Welcome to your International Navodaya Chamber of Commerce (INCOC) Platform ! Subject: Strategic Cost Management Total Number of Question: 40 Time: 41 Minutes Please check your email after completion of test for result. All the best... Name Phone No Email Area Pin Code 1. In cost-plus pricing, the markup percentage is generally based on: The cost of capital employed Competitors' prices The desired profit margin and the total cost of production The customer's willingness to pay None 2. Which of the following is the main characteristic of lean manufacturing? Maximizing production capacity by increasing inventory Minimizing waste and improving efficiency through continuous improvement Focusing on reducing direct labor costs Using activity-based costing for all operations None 3. Which of the following is the main focus of strategic cost management? Reducing the cost of raw materials Aligning cost management strategies with long-term business objectives Maximizing short-term profitability Allocating costs for each department individually None 4. In life cycle costing, which of the following costs is included? Only manufacturing costs Only marketing and sales costs All costs incurred during the product’s development, production, and disposal phases Only administrative costs None 5. What does Theory of Constraints (TOC) focus on in cost management? Managing inventory levels to reduce carrying costs Identifying the constraint (bottleneck) that limits overall throughput and improving it Increasing production capacity Minimizing fixed costs None 6. In target costing, the target cost is: The difference between the selling price and the desired profit The cost of producing the product as per historical costs A cost determined after calculating overhead costs d) The cost set by competitors None 7. The main objective of process costing is to: Determine the total cost for each specific job Allocate fixed costs to different products Assign costs to large volumes of similar products Focus on short-term cost control None 8. In activity-based costing (ABC), which of the following is true about overhead costs? They are not allocated to products They are allocated based on a single volume-based cost driver They are allocated based on multiple activities that drive costs They are only allocated to direct labor costs None 9. In just-in-time (JIT) inventory systems, which of the following is the primary objective? To minimize inventory holding costs by receiving materials just as needed To ensure an overstock of materials for production To increase production time by using excess inventory To forecast future demand and plan inventory accordingly None 10. The purpose of benchmarking in strategic cost management is to: Set a target cost for the product Compare internal processes and performance against industry leaders to identify areas of improvement Analyze only financial performance Maximize profits by setting high prices None 11. Which of the following is an example of a fixed cost? Raw material cost Sales commissions Rent for office space Direct labor cost None 12. Kaizen costing focuses on: Continuous cost reduction Absorbing fixed costs One-time cost savings Increasing selling price None 13. In value chain analysis, the focus is on: Reducing product features to minimize cost Evaluating all activities within the value chain to increase value and eliminate waste Maximizing the selling price of the product Decreasing the length of the production process None 14. In cost-volume-profit (CVP) analysis, the break-even point is the level of sales at which: Total revenue equals total fixed costs Total revenue equals total variable costs Total revenue equals total costs (fixed and variable) Total revenue exceeds total costs by the desired profit margin None 15. What is the purpose of variable costing? To calculate the cost of goods sold under absorption costing To allocate fixed costs to products To focus on short-term decision-making by separating fixed and variable costs To determine long-term capital investment decisions None 16. Standard costing involves: Determining actual costs Establishing predetermined costs Excluding variances from cost analysis None of the above None 17. The main advantage of flexible budgeting is that it: Helps in comparing actual performance to a fixed budget at different levels of activity Focuses solely on long-term planning Requires no adjustments for changes in activity levels Ignores changes in fixed costs None 18. Job order costing is most appropriate when: The production process is standardized and continuous Large volumes of identical products are produced Products are custom-made or unique, with different production processes for each order The company focuses on minimizing fixed costs None 19. Which of the following strategies is used in cost leadership? Offering premium products with high-quality features Competing on price by becoming the lowest-cost producer Differentiating products based on brand image Targeting a niche market with specialized products None 20. theory of constraints (TOC), a "bottleneck" refers to: The most expensive activity in the production process A process that has excess capacity and causes delays A constraint that limits the overall throughput of the system A process that leads to inefficiency but does not impact throughput None 21. Which of the following is not a benefit of activity-based costing (ABC)? More accurate product costing Better identification of cost drivers Reduces the need for separate accounting systems d) Provides more detailed insights into the production process None 22. Which of the following is not a goal of lean manufacturing? Reducing waste and improving efficiency Minimizing inventory levels Maximizing product differentiation Streamlining production processes None 23. Theory of Constraints (TOC) emphasizes the importance of: Cutting direct material costs Identifying and optimizing the key constraint in the system that limits overall performance Minimizing the number of production lines Maximizing capacity in every department None 24. Which of the following is the main principle of zero-based budgeting (ZBB)? Using historical data as a basis for the new budget Justifying every expense from the ground up, without considering previous budgets Allocating a fixed percentage increase over the last budget Allocating funds based on departmental priorities None 25. Which of the following is not an advantage of value engineering? Identifying cost-saving opportunities without affecting product quality Focusing on improving the functionality of the product Increasing the product’s complexity Reducing the overall cost of the product None 26. Which of the following describes target costing? Cost is determined based on a markup from the cost of production Cost is determined by subtracting the desired profit from the competitive market price Cost is allocated based on the highest demand Cost is based on historical production data None 27. In a just-in-time (JIT) system, the goal is to: Maintain a large inventory to ensure production continuity Minimize production downtime Receive inventory just before it is needed in production Increase production capacity regardless of demand None 28. In cost-plus pricing, the cost used to set prices typically includes: Only the direct costs of production Direct costs and a proportion of fixed costs Only the direct materials costs The cost of capital and interest None 29. The Cost Leadership strategy primarily focuses on: Differentiating products to create a unique market position Reducing costs to offer competitive pricing Improving quality at the expense of cost Expanding into niche markets None 30. In process costing, costs are: Assigned to individual products based on job order Accumulated for each process and averaged over units produced Focused on direct labor costs Allocated based on fixed costs alone None 31. In Kaizen costing, which of the following is emphasized? Radical improvements in cost structure Achieving cost reductions through small, continuous improvements Shifting production costs to other departments Avoiding changes in existing processes None 32. In value chain analysis, activities that add value to a product are known as: Support activities Primary activities External activities Non-value-adding activities None 33. Balanced scorecard includes all of the following perspectives EXCEPT: Financial perspective Customer perspective Internal business processes perspective Competitive perspective None 34. Which of the following strategies involves cost cutting through reengineering business processes? Cost leadership strategy Differentiation strategy Focus strategy Business process reengineering (BPR) None 35. In transfer pricing, the main objective is to: Maximize taxes on internal sales Allocate resources to maximize efficiency within a division Set an optimal price for transactions between different divisions of a company Lower production costs for the firm None 36. Life cycle costing is useful when: The focus is on reducing costs in the short term Products have a long-term production and maintenance phase Profitability is determined based on immediate market conditions Only direct material costs are considered None 37. Which of the following is the key objective of strategic cost management? Minimize cost of goods sold Align cost management practices with the organization's strategic goals Maximize profit in the short term Eliminate all non-value-adding activities None 38. In target costing, when the actual cost exceeds the target cost, the company needs to: Increase the selling price to compensate Eliminate waste and reduce costs to meet the target Reduce the desired profit margin Increase production volume None 39. Activity-based costing (ABC) is useful primarily when: There is a high volume of similar products produced The production process involves a wide variety of products with different levels of complexity The company has minimal overhead costs Only direct costs need to be tracked None 40. Which of the following is a primary principle of lean accounting? Maximizing inventory at each production stage Simplifying cost allocation by focusing only on value-added activities Allocating overhead costs uniformly across all products Minimizing the production time for each product None 1 out of 4 Great job on taking the INCOC Test! We appreciate your interest in test. Look out for results and future opportunities. Stay Connected !! Your quiz time is about to finish. Few seconds left. 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