Welcome to your International Navodaya Chamber of Commerce (INCOC) Platform ! Subject: Cost and Management AccountingTotal Number of Question: 40Time: 41 MinutesPlease check your email after completion of test for result.All the best... Name Phone No Email State 1. A cost that changes in total in direct proportion to the changes in the level of activity is called: Fixed cost Variable cost Semi-variable cost Step cost None 2. Which of the following is a fixed cost? Raw material cost Salaries of permanent staff Electricity cost Cost of transportation None 3. Which of the following is an example of a semi-variable cost? Electricity cost Rent Salaries of staff Commission on sales None 4. Direct costs can be traced directly to: Products Cost centers Period costs Financial statements None 5. Which of the following is an example of job order costing? Mass production of plastic items Construction of a building Manufacturing of soap Assembly line production None 6. Process costing is used in industries where: Customized goods are produced Products are manufactured in large quantities The production process is not continuous Each product is unique None 7. The cost of scrap in a process costing system is considered as: Normal loss Abnormal loss By-product Direct cost None 8. Which of the following best describes batch costing? Used for industries producing single products Suitable for industries where products are produced in groups or batches Only applicable for service industries Used in continuous production processes None 9. Which of the following is a common method of valuing materials issued from stores? FIFO Standard costing Marginal costing Activity-based costing None 10. The cost of defective materials that are returned to the store should be treated as: Direct material cost Reduction in material cost Abnormal loss Part of overhead cost None 11. Which of the following is considered a direct material cost? Depreciation on factory building Raw materials used in production Office supplies Factory management salaries None 12. When stock levels fall below the minimum level, this is known as: Reorder level Economic order quantity Maximum level Danger level None 13. Which of the following is an example of indirect labor? Factory supervisor wages Worker wages in the production line Maintenance worker wage Carpenter’s wages for building a product None 14. The cost of overtime labor should be classified as: Direct labor Indirect labor Abnormal labor cost Variable cost None 15. Under the piece rate system, the worker is paid: Based on time worked A fixed monthly salary For each unit of output produced Based on output quality None 16. The labor cost variance can be split into: Labor rate variance and labor efficiency variance Labor idle time variance and labor efficiency variance Labor rate variance and production variance Direct cost variance and indirect cost variance None 17. Which of the following is a characteristic of overhead costs? They are directly traceable to a product They vary with the volume of production They are indirectly related to production They are always fixed in nature None 18. The primary purpose of overhead absorption is to: Allocate overheads to products or services Reduce variable costs Eliminate fixed costs Determine selling prices None 19. Which of the following is an example of an indirect material cost? Raw material Factory supplies Direct labor Depreciation of machinery None 20. In a standard costing system, the overhead rate is based on: Actual overhead costs Predetermined overhead costs Total sales Variable costs only None 21. The variance between actual and standard costs is termed as: Profit variance Cost variance Contribution variance Overhead variance None 22. Which of the following would be an example of an unfavorable variance? Actual costs are less than standard costs Actual revenue is more than expected revenue Actual costs are higher than standard costs Sales exceed the break-even point None 23. In a variance analysis, if actual production exceeds standard production, this leads to: A favorable variance An unfavorable variance A zero variance An increase in fixed costs None 24. The labor rate variance is the difference between: Actual hours worked and standard hours allowed Standard rate and actual rate Total labor cost and standard labor cost Labor efficiency and overhead efficiency None 25. When setting prices under marginal costing, companies focus on covering: Total fixed costs and variable costs Only variable costs Only fixed costs Contribution margin None 26. In a competitive market, a company may decide to set the price of a product at its: Marginal cost Total cost Break-even price Market price None 27. The contribution margin per unit is calculated by: Subtracting total variable cost from total sales Subtracting fixed costs from total sales Subtracting variable cost per unit from selling price per unit Subtracting variable cost per unit from selling price per unit d) Subtracting fixed cost per unit from selling price per unit None 28. If a company is operating at full capacity, the price should cover: Total fixed costs only Variable costs and contribute towards fixed costs Direct material costs Only the selling price None 29. Which of the following is the first step in the budgeting process? Identifying the financial goals Preparing detailed cost estimates Reviewing past budgets Sales forecasting None 30. A flexible budget is useful when: Actual output differs from the expected output Fixed costs change during the budget period The sales price is constant Variance analysis is not needed None 31. The master budget is a comprehensive financial plan that includes all the following except: Cash budget Sales budget Production budget Actual results None 32. A cash budget helps a company in: Determining the long-term financial structure Managing liquidity and ensuring sufficient cash flow Analyzing capital structure Setting prices for products None 33. Activity-based costing is especially useful in allocating overheads for: Low-volume, high-cost products High-volume, low-cost products Fixed costs Period costs None 34. In Activity-Based Costing (ABC), overhead costs are allocated to: Direct materials Activities Labor hours Direct labor None 35. Which of the following is a disadvantage of Activity-Based Costing? It is expensive to implement and maintain It does not allocate indirect costs It ignores cost drivers It is only suitable for small businesses None 36. The key concept of Activity-Based Costing is that: Costs are driven by a single cost driver Overhead costs are arbitrarily allocated Activities cause costs, not products Cost centers are assigned to products directly None 37. In relevant cost analysis, sunk costs are: Relevant for decision making Relevant for decision making Only relevant when analyzing future cash flows Always considered in marginal costing None 38. The relevant cost for a special order decision includes: Fixed costs Sunk costs Incremental costs Past investments None 39. When a company is operating at full capacity and receives a special order, it should consider: Total costs only Fixed costs only Opportunity cost of the resources used Selling price per unit None 40. In make-or-buy decisions, the relevant costs are: All costs incurred in production Only variable costs Avoidable costs Only fixed costs None 1 out of 4 Great job on taking the INCOC Test! 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