volume. 3. Differential cost refers to the difference in costs between alternatives. 4. Product costs are costs incurred to acquire or manufacture a product, like direct materials, direct labor, and manufacturing overhead. Period costs are expenses recognized in the period incurred, like sales commissions and interest.

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389 views

Cost Classification (MCQ) Sample

1. A direct cost is a cost that is easily traceable to a cost object. An indirect cost is not easily traceable to a cost object. 2. Variable costs change with changes in activity or volume. Fixed costs do not change with changes in activity or volume. 3. Differential cost refers to the difference in costs between alternatives. 4. Product costs are costs incurred to acquire or manufacture a product, like direct materials, direct labor, and manufacturing overhead. Period costs are expenses recognized in the period incurred, like sales commissions and interest.

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thelkokomg_294988315
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Cost Classification

1. A cost that is easily traceable to a cost object is known as:


indirect cost
variable cost
direct cost
fixed cost
2. A cost that is not easily or conveniently traceable to a cost object is known as:
Collective cost
Indirect cost
Additional cost
Conversion cost
3. Which of the following terms is used to denote the response of a cost to the change in
business activity?
Cost behavior
Cost trend
Cost response
Cost accumulation
4. A cost that changes in total dollar amount with the change in the level of activity is known as:
Fixed cost
Mixed cost
Conversion cost
Variable cost
5. A cost that does not change, in total, with the change in activity is called:
Mixed cost
Fixed cost
Prime cost
Unchanged cost
6. Mixed cost is also known as:
Double cost
Semi-variable cost
Fluctuating cost
Full cost
7. According to cost formula Y = $20,000 + $4X, total cost at an activity level of 15,000 units
would be:
$20000
$60000
$80000
$35000
8. Which of the following costs is not a product cost?
Depreciation on the plant installed in the factory
The electricity cost of the office of factory foreman
The cost of shipping finished products to customers
The cost of fuel used in the factory
9. Which of the following costs is not a period cost?
Advertising cost
Sales commission
Interest
Direct labor
10. The costs incurred to acquire or manufacture a product is known as:
Period costs
Product costs
Admin costs
Real costs
11. Prime cost = ?
Manufacturing overhead cost + Direct labor cost
Direct materials cost + Direct labor cost
Direct materials cost + Manufacturing overhead cost
Direct materials cost + Direct labor cost + Manufacturing overhead cost
12. Conversion cost = ?
Direct labor cost + Manufacturing overhead cost
Direct materials cost + Manufacturing overhead cost
Direct materials cost + Admin. Cost
Direct materials cost + Marketing cost
13. Manufacturing cost = ?
Direct materials cost + Manufacturing overhead cost
Direct materials cost + Direct labor cost + Manufacturing overhead cost
Direct materials cost + Direct labor cost + Manufacturing overhead cost + Marketing and
admin cost
Prime cost + Conversion cost
14. The cost of alternative ‘A’ is $25,000 and the cost of alternative ‘B’ is $20,000. In managerial
accounting, the difference of $5,000 in costs of two alternatives would be termed as:
Additional cost
Extra cost
Differential cost
Essential cost
15. Which of the following costs is treated as indirect labor?
Idle time
Overtime premium
Fringe benefits
All of the above
16. The term quality cost refers to:
the cost incurred to purchase expensive materials
the cost incurred to purchase very high-quality materials
the cost incurred to higher highly skilled workers
the cost incurred to prevent, detect and remove defects from products
17. The costs that are incurred to avoid defects at first place are known as:
prevention costs
appraisal costs
internal failure costs
external failure costs
18. Which of the following costs is an example of external failure cost?
Statistical process control
The cost of supplies used in testing
Warranty repairs and replacement costs
Rework labor and overhead
19. The benefit forgone when one alternative is selected rather than another is known as:
sunk cost
opportunity cost
differential cost
decision cost
20. The Washington Company incurred $50,000 to ship 22,000 liters and $42,000 to ship 18,000
liters. If the company ships 20,000 liters, its expected shipping expense would be closest to:
$40,000
$44,000
$46,000
$48,000
21. Which of the following terms is correct for a cost that has already been incurred and cannot
be changed by any decision?
Past cost
Previous cost
Lost cost
Sunk cost
22. Within the relevant range:
both total variable costs and total fixed costs fluctuate
both total variable costs and total fixed costs will remain constant
variable costs per unit will remain constant and fixed costs per unit will fluctuate
fixed costs per unit will remain constant and variable costs per unit will fluctuate

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