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Quiz 5_ Cost Control & Decision-Making

The document is a quiz focused on cost control and decision-making, containing ten questions that assess knowledge on relevant costs, cost reduction strategies, and decision-making criteria in a business context. Key topics include avoidable costs, incremental analysis, and the impact of fixed and variable costs on production decisions. The quiz aims to evaluate understanding of how management can effectively reduce costs and make informed financial decisions.

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Chennalyn Alojado
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3 views

Quiz 5_ Cost Control & Decision-Making

The document is a quiz focused on cost control and decision-making, containing ten questions that assess knowledge on relevant costs, cost reduction strategies, and decision-making criteria in a business context. Key topics include avoidable costs, incremental analysis, and the impact of fixed and variable costs on production decisions. The quiz aims to evaluate understanding of how management can effectively reduce costs and make informed financial decisions.

Uploaded by

Chennalyn Alojado
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Quiz 5: Cost Control & Decision-Making

1.​ Which of the following helps management reduce costs?​


a) Absorption costing​
b) Cost control systems​
c) Sunk cost analysis​
d) Financial statements
2.​ What is a relevant cost?​
a) A cost that does not affect decision-making​
b) A past cost that cannot be changed​
c) A cost that differs between alternatives​
d) A cost that remains fixed
3.​ A company should continue producing a product if:​
a) Its total cost is higher than total revenue​
b) It covers variable costs and contributes to fixed costs​
c) Fixed costs are greater than revenue​
d) Competitors have lower prices
4.​ Which cost is avoidable when deciding to discontinue a product?​
a) Sunk cost​
b) Fixed cost​
c) Direct cost​
d) Opportunity cost
5.​ When deciding whether to make or buy a product, which cost is NOT relevant?​
a) Direct materials​
b) Direct labor​
c) Fixed costs already incurred​
d) Variable costs of production
6.​ The process of setting cost reduction targets is called:​
a) Budgeting​
b) Cost control​
c) Standard costing​
d) Activity-based costing
7.​ Which cost is NOT considered in incremental analysis?​
a) Fixed cost​
b) Sunk cost​
c) Variable cost​
d) Opportunity cost
8.​ A decision to replace a machine should consider:​
a) Depreciation already recorded​
b) The sunk cost of the old machine​
c) Future savings and efficiency gains​
d) Historical cost of the old machine
9.​ Which of the following would be an example of opportunity cost?​
a) Buying a new machine to improve production​
b) Wages paid to factory workers​
c) Revenue lost by choosing one project over another​
d) A fixed salary expense
10.​Which of the following is an example of cost reduction?​
a) Hiring more workers​
b) Increasing production waste​
c) Improving production efficiency​
d) Increasing material costs

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