Cost Accounting Trivia Questions
-
Which one of the following best describes direct labor?
-
A prime cost.
-
A period cost.
-
A product cost.
-
Both a product cost and a prime cost.
-
This 'Cost Accounting Trivia Questions' quiz assesses knowledge on key cost accounting concepts, including direct labor, contribution margins, conversion costs, and inventory costs. It's designed for learners to understand practical applications in cost accounting, enhancing their skills in financial decision-making.
Quiz Preview
- 2.
The difference between the sales price and total variable costs is
-
Gross operating profit.
-
Net profit.
-
The breakeven point.
-
The contribution margin
Correct Answer
A. The contribution marginExplanation
The contribution margin is the difference between the sales price and total variable costs. It represents the amount of revenue that is available to cover fixed costs and contribute towards profit. By subtracting variable costs from sales price, the contribution margin helps to determine the profitability of each unit sold. It is an important metric for businesses to analyze their cost structure and make informed decisions about pricing, cost control, and overall profitability.Rate this question:
-
- 3.
In cost terminology, conversion costs consist of
-
Direct and indirect labor.
-
Direct labor and direct materials.
-
Direct labor and factory overhead.
-
Indirect labor and variable factory overhead.
Correct Answer
A. Direct labor and factory overhead.Explanation
Conversion costs refer to the expenses incurred in transforming raw materials into finished goods. These costs include both direct labor, which refers to the wages and benefits paid to workers directly involved in the production process, and factory overhead, which includes other indirect expenses such as utilities, rent, and equipment depreciation. Therefore, the correct answer is direct labor and factory overhead, as these two components make up the conversion costs.Rate this question:
-
- 4.
Which one of the following categories of cost is most likely not considered a component of fixed factory overhead?
-
Rent.
-
Property taxes.
-
Depreciation.
-
Power.
Correct Answer
A. Power.Explanation
Power is most likely not considered a component of fixed factory overhead because it is a variable cost that can fluctuate based on the level of production. Fixed factory overhead costs, on the other hand, remain constant regardless of the production level. Rent, property taxes, and depreciation are examples of fixed factory overhead costs as they do not change with the level of production.Rate this question:
-
- 5.
Inventoriable costs
-
Include only the prime costs of manufacturing a product.
-
Include only the conversion costs of manufacturing a product.
-
Are expensed when products become part of finished goods inventory.
-
Are regarded as assets before the products are sold
Correct Answer
A. Are regarded as assets before the products are soldExplanation
Inventoriable costs are costs that are regarded as assets before the products are sold. This means that these costs are capitalized and recorded as an asset on the balance sheet until the products are sold. Once the products are sold, the costs are then expensed as cost of goods sold. This is in contrast to period costs, which are expensed in the period they are incurred.Rate this question:
-
- 6.
The cost of goods manufactured for X company for the year 2005 was $860,000. Begining work - in - process inventory was $50,000. Ending work - in - process was $60,000. if the begining finished goods inventory was $500,000 and the ending finished goods inventory was $990,000, what was the cost of goods sold for the year?
-
$360,000
-
$370,000
-
$490,000
-
$1,350,000
Correct Answer
A. $370,000Explanation
The cost of goods sold can be calculated by adding the beginning finished goods inventory to the cost of goods manufactured and subtracting the ending finished goods inventory. In this case, the beginning finished goods inventory was $500,000, the cost of goods manufactured was $860,000, and the ending finished goods inventory was $990,000. Therefore, the cost of goods sold for the year was $370,000.Rate this question:
-
- 7.
If the begining balance for May of the materials inventory account was $27,500, the ending balance for May is $28,750, and $128,900 of materials were used during the month, the material purchased during the month cost
-
$101,400
-
$127,650
-
$130,150
-
$157,650
Correct Answer
A. $130,150Explanation
The beginning balance of the materials inventory account in May was $27,500. The ending balance for May is $28,750. This means that $1,250 worth of materials were added to the inventory during the month. Additionally, $128,900 worth of materials were used during the month. To find the cost of materials purchased during the month, we need to subtract the materials used from the total increase in inventory. Therefore, the cost of materials purchased during the month is $130,150 ($1,250 + $128,900).Rate this question:
-
- 8.
X Company produced 600 units of one of its products last year. The standard for labor hours allowed was 2 hours per unit at a standard rate of $6 per hour. Actual hours worked amounted to 1,230 hours. The labor rate variance was $246 unfavorable, and labor efficiency variance was $180 unfavorable. What was the actual direct labor cost for the period?
-
$7,134
-
$7,200
-
$7,380
-
7,626
Correct Answer
A. 7,626Explanation
The actual direct labor cost for the period can be calculated by multiplying the actual hours worked (1,230 hours) by the standard rate ($6 per hour). This gives us a total of $7,380. However, since the labor rate variance was unfavorable by $246, the actual direct labor cost would be higher by that amount. Therefore, the correct answer is $7,626.Rate this question:
-
- 9.
A favorable materials price variance coupled with an unfavorable materials usage variance most likely results from
-
Machine efficiency problem
-
Product mix production changes.
-
The purchase and use of higher - than - standard quality materials
-
The purchase and use of lower - than - standard quality materials
Correct Answer
A. The purchase and use of lower - than - standard quality materialsExplanation
A favorable materials price variance suggests that the actual cost of materials purchased is lower than the standard cost. On the other hand, an unfavorable materials usage variance indicates that more materials were used than expected. Therefore, if both variances occur simultaneously, it suggests that lower quality materials were purchased and used, resulting in a lower cost but higher usage. Lower quality materials may require more quantity to achieve the desired output, leading to higher usage variance.Rate this question:
-
- 10.
The breakeven point in units increases when unit costs
-
Increase and sales price remains unchanged.
-
Decrease and sales price remain unchanged.
-
Remain unchanged and sales price increase.
Correct Answer
A. Increase and sales price remains unchanged.Explanation
When the unit costs increase and the sales price remains unchanged, the breakeven point in units will increase. This is because the higher costs per unit will require more units to be sold in order to cover the expenses and reach the breakeven point. If the sales price remains the same, each unit sold will generate the same revenue, but the higher costs will eat into the profits, resulting in a larger number of units needed to break even.Rate this question:
-
Quiz Review Timeline (Updated): Sep 15, 2023 +
Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.
-
Current Version
-
Sep 15, 2023Quiz Edited by
ProProfs Editorial Team -
Nov 01, 2009Quiz Created by
Khalid312
Back to top