Unlock hundreds more features
Save your Quiz to the Dashboard
View and Export Results
Use AI to Create Quizzes and Analyse Results

OR
Sign inSign in with Facebook
Sign inSign in with Google
Quizzes > Quizzes for Business > Finance

Master the Cost Accounting Methods Quiz

Evaluate Cost Accounting Approaches in This Quiz

Difficulty: Moderate
Questions: 20
Learning OutcomesStudy Material
Colorful paper art depicting a quiz on cost accounting methods

Ready to master cost accounting methods? This cost accounting methods quiz invites you to apply principles like job order costing, process costing, and activity-based costing through engaging questions. Whether you're an accounting student seeking a targeted review or an instructor needing a free diagnostic tool, you'll benefit from instant feedback and clear explanations. Explore the Cost Accounting Knowledge Assessment or dive into the Management Accounting Assessment for broader practice. Easily customize and expand questions in our quizzes editor to match your learning goals.

What costing method is best suited for unique, custom jobs with distinct cost accumulation?
Activity-based costing
Job order costing
Process costing
Standard costing
Job order costing tracks costs for each unique job separately, making it ideal for custom projects. Process costing accumulates costs by department for homogeneous products.
Which costing method accumulates costs by department for continuous, homogeneous production?
Activity-based costing
Job order costing
Standard costing
Process costing
Process costing assigns costs to each production department for similar units produced continuously. Job order costing is for distinct batches or jobs.
What is the primary purpose of a standard costing system?
To allocate overhead using actual rates
To determine selling price directly
To track costs of individual jobs
To control costs through variance analysis
Standard costing compares actual costs to predetermined standards to highlight variances. These variances help managers control operations.
How is a predetermined overhead rate typically calculated?
Estimated overhead ÷ Estimated activity base
Total costs ÷ Units produced
Budgeted sales ÷ Overhead cost
Actual overhead ÷ Actual activity base
A predetermined overhead rate uses estimated overhead and an estimated activity base before the period begins. It smooths overhead application over the period.
What distinguishes activity-based costing from traditional overhead allocation?
Overhead is allocated based on multiple activities and cost drivers
Indirect costs are ignored
Overhead is allocated solely on direct labor hours
All overhead is applied equally to every product
Activity-based costing uses multiple cost pools and cost drivers to allocate overhead more accurately. Traditional methods often rely on a single volume-based driver.
Under absorption costing, how is fixed manufacturing overhead treated?
Allocated to selling and administrative
Included in product cost
Expensed immediately as incurred
Ignored until year-end
Absorption costing assigns all manufacturing costs, including fixed overhead, to product costs. This differs from variable costing, which expenses fixed overhead in the period incurred.
Which formula represents the materials price variance?
(Standard Quantity - Actual Quantity) × Actual Price
(Actual Quantity - Standard Quantity) × Standard Price
(Actual Price - Standard Price) × Actual Quantity Purchased
(Standard Price - Actual Price) × Standard Quantity Used
Materials price variance measures the difference between actual and standard price for the quantity purchased. It isolates price effects from quantity effects.
Which formula represents the labor efficiency variance?
(Actual Rate - Standard Rate) × Standard Hours
(Actual Hours - Standard Hours Allowed) × Standard Rate
(Standard Hours - Actual Hours) × Actual Rate
(Actual Rate - Standard Rate) × Actual Hours
The labor efficiency variance compares actual labor hours to the standard allowed hours at the standard rate. It highlights variances in labor usage.
Which costing method is most appropriate for a custom furniture maker producing distinct orders?
Throughput costing
Target costing
Job order costing
Process costing
Custom furniture orders vary by design and cost, so job order costing tracks each order separately. Process costing is used for uniform, continuous production.
Which costing method would a bottling plant producing millions of identical cans use?
Job order costing
Direct costing
Process costing
Activity-based costing
A bottling plant has homogeneous output in continuous flow, so process costing accumulates costs by department or process.
What is the first step in implementing an activity-based costing system?
Calculate product margins
Select cost drivers
Assign costs to products
Identify activities and cost pools
ABC begins by identifying the major activities that consume resources and setting up cost pools around them. Later steps select drivers and assign costs.
A company estimates $500,000 in manufacturing overhead and 50,000 machine”hours. What is its predetermined overhead rate?
$15 per machine”hour
$20 per machine”hour
$5 per machine”hour
$10 per machine”hour
The rate is calculated by dividing estimated overhead ($500,000) by estimated machine”hours (50,000), yielding $10 per machine”hour.
If overhead is under”applied by $8,000, which entry correctly closes the balance?
Debit Manufacturing Overhead $8,000; Credit COGS $8,000
Debit Cost of Goods Sold $8,000; Credit Manufacturing Overhead $8,000
Debit Finished Goods $8,000; Credit Work in Process $8,000
Debit COGS $8,000; Credit Finished Goods $8,000
Under”applied overhead has a debit balance that must be closed by debiting COGS and crediting Manufacturing Overhead.
In activity-based costing, what is a cost pool?
A batch of raw materials
Total direct labor costs
A grouping of overhead costs related to a single activity
A finished goods inventory account
A cost pool collects all overhead costs associated with a particular activity. Costs are then allocated to products based on driver usage.
What does a favorable spending variance in overhead signify?
Actual overhead costs were less than budgeted overhead
Standard hours exceeded actual hours
Budgeted overhead costs were lower than standard
Actual overhead costs were more than budgeted overhead
A favorable spending variance means the actual costs incurred were lower than the budgeted or standard overhead costs.
How are joint production costs allocated if using the sales value at split-off method?
Allocate costs based on each product's sales value at split-off divided by total sales value
Allocate based on direct labor hours
Allocate equally between products
Allocate based on production volume only
Under the sales value at split-off method, joint costs are allocated in proportion to the relative sales values of each product at the split-off point.
If materials price variance is $200 F and materials usage variance is $150 U, what is the net materials variance?
$50 Favorable
$350 Unfavorable
$50 Unfavorable
$350 Favorable
Net materials variance combines price and usage variances: $200 Favorable minus $150 Unfavorable equals $50 Favorable overall.
In ABC, if a cost pool has $120,000 and 6,000 activity driver units, what is the activity rate?
$20 per driver unit
$15 per driver unit
$22 per driver unit
$18 per driver unit
The activity rate is calculated by dividing the total cost pool ($120,000) by the total driver units (6,000), yielding $20 per driver unit.
What is an advantage of using a dual-rate departmental overhead allocation system?
It ignores fixed costs entirely
It allocates all overhead based on a single driver
It separates fixed and variable overhead for more accurate cost behavior analysis
It always reduces product costs
Dual-rate systems distinguish between fixed and variable overhead rates, improving accuracy in cost allocation and cost behavior understanding.
Under the FIFO method of process costing, which units are included in equivalent units of production?
Only beginning inventory units
Only units in ending inventory
All units worked on, regardless of beginning inventory
Only units started and completed during the current period plus work needed to finish beginning inventory
FIFO counts only the work done in the current period: units completed beyond beginning inventory and work to finish beginning inventory. It excludes prior-period work.
0
{"name":"What costing method is best suited for unique, custom jobs with distinct cost accumulation?", "url":"https://www.quiz-maker.com/QPREVIEW","txt":"What costing method is best suited for unique, custom jobs with distinct cost accumulation?, Which costing method accumulates costs by department for continuous, homogeneous production?, What is the primary purpose of a standard costing system?","img":"https://www.quiz-maker.com/3012/images/ogquiz.png"}

Learning Outcomes

  1. Analyse different cost accounting methods and their applications
  2. Apply standard costing to calculate variances
  3. Identify appropriate costing techniques for diverse scenarios
  4. Demonstrate understanding of job order and process costing
  5. Evaluate activity-based costing to allocate overhead

Cheat Sheet

  1. Fundamentals of Cost Accounting - Get to know the ABCs of cost accounting by classifying costs as fixed, variable, direct, or indirect. This solid foundation helps you break down production expenses and make savvy financial calls. Read more
    2. Cost Accounting: Definition and Types With Examples
  2. Job Costing - Dive into job costing, where you allocate costs to individual jobs or batches, perfect for custom projects. You'll track exact expenses and see how each unique order impacts your bottom line. Read more
    3. Job Costing
  3. Process Costing - Explore process costing to accumulate costs in continuous, homogeneous production - think chemicals or textiles. It's the go-to method when your output flows uninterrupted. Read more
    4. Process Costing
  4. Activity-Based Costing (ABC) - ABC allocates overhead based on real activities, giving you a crystal-clear view of where money really goes. It's like shining a spotlight on each step of production! Read more
    5. Activity-Based Costing
  5. Standard Costing - Set up expected costs for materials, labor, and overhead, then compare against real numbers to spot variances. This superpower helps you tweak operations and boost efficiency. Read more
    6. Standard Costing Explained
  6. Total Absorption Costing - Want the full picture? Total absorption costing folds in all manufacturing costs - fixed and variable - into unit costs, ensuring nothing slips through the cracks. Read more
    7. Total Absorption Costing
  7. Comparing Job vs. Process Costing - Uncover when to pick job costing or process costing based on your production style. Understanding both methods sharpens your decision-making toolkit. Read more
    8. Job vs. Process Costing
  8. Identifying Cost Drivers - In ABC, cost drivers are the secret sauce that triggers costs - like machine hours or number of setups. Pinpoint them to allocate overhead more accurately and reduce waste. Read more
    9. Activity-Based Costing Details
  9. Variance Analysis - Use variance analysis to compare actual versus standard costs and decode the "why" behind any differences. This detective work helps keep budgets on track. Read more
    10. Variance Analysis Basics
  10. Overhead Allocation Techniques - Master different ways to spread overhead costs - like plantwide rates or department rates - to refine your product pricing. Accurate allocation means healthier profit margins. Read more
    11. Overhead Allocation
Make a Quiz (FREE) Copy & Edit This Quiz Create a Quiz with AI

Finance Quizzes

Powered by: Quiz Maker