Cost Accounting
Cost classification
Section 1
Direct costs are those that:
A) can be traced to a specific cost object
B) cannot be traced to a specific cost object
C) are not related to production
D) are not related to selling and administrative expenses
Answer: A
Submitted by: Hamza
Indirect costs are those that:
A) can be traced to a specific cost object
B) cannot be traced to a specific cost object
C) are not related to production
D) are not related to selling and administrative expenses
Answer: B
Submitted by: Hamza
Which of the following is an example of a direct cost?
A) Rent for the factory building
B) Depreciation on the office equipment
C) Wages paid to factory workers
D) Advertising expenses
Answer: C
Submitted by: Hamza
Which of the following is an example of an indirect cost?
A) Direct materials cost
B) Direct labor cost
C) Factory rent
D) Wages paid to salespersons
Answer: C
Submitted by: Hamza
Fixed costs:
A) remain constant in total, regardless of changes in the level of activity
B) vary in total, but remain constant per unit, regardless of changes in the level of activity
C) vary both in total and per unit, with changes in the level of activity
D) are incurred only in the short run
Answer: A
Submitted by: Hamza
Variable costs:
A) remain constant in total, regardless of changes in the level of activity
B) vary in total, but remain constant per unit, regardless of changes in the level of activity
C) vary both in total and per unit, with changes in the level of activity
D) are incurred only in the short run
Answer: C
Submitted by: Majid
Which of the following is an example of a fixed cost?
A) Direct labor cost
B) Rent on the factory building
C) Direct materials cost
D) Wages paid to salespersons
Answer: B
Submitted by: Majid
Which of the following is an example of a variable cost?
A) Depreciation on the factory equipment
B) Property taxes on the factory building
C) Direct materials cost
D) Insurance on the factory building
Answer: C
Submitted by: Majid
Product costs:
A) are expensed when the product is sold
B) are expensed when the product is produced
C) include all costs other than product costs
D) are the same as period costs
Answer: B
Submitted by: Majid
Period costs:
A) are expensed when the product is sold
B) are expensed when the product is produced
C) include all costs other than product costs
D) are the same as product costs
Answer: C
Submitted by: Majid
Which of the following is an example of a period cost?
A) Direct materials cost
B) Direct labor cost
C) Advertising expenses
D) Factory rent
Answer: C
Submitted by: Majid
Which of the following costs change in response to changes in the level of activity?
A) Fixed costs
B) Variable costs
C) Both fixed and variable costs
D) Neither fixed nor variable costs
Answer: B
Submitted by: Farid
Which of the following costs remain the same in total, regardless of changes in the level of activity?
A) Fixed costs
B) Variable costs
C) Both fixed and variable costs
D) Neither fixed nor variable costs
Answer: A
Submitted by: Farid
Which of the following is an example of a mixed cost?
A) Rent on the factory building
B) Depreciation on the factory equipment
C) Wages paid to factory workers
D) Utility bills for the factory
Answer: D
Submitted by: Farid
Which of the following methods is used to separate a mixed cost into its fixed and variable components?
A) High-low method
B) Regression analysis
C) Both high-low method and regression analysis
D) Neither high-low method nor regression analysis
Answer: C
Submitted by: Farid
Which of the following is an example of a step cost?
A) Rent on the factory building
B) Depreciation on the factory equipment
C) Wages paid to factory workers
D) Cost of setting up a new production line
Answer: D
Submitted by: Farid
Which of the following is an example of a committed cost?
A) Cost of raw materials
B) Wages paid to factory workers
C) Rent on the factory building
D) Advertising expenses
Answer: C
Submitted by: Farid
Which of the following is an example of a discretionary cost?
A) Cost of raw materials
B) Wages paid to factory workers
C) Rent on the factory building
D) Advertising expenses
Answer: D
Submitted by: Farid
Which of the following statements is true about direct and indirect costs?
A) Direct costs are always variable costs
B) Indirect costs are always fixed costs
C) Direct costs can be traced to a specific cost object, while indirect costs cannot
D) Indirect costs can be traced to a specific cost object, while direct costs cannot
Answer: C
Submitted by: Jamil
Which of the following is an example of a sunk cost?
A) Cost of raw materials
B) Wages paid to factory workers
C) Rent on the factory building
D) Cost of research and development on a project that has been cancelled
Answer: D
Submitted by: Jamil
Which of the following costs are included in the cost of goods sold?
A) Product costs
B) Period costs
C) Both product costs and period costs
D) Neither product costs nor period costs
Answer: A
Submitted by: Jamil
Which of the following is an example of a direct cost?
A) Factory rent
B) Salaries of sales personnel
C) Raw materials used in production
D) Office supplies
Answer: C
Submitted by: Jamil
Which of the following is an example of an indirect cost?
A) Direct materials cost
B) Direct labor cost
C) Rent on the factory building
D) Shipping and handling costs
Answer: C
Submitted by: Jamil
Which of the following methods is used to allocate indirect costs to cost objects?
A) Activity-based costing
B) Standard costing
C) Marginal costing
D) Absorption costing
Answer: A
Submitted by: Jamil
Which of the following is an example of a differential cost?
A) Cost of raw materials
B) Depreciation on factory equipment
C) Cost of repairing defective products
D) Cost of training new employees
Answer: C
Submitted by: Jamil
Which of the following costs are incurred to support a company’s overall operations rather than the production of a specific product?
A) Direct costs
B) Indirect costs
C) Both direct and indirect costs
D) Neither direct nor indirect costs
Answer: B
Submitted by: Jamil
Which of the following is an example of a controllable cost?
A) Cost of raw materials
B) Rent on the factory building
C) Salaries of top management
D) Depreciation on the factory equipment
Answer: C
Submitted by: Jamil
Which of the following is an example of an uncontrollable cost?
A) Cost of raw materials
B) Rent on the factory building
C) Salaries of top management
D) Wages paid to factory workers
Answer: B
Submitted by: Jamil
Which of the following costs are incurred as a result of a past decision and cannot be changed?
A) Fixed costs
B) Variable costs
C) Sunk costs
D) Opportunity costs
Answer: C
Submitted by: Jamil
Which of the following is an example of an opportunity cost?
A) Cost of raw materials
B) Rent on the factory building
C) Salaries of top management
D) Potential revenue lost from choosing one investment over another
Answer: D
Submitted by: Jamil
Which of the following is an example of a direct material cost?
A) Factory rent
B) Depreciation on factory equipment
C) Wages paid to factory workers
D) Raw materials used in production
Answer: D
Submitted by: Jamil
Which of the following is an example of a direct labor cost?
A) Rent on the factory building
B) Depreciation on factory equipment
C) Wages paid to factory workers
D) Raw materials used in production
Answer: C
Submitted by: Jamil
Which of the following is an example of a variable overhead cost?
A) Factory rent
B) Depreciation on factory equipment
C) Wages paid to factory workers
D) Cost of electricity used in production
Answer: D
Submitted by: Jamil
Which of the following is an example of a fixed overhead cost?
A) Factory rent
B) Depreciation on factory equipment
C) Wages paid to factory workers
D) Cost of raw materials used in production
Answer: A
Submitted by: Tariq
Which of the following costs are included in the cost of goods manufactured?
A) Direct materials, direct labor, and manufacturing overhead
B) Direct materials, direct labor, and period costs
C) Indirect materials, indirect labor, and manufacturing overhead
D) Indirect materials, indirect labor, and period costs
Answer: A
Submitted by: Tariq
Which of the following is an example of a conversion cost?
A) Direct materials cost
B) Direct labor cost
C) Rent on the factory building
D) Depreciation on factory equipment
Answer: B
Submitted by: Tariq
Which of the following is an example of a period cost?
A) Cost of goods sold
B) Depreciation on factory equipment
C) Advertising expenses
D) Direct labor cost
Answer: C
Submitted by: Tariq
Which of the following is an example of a step-fixed cost?
A) Cost of raw materials
B) Cost of factory rent
C) Cost of electricity used in production
D) Cost of setting up a new production line
Answer: B
Submitted by: Tariq
Which of the following methods is used to allocate manufacturing overhead to products?
A) Direct labor hours method
B) Direct materials cost method
C) Activity-based costing
D) None of the above
Answer: C
Submitted by: Tariq
Which of the following is an example of a committed fixed cost?
A) Depreciation on factory equipment
B) Cost of electricity used in production
C) Rent on the factory building
D) Advertising expenses
Answer: C
Submitted by: Tariq
Which of the following costs are expensed in the period in which they are incurred?
A) Product costs
B) Period costs
C) Both product costs and period costs
D) Neither product costs nor period costs
Answer: B
Submitted by: Malik
Which of the following is an example of a step-variable cost?
A) Cost of raw materials
B) Cost of factory rent
C) Wages paid to factory workers
D) Cost of setting up a new production line
Answer: C
Submitted by: Malik
Which of the following is an example of an avoidable cost?
A) Cost of raw materials
B) Rent on the factory building
C) Salaries of top management
D) Cost of repairs for a faulty machine
Answer: D
Submitted by: Malik
Which of the following is an example of a non-manufacturing cost?
A) Depreciation on factory equipment
B) Cost of direct materials
C) Advertising expenses
D) Direct labor cost
Answer: C
Submitted by: Anas
Which of the following methods is used to allocate indirect costs to cost objects based on a predetermined overhead rate?
A) Direct labor hours method
B) Direct materials cost method
C) Activity-based costing
D) Normal costing
Answer: D
Submitted by: Anas
Which of the following is an example of a period cost?
A) Depreciation on factory equipment
B) Cost of raw materials
C) Salaries of top management
D) Wages paid to factory workers
Answer: C
Submitted by: Anas
Which of the following is an example of a semi-variable cost?
A) Cost of raw materials
B) Cost of factory rent
C) Cost of electricity used in production
D) Cost of repairs for a faulty machine
Answer: C
Submitted by: Anas
Which of the following is an example of a direct cost?
A) Depreciation on factory equipment
B) Rent on the factory building
C) Salaries of top management
D) Cost of direct materials
Answer: D
Submitted by: Saad
Which of the following is an example of an indirect cost?
A) Cost of direct materials
B) Cost of direct labor
C) Cost of factory rent
D) Cost of shipping finished goods
Answer: C
Submitted by: Saad
Which of the following is an example of a variable cost?
A) Cost of factory rent
B) Cost of direct materials
C) Cost of advertising expenses
D) Cost of depreciation on factory equipment
Answer: B
Submitted by: Saad
Which of the following is an example of a product cost?
A) Cost of rent for the factory building
B) Cost of direct labor
C) Cost of advertising expenses
D) Cost of salaries of top management
Answer: B
Submitted by: Imran
Which of the following is an example of a prime cost?
A) Cost of direct materials
B) Cost of direct labor
C) Cost of advertising expenses
D) Cost of factory rent
Answer: A
Submitted by: Imran
Which of the following is an example of a conversion cost?
A) Cost of direct materials
B) Cost of direct labor
C) Cost of factory rent
D) Cost of shipping finished goods
Answer: B
Submitted by: Imran
