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. Which of the following is not a feature of target costing? The cost is determined based on market price and desired profit margin It focuses on managing costs during the product development phase It helps companies reduce costs based on historical pricing strategies It aims to achieve a cost lower than the target to maintain profitability None 2. Which of the following cost management techniques focuses on the continuous improvement of quality and efficiency through small, incremental improvements? Kaizen costing Activity-based costing Life cycle costing Target costing None 3. Which type of cost is not typically considered in a life cycle costing approach? Research and development costs Manufacturing costs Marketing and sales costs Opportunity costs of lost investments None 4. The key success factor in strategic cost management is: Maximizing short-term profits Aligning cost strategies with long-term business goals Increasing production capacity Cutting down on variable costs only None 5. In benchmarking, organizations compare their processes against: Competitors' processes Internal standards only Industry best practices The company's own historical performance None 6. Which of the following methods is used in strategic cost management to achieve cost reduction through improved operational efficiencies? Process reengineering Standard costing Break-even analysis Variance analysis None 7. In activity-based costing (ABC), what is considered a "cost driver"? A unit of product produced An activity that causes the cost to increase or decrease A fixed cost allocation The total volume of production None 8. Which of the following is not an objective of lean manufacturing? Reducing inventory levels Improving product quality Streamlining the production process Increasing the production capacity without improving efficiency None 9. Strategic cost management emphasizes: Maintaining high profit margins through premium pricing Minimizing costs in production while maintaining the same product quality Aligning cost control strategies with the strategic goals of the organization Focusing solely on short-term cost reductions None 10. Zero-based budgeting is an approach where: The budget is based on the previous year's expenditures with adjustments for inflation Each department starts from zero and justifies every expense as if it were a new activity The company focuses on historical spending patterns Budgeting is done based on a fixed percentage increase over the prior year None 11. In activity-based costing (ABC), how are overhead costs assigned? Based on the direct labor cost incurred Based on the number of units produced Based on the activities that drive the overhead costs Based on fixed cost allocations None 12. Cost-plus pricing is primarily used in which situation? When competition is high in the market When setting prices based on costs plus a desired profit margin When the firm aims to establish a premium brand image When demand is very elastic None 13. Just-in-time (JIT) production is designed to: Maintain a large inventory to ensure production continuity Minimize waste and reduce production time by producing only when needed c) Focus on increasing product variety to meet customer demands Focus on increasing stock levels for cost benefits None 14. The process of outsourcing in strategic cost management is primarily aimed at: Reducing direct labor costs Increasing the quality of in-house processes Shifting risk and responsibility to external vendors Reducing the need for long-term investments in production equipment None 15. In target costing, the target price is set by: Estimating the cost of production first and adding a profit margin Identifying the desired profit margin and subtracting it from the competitive market Negotiating the price with suppliers Estimating the fixed costs of production and setting the price based on that None 16. In the Theory of Constraints (TOC), the goal is to: Eliminate all non-value-adding activities Identify the bottleneck in the system and optimize it to improve throughput Maximize the use of available resources Focus on minimizing overhead costs None 17. Process costing is most suitable for: Manufacturing steel Accounting services Custom-made furniture Consulting None 18. Value chain analysis helps identify: Ways to reduce direct costs only Opportunities to enhance product quality and reduce costs by evaluating each activity c) Financial performance across departments d) The price elasticity of demand None 19. In strategic cost management, cost allocation refers to: Assigning the total fixed cost to each department evenly Distributing costs among various business functions based on specific criteria Reducing overall fixed costs across all departments Shifting production costs to external vendors None 20. Kaizen costing is typically applied during: The early stages of production to set initial cost targets The product life cycle, particularly during the manufacturing phase The product's marketing phase to adjust advertising costs The product development stage for pricing decisions None 21. Cost-volume-profit (CVP) analysis is used primarily to: Forecast the company's market share Evaluate the effect of various sales volumes and costs on profit Set long-term capital investment plans Determine customer demand based on production costs None 22. The principal aim of value engineering is: To improve the overall quality of the product To reduce the cost of producing the product without affecting its functionality To increase the product’s complexity To differentiate the product from competitors None 23. Flexible budgeting is useful when: The production process is stable and does not change over time A company needs to adjust its budget according to different levels of activity There is no significant variation in fixed and variable costs The company does not want to monitor performance continuously None 24. Job order costing is appropriate when: The production process involves continuous production of identical units Products are produced based on specific customer orders There are only indirect costs involved The company uses a highly automated production system None 25. In value-based pricing, prices are determined by: The company’s historical costs The perceived value of the product to customers The competitive price for similar products The company's fixed cost structure None 26. In process costing, costs are assigned to: Individual jobs or orders Units of production in a continuous flow process Individual departments based on budgeted estimates Direct labor only None 27. Break-even analysis determines: The level of sales at which profit equals total fixed costs The point at which total revenue equals total variable costs The selling price that will maximize profitability The minimum profit margin needed to cover fixed costs None 28. Activity-based costing (ABC) is especially useful when: Direct costs dominate the cost structure A firm produces a large number of highly standardized products A company produces a variety of products that consume different resources at varying levels Fixed costs are not significant in the cost structure None 29. In theory of constraints (TOC), improving the throughput of the system focuses on: Eliminating waste in non-bottleneck processes Increasing the capacity of every Maximizing the output at the bottleneck or constraint d) Reducing the need for capital investments None 30. Transfer Pricing refers to: Taxation on the transfer of property Tax rates on imports and exports The pricing of goods, services, or intangible assets between related entities None of the above None 31. Which of the following is not a typical characteristic of lean accounting? Emphasis on value stream costing Focus on measuring and eliminating non-value-added activities Allocating costs based on traditional cost accounting systems Simplified financial reporting for lean operations None 32. The cost-plus pricing method is often used in: Competitive industries with minimal differentiation Industries with high levels of competition and fluctuating costs Long-term contracts or industries with less price sensitivity Retail sectors with high sales volume None 33. Strategic Cost Management (SCM), a SWOT analysis can help identify: The competitive pricing strategy Opportunities for cost reduction and profitability enhancement The pricing power of the company’s suppliers Financial risks associated with cost allocation None 34. The primary goal of target costing is to: Reduce production costs by increasing automation Ensure that a product is priced to meet the target market price and desired profit Increase profit margins on each unit sold Increase product quality to exceed customer expectations None 35. The break-even point in cost-volume-profit analysis (CVP) is: The point where total revenue equals total costs, resulting in no profit or loss The level of production where fixed costs are fullycovered The level of sales at which profit is maximized The point where marginal cost equals marginal revenue None 36. Life cycle costing includes costs that: Are incurred only during the production phase of the product Span from the product’s development phase through to its disposal Focus solely on the initial production and sales costs Are related exclusively to the product’s marketing activities None 37. In process costing, which of the following is used to determine the cost per unit? Fixed costs per unit Total direct labor costs divided by units produced Total manufacturing costs divided by the number of units produced Only variable production costs divided by the number of units produced None 38. Kaizen costing focuses on: Continuous cost reduction Absorbing fixed costs One-time cost savings Increasing selling price None 39. In value chain analysis, the focus is to: Optimize costs related to marketing and sales only Identify and improve activities that add value to the product or service Increase the volume of production to reduce cost per unit Focus solely on reducing raw material costs None 40. Activity-based costing (ABC) is most beneficial in companies that: Have high volumes of similar products and standardized processes Manufacture a small number of highly customized products with diverse costs Focus on long-term, low-volume production Use highly automated systems with minimal complexity None 1 out of 4 Great job on taking the INCOC Test! 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