Test 355 Welcome to your International Navodaya Chamber of Commerce (INCOC) Platform ! Subject: Cost Accounting 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 State 1. Which of the following costs is excluded when calculating marginal cost? Direct material Direct labour Variable overheads Fixed overheads None 2. Which of the following costs can be classified as a sunk cost? Salaries for future projects Cost of raw material purchased but not yet used Cost of machinery purchased three years ago Expected costs for a new product None 3. Which variance is associated with the efficiency of the usage of materials? Material price variance Material usage variance Labour efficiency variance Overhead expenditure variance None 4. Which of the following is a key feature of activity-based costing (ABC)? It uses only direct labour hours to allocate costs It assigns overheads based on activities that drive costs It is only used in service industries It excludes indirect costs None 5. Which of the following describes equivalent units of production? The number of defective units produced The units that could have been produced given the total input The difference between actual and standard production units The cost per unit of raw material used None 6. In a manufacturing concern, factory rent is an example of Variable cost Fixed cost Direct cost Semi-variable cost None 7. The cost incurred in reworking defective products is called: Prime cost Conversion cost Rework cost Opportunity cost None 8. Which of the following is not an example of a fixed cost? Depreciation of machinery Rent of factory building Direct labour wages Insurance premium None 9. A high margin of safety indicates: Higher fixed costs Higher profitability Low break-even point Low sales volume None 10. The process of estimating future costs based on historical data is called: Budgeting Standard costing Cost forecasting Cost allocation None 11. Which of the following is a feature of job costing? Suitable for continuous production Costs are accumulated for a batch of similar products Costs are traced to individual jobs Costs are not traced to specific products None 12. Which method of costing is used in the construction of bridges? Job costing Batch costing Contract costing Process costing None 13. Fixed cost per unit will change with: Variable cost changes Changes in production level Direct labour changes Material cost changes None 14. The cost accounting system that records costs after they have been incurred is called: Standard costing Historical costing Marginal costing Budgetary costing None 15. The difference between the standard cost and the actual cost of production is called: Overhead Variance Absorption Contribution None 16. Which cost can be eliminated if a specific operation is discontinued? Committed cost Avoidable cost Sunk cost Fixed cost None 17. Which costing method is appropriate for a bakery producing bread and cakes in batches? Job costing Batch costing Contract costing Process costing None 18. The main purpose of cost accounting is to Maximize profit Allocate costs accurately Determine tax liability Maintain legal records None 19. Which cost is treated as a product cost under absorption costing? Selling expenses General administrative expenses Fixed manufacturing overhead Interest on loans None 20. Which of the following best describes step-fixed costs? Costs that vary with each unit produced Costs that remain fixed over a certain range and then increase Costs that are only incurred in certain production steps Costs that remain the same irrespective of production volume None 21. Which type of cost is allocated to products in activity-based costing? Direct costs Indirect costs based on activities Only fixed costs Variable costs only None 22. In which industry is process costing most likely to be used? Construction Chemical manufacturing Tailoring services Automobile servicing None 23. Labour efficiency variance is related to: Time taken by labour compared to standard time Number of workers employed Wage rate fluctuations Production overheads None 24. Which of the following is true regarding contribution margin? It is the difference between sales and fixed costs It is used to cover variable costs first It is the difference between sales and variable costs It is the profit before taxes None 25. Which of the following is a controllable cost? Factory rent Depreciation on equipment Direct materials used in production Salaries of factory managers None 26. Which of the following best describes the term 'cost driver' in activity-based costing? A measure that directly causes costs A tool for profit calculation The total variable cost The production volume None 27. Under marginal costing, profit is calculated based on: Absorbed overheads Contribution margin Total fixed costs Opportunity costs None 28. The overhead absorption rate is used to: Allocate variable costs to cost units Determine the selling price of products Charge overheads to cost units Calculate direct labour cost None 29. Which of the following is an example of semi-variable costs? Rent of a factory Supervisor's salary Utility costs with a fixed and variable component Direct materials cost None 30. Break-even analysis is primarily concerned with: Estimating future profits Finding the level of sales to cover all costs Calculating gross margin Determining production capacity None 31. Under process costing, normal loss is treated as: Part of the cost of production Abnormal gain Overhead cost Not included in cost accounts None 32. Which of the following is true about under-absorbed overhead? t occurs when actual overhead is less than absorbed overhead It occurs when absorbed overhead is more than actual overhead It indicates that the actual overhead is more than absorbed overhead It does not affect cost accounting None 33. The term 'prime cost' refers to: Direct material cost only Direct material, direct labour, and direct expenses Total cost minus overheads Selling and distribution expenses None 34. Which of the following best describes absorption costing? Only variable costs are included in product cost Fixed overheads are treated as period costs Both fixed and variable overheads are included in product cost It ignores the contribution margin None 35. If actual output is more than normal output, the fixed overhead volume variance will be: Zero Favourable Adverse Equal to the spending variance None 36. The purpose of budgetary control is to: Set sales targets Provide a basis for financial reporting Compare actual performance with budgeted figures Allocate costs between products None 37. Which of the following statements is true regarding step-variable costs? They remain fixed irrespective of production levels They increase in small steps as production volume increases They are always fixed within the relevant range They are direct costs None 38. Which costing method is suitable for industries where products pass through different processes? Job costing Process costing Contract costing Batch costing None 39. The margin of safety ratio is calculated as: (Actual Sales - Break-even Sales) / Actual Sales (Fixed Costs / Total Sales) x 100 (Contribution Margin / Variable Costs) x 100 Total Sales / Fixed Costs None 40. In a cost sheet, depreciation is treated as: Direct cost Variable cost Overhead Selling expense None 1 out of 4 Great job on taking the INCOC Test! 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