Cost Accounting Principles Quiz

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Questions and Answers

What can result in a malus during the evaluation process?

Participating actively in discussions

Maintaining excellent behavior

Arriving late to class (correct)

Completing quizzes on time

Which of the following abbreviations represents total variable cost?

DVCu

VC (correct)

Which costing method is indicated by the acronym IVC?

Internal variable cost

Total indirect cost (correct)

Total indirect variable cost

Indirect variable cost

What is the purpose of the final exam in the evaluation criteria?

To evaluate knowledge retention Signup and view all the answers

Which of the following represents the total contribution margin?

CM Signup and view all the answers

What is the definition of a cost object?

Any activity that requires measurement of expenses Signup and view all the answers

How does management accounting support decision-making?

By providing a toolbox of costing methods for various managerial decisions Signup and view all the answers

Which of the following best describes standard costs?

Estimated costs predetermined based on standards Signup and view all the answers

What is the main purpose of cost management systems (CMS)?

To classify and assign costs to cost objects Signup and view all the answers

Which of the following is NOT a type of cost considered in cost accounting?

Interest expense on loans Signup and view all the answers

Which decision might require management to consider a make or buy decision?

Determining if a component should be manufactured internally or purchased Signup and view all the answers

What are actual costs based on?

Historical expenses incurred Signup and view all the answers

Which of the following scenarios would likely involve using cost accounting techniques?

Calculating the profitability of a new product before its launch Signup and view all the answers

Which type of cost directly varies with the production of a specific cost object?

Direct, variable costs Signup and view all the answers

What is a primary focus of financial accounting?

Externals reports for tax and financial purposes Signup and view all the answers

Which of the following is an example of indirect, fixed costs?

Rental of the restaurant Signup and view all the answers

Which characteristic differentiates management accounting from financial accounting?

It is internally oriented rather than externally oriented. Signup and view all the answers

What type of costs are energy consumption in a kitchen where many pizzas are cooked simultaneously?

Indirect, variable costs Signup and view all the answers

Which of the following describes direct, fixed costs?

They do not depend on the volume of the cost object. Signup and view all the answers

What type of information does management accounting utilize?

Financial and non-financial information Signup and view all the answers

In management accounting, how are expenses primarily categorized?

By destination Signup and view all the answers

Which of these is considered a direct cost in the production of sneakers?

Raw materials used in production Signup and view all the answers

What type of costs are associated with the marketing and advertisement of a sneakers shop?

Indirect, variable costs Signup and view all the answers

Which of the following best describes accounting as an information system?

It includes analyzing and interpreting data for decision making. Signup and view all the answers

Which is a key feature of financial accounting reports?

They are mandatory and must follow accounting standards. Signup and view all the answers

In the context of the content provided, what does 'shared support services' refer to?

Indirect, fixed costs Signup and view all the answers

Which cost is likely to remain unchanged regardless of whether a pizza is produced?

Indirect, fixed costs Signup and view all the answers

What is an essential aspect of management accounting related to time frame?

It considers both past and future information for planning. Signup and view all the answers

What type of reports does financial accounting emphasize?

Companywide reports such as balance sheets and income statements? Signup and view all the answers

Which of the following costs depend on the continuation of a cost object but not its volume?

Direct, fixed costs Signup and view all the answers

Which of these is an indirect cost example related to pizza production?

Depreciation of the oven Signup and view all the answers

What best describes a direct cost?

Costs that can be specifically identified with a particular cost object. Signup and view all the answers

Which of the following is an example of an indirect cost?

Salaries of supervisors in a multi-product factory. Signup and view all the answers

Which of the following costs can be classified as both direct and indirect?

Electricity usage Signup and view all the answers

What is the main difference between variable and fixed costs?

Variable costs directly relate to the quantity of output produced. Signup and view all the answers

What process is typically used to assign indirect costs?

Allocation bases or allocation keys. Signup and view all the answers

Which of the following is a characteristic of direct costs?

Easily identifiable and directly traceable to cost objects. Signup and view all the answers

Which item is classified as a fixed indirect cost?

Depreciation of a multi-product machine. Signup and view all the answers

What role do allocation bases play in cost assignments?

They help assign indirect costs to relevant cost objects. Signup and view all the answers

Which costs are included in full (or absorption) costing methods?

All costs consumed by a cost object Signup and view all the answers

What is the difference between partial costing and full costing?

Full costing includes all consumed resources, whereas partial costing only includes a portion. Signup and view all the answers

In the context of management accounting, what is meant by 'margin'?

It is the difference between sales revenue and one of its partial costs. Signup and view all the answers

What term is used in full (or absorption) costing to describe the profit generated?

Analytical Income Signup and view all the answers

Which of the following is typically not considered an indirect fixed cost?

Sales commissions Signup and view all the answers

Which of the following is a characteristic of partial costing?

It only includes certain resources consumed by a cost object. Signup and view all the answers

What type of costs are 'depreciation of a single-product machine' classified as?

Fixed direct costs Signup and view all the answers

Which of the following best describes indirect variable costs?

Costs that fluctuate with production levels but are not directly linked to specific units. Signup and view all the answers

Study Notes

Course Information

Course title: 4H1CD: Costs and decisions
Course supervisor: Agathe Morinière
Teacher: (Not specified)
Academic year: 2024-2025

Part 1: Main Concepts

Sections: Introduction, Classification of costs, Costing methods, Management accounting vs. financial accounting, Objectives of cost (management) systems or management accounting, Costing, and costs behaviour.

Evaluation

Assessment methods: Quizzes in sessions, Final exam
Grading elements: Malus (deduction of points) for arriving late or chatting, Bonus points for participation

Abbreviations

Q: quantity or volume
SPu/SP: selling price per unit / selling price
Sales: sales revenue, turnover
TC: total cost
Cu: unit cost
VC: total variable cost
VCu: unit variable cost
FC: total fixed cost
FCu: unit fixed cost
DC: total direct cost
DCu: unit direct cost
IC: total indirect cost
ICu: unit indirect cost
MC: marginal cost
DVC: total direct variable cost
DVCu: unit direct variable cost
IVC: total indirect variable cost
IVCu: unit indirect variable cost
DFC: total direct fixed cost
DFCu: unit direct fixed cost
IFC: total indirect fixed cost
IFCu: unit indirect fixed cost
CM: total contribution margin
CMu: unit contribution margin
ACM: total advanced contribution margin
ACMu: unit advanced contribution margin
Income: analytical income or profit

The Organisation as a Black Box/Financial Accounting Lenses/Cost Accounting Lenses

The organization is depicted as a black box that transforms resources into income
Financial accounting: resources, transformation process, products/services, costs, income, revenues
Cost accounting: resources, purchasing, production, sales, income

Costs by Stage/Operational/Running Costs

Costs by stage: Acquisition costs (materials and components), Production costs, Selling costs (and distribution), and Administrative & general costs.
Costs are broken down into categories as they move through the supply, production, and sales cycles

From Purchases to Expenses

Supply: Price of raw material + purchasing cost = Acquisition cost, Inventory of raw materials
Production: Cost of raw material + Direct labor + Manufacturing overheads = Cost of goods, Inventory of finished goods
Sales: Cost of goods sold + Selling expenses + General expenses = Operating expenses, Quantity sold, Expenses are handled in the income statement/balance sheet

Understanding Questions

These are questions for the student to answer during the course.

Costs and Cost Objects

Cost: Monetary measure of resources consumed to perform an activity (e.g., product/service delivery, acquisition of an asset). It's the sum/accumulation of expenses to achieve a specific objective (cost object).
Cost object: Any activity for a separate cost measurement (e.g., product, activity, department, customer).

Cost Timing

Actual cost: Cost calculated ex-post (after the fact), based on actual expenses incurred.
Standard cost: Cost estimated ex-ante (before the fact), calculated using predetermined standards (often based on past data and industry norms).

Costs and Cost Management Systems (CMS)

CMS purpose: Gathering, classifying, accumulating costs to help managers make decisions.
Costs are assembled differently based on managerial need

Costing Means Choosing

Costing methods are chosen based on the managerial decisions needing to be made (e.g., pricing, assessing product profitability, outsourcing decisions).

Costs and Cost Objects - Classification

Costs are categorized as:
- Direct, variable
- Indirect, variable
- Direct, fixed
- Indirect, fixed
These categories are used to analyze costs relevant to a specific cost object

Costs and Cost Objects - Frameworks

This shows different ways costs are classified depending on how they relate to cost objects:
- Direct, variable
- Indirect, variable
- Direct, fixed
- Indirect, fixed

Understanding Questions (continued/new)

Questions on the nature of costs, variable and fixed costs, and cost classifications (e.g., what is a cost? Why analyze costs?).

Costs Behaviour: Variable vs. Fixed Costs

Variable costs change in direct proportion to the level of activity or volume.
- Example: wood for desks

Variable Costs: Examples

Lists of costs by department and the factor influencing the cost (in the table structure)

Variable Costs: Graph

Graphs illustrate the behavior of variable costs, unit and total cost.

Costs Behaviour: Variable vs. Fixed Costs (2)

Fixed costs remain constant despite changes in the level of activity or volume

Fixed Costs: Graph

Graphs show the behavior of total fixed cost and unit fixed cost as production levels change

Fixed Costs: Examples

Lists fixed costs depending on the factors contributing to these costs

Fixed and Variable Costs

Charts of cost behaviours, showing total variable cost and total fixed cost relative to volume

Understanding Questions (continued)

Questions about specific cost types.

Cost Assignment: Direct vs. Indirect Costs

Direct cost: Costs specifically identifiable with a particular cost object (e.g. raw materials for a product).
Indirect cost: Costs that cannot be specifically identified with a cost object and must be allocated (e.g. rent of a production facility)

Cost Assignment: Direct vs. Indirect Costs (2)

Indirect costs are assigned to cost objects using allocation bases/allocation keys.

Classification of Costs: Examples

Examples illustrating the different types of direct and indirect costs (variable and fixed) categorized within the context of a business.

Exercises

Quiz marathon, Quiz noir, Best Bread, Exercise Deker, Exercice Presto services + exercice Quel coût.

Cost Calculation

Examples of different cost calculations.

Parts

Part 1: Main concepts (overview)

Studying That Suits You

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Description

This quiz tests your understanding of key concepts in cost accounting, including definitions, abbreviations, and the role of management accounting. Assess your knowledge on evaluation processes, cost objects, and decision-making scenarios crucial for effective cost management.