Cost Accounting Quizzes: Master Cost Classification, Allocation, and Overhead Costing

Question 1

Which of the following is a feature of direct costs?

Accepted Answer

Easily traceable to a specific cost object (e.g., product, project, or department)

Answer

Incurred during the production of multiple units or services

Answer

Assigned to a cost object based on an arbitrary or proportional basis

Answer

Difficult to identify with a particular cost object

Question 2

Which cost allocation method uses a predetermined overhead rate based on direct labor hours to assign overhead costs?

Accepted Answer

Direct labor hours

Answer

Activity-based costing

Answer

Percentage of sales

Answer

Machine hours

Question 3

Which of the following is NOT an advantage of utilizing a job order costing system?

Accepted Answer

Simplified record-keeping and data processing

Answer

Accurate costing of specific production orders

Answer

Improved inventory management and control

Answer

Reduced errors in overhead allocation

Question 4

What is the primary purpose of underapplied overhead?

Accepted Answer

To account for overhead costs that were not allocated to products or services during a period

Answer

To reduce the reported cost of goods sold

Answer

To increase the net income reported on the financial statements

Answer

To adjust for overallocated overhead costs

Question 5

In job order costing, how does the selection of a cost allocation method impact the unit cost of a product?

Accepted Answer

Influences the cost per unit of the product.

Answer

Alters the total cost of the product.

Answer

Determines the specific costs assigned to each product.

Question 6

The process of assigning indirect costs to relevant cost units is termed:

Accepted Answer

Cost allocation

Answer

Cost accumulation

Answer

Cost estimation

Answer

Cost analysis

Question 7

Which of the following is an example of a direct cost in manufacturing?

Accepted Answer

Raw materials

Answer

Rent

Answer

Utilities

Answer

Factory supervisor's salary

Question 8

The deviation between actual costs and budgeted costs is referred to as:

Accepted Answer

Cost variance

Answer

Cost overrun

Answer

Cost saving

Answer

Cost overestimation

Question 9

A key element of an activity-based costing system is the use of:

Accepted Answer

Cost drivers

Answer

Overhead rates

Answer

Standard costs

Answer

Cost allocation bases

Question 10

The process of comparing actual costs to planned costs is known as:

Accepted Answer

Cost variance analysis

Answer

Cost estimation

Answer

Cost allocation

Answer

Cost control

Question 11

When evaluating the limitations of cost accounting data for decision-making, which concern is not valid?

Accepted Answer

Guarantee of optimal decision-making outcomes

Answer

Inaccuracies due to estimations and allocations

Answer

Historical nature of data, potentially misrepresenting future conditions

Answer

Lack of consideration for qualitative factors and non-financial implications

Question 12

Which of the following is NOT a classification of costs?

Accepted Answer

Opportunity cost

Answer

Direct

Answer

Fixed

Answer

Indirect

Question 13

What is the primary purpose of cost allocation?

Accepted Answer

To assign costs to specific cost objects.

Answer

To prepare financial statements.

Answer

To compare actual costs to budgeted costs.

Answer

To determine the total cost of production.

Question 14

Which of the following is NOT a method of overhead costing?

Accepted Answer

Marginal costing

Answer

Variable costing

Answer

Activity-based costing

Answer

Absorption costing

Question 15

What is the fundamental difference between a direct cost and an indirect cost?

Accepted Answer

Direct costs can be directly traced to the cost object, while indirect costs cannot.

Answer

Direct costs are only incurred during production, while indirect costs are not production-related.

Answer

Direct costs are always fixed costs, while indirect costs are always variable costs.

Question 16

What is a key advantage of using activity-based costing?

Accepted Answer

It provides more accurate information about the costs of products and services.

Answer

It eliminates the need for cost allocation.

Answer

It simplifies the cost accounting system.

Question 17

What is the overarching purpose of a cost accounting system?

Accepted Answer

To provide information for decision-making, planning, and control.

Answer

To ensure compliance with government regulations.

Answer

To minimize costs.

Question 18

Which of the following is NOT a fundamental step in the cost accounting process?

Accepted Answer

Preparing financial statements

Answer

Classifying costs

Answer

Analyzing costs

Answer

Recording transactions

Question 19

How do cost accounting and financial accounting interact?

Accepted Answer

Cost accounting provides information that is used in financial accounting.

Answer

Financial accounting is a component of cost accounting.

Answer

Cost accounting is a component of financial accounting.

Question 20

What is the main purpose of a cost-volume-profit analysis?

Accepted Answer

To determine the relationship between costs, volume, and profit.

Answer

To set sales targets

Answer

To predict financial performance

Question 21

Which of the following is NOT a primary purpose of cost accounting?

Accepted Answer

To evaluate employee performance

Answer

To assist in financial reporting

Answer

To provide information for decision-making

Question 22

Fixed costs are characterized by which of the following?

Accepted Answer

They remain constant within a relevant range of activity

Answer

They are incurred only at specific points in time

Answer

They fluctuate with the level of production

Question 23

Which cost allocation method considers the specific activities that drive costs?

Accepted Answer

Activity-based costing

Answer

Variable costing

Answer

Marginal costing

Answer

Direct costing

Question 24

The purpose of a cost center is to:

Accepted Answer

Assign responsibility for cost control

Answer

Determine product costs

Answer

Allocate overhead costs

Question 25

The process of comparing actual costs to predetermined standards is known as:

Accepted Answer

Variance analysis

Answer

Profitability analysis

Answer

Performance evaluation

Answer

Cost control

Question 26

Which of the following is a limitation of marginal costing?

Accepted Answer

It disregards fixed costs

Answer

It makes decision-making easier

Answer

It is simple to implement

Answer

It provides precise product costs

Question 27

The concept of opportunity cost is relevant in the context of:

Accepted Answer

Decision-making

Answer

Cost allocation

Answer

Financial reporting