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1. What is the primary purpose of cost accounting?
A) To calculate profit margins
B) To control and reduce costs
C) To set product prices
D) To prepare financial statements
Answer: B) To control and reduce costs. Cost accounting focuses on
capturing a company's total costs of production by assessing the variable
costs of each step of production as well as fixed costs, such as a lease
expense.
2. Which cost accounting principle is used to determine the break-even
point?
A) Cost-volume-profit analysis
B) Job order costing
C) Activity-based costing
D) Standard costing
Answer: A) Cost-volume-profit analysis. This principle helps in
determining the level of sales needed to cover all costs and to break even.
3. In identifying cost behavior, what type of cost remains constant per unit
at various levels of activity?
A) Fixed cost
B) Variable cost
C) Mixed cost
D) Step cost
Answer: B) Variable cost. Variable costs vary in total in direct proportion
to changes in an activity level but remain constant on a per-unit basis.
4. Which method is most appropriate for accounting for materials in a
manufacturing environment?
A) LIFO method
B) FIFO method
C) Weighted average method
D) Specific identification method
Answer: C) Weighted average method. This method smooths out price
fluctuations over time, which is useful in manufacturing environments
where materials are frequently used and replenished.
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