According to the cost classification, costs can be classified into three categories based on their nature. What are these categories?

Direct Costs and Indirect Costs

Manufacturing Costs and Commercial Costs

Fixed Costs, Variable Costs, and Semi-variable Costs

According to the cost classification by functions, costs are divided into manufacturing and production costs and commercial costs. What are commercial costs?

Costs involved in manufacture, construction, and fabrication of products

Costs incurred in various functions of an organization such as production, administration, selling, and distribution

According to the cost classification by degree of traceability to the product, costs are divided into direct costs and indirect costs. What are direct costs?

Costs incurred for the benefit of a number of cost centers or cost units

Costs incurred for a particular product and can be identified with a particular cost center or cost unit

Costs that remain fixed in total amount with changes in the level of activity or volume of production

Costs that vary in direct proportion to the volume of output

According to the cost classification by changes in activity or volume, costs are classified into fixed, variable, and semi-variable costs. What are fixed costs?

Costs that remain fixed in total amount with changes in the level of activity or volume of production

Costs that vary in direct proportion to the volume of output

Costs that are partly fixed and partly variable

Costs incurred for a particular product and can be identified with a particular cost center or cost unit

According to the cost classification by association with the product, costs can be classified as product costs and period costs. What are period costs?

Costs that are incurred for a particular product and included in inventory cost

Costs incurred on the basis of time, such as rent and salaries

Costs that vary in direct proportion to the volume of output

Costs that are incurred under abnormal conditions and not normally incurred in the normal course of production

According to the cost classification by controllability, costs can be classified as controllable costs and non-controllable costs. What is a controllable cost?

A cost which cannot be influenced by the action of a specified member of an undertaking

A cost which can be influenced by the action of a specified member of an undertaking

A cost which remains fixed in total amount with changes in the level of activity or volume of production

A cost which varies in direct proportion to the volume of output

According to the cost classification by normality, costs can be classified as normal costs and abnormal costs. What are normal costs?

Costs incurred under abnormal conditions and not normally incurred in the normal course of production

Costs which are normally incurred at a given level of output under normal conditions

Costs that remain fixed in total amount with changes in the level of activity or volume of production

Costs that vary in direct proportion to the volume of output

According to the cost classification by relationship with the accounting period, costs can be classified as capital expenses and revenue expenses. What is a capital cost?

A cost incurred for maintaining an asset or running a business

A cost incurred in purchasing an asset to earn income or increase the earning capacity of the business

A cost that varies in direct proportion to the volume of output

A cost incurred under abnormal conditions and not normally incurred in the normal course of production

According to the cost classification by time, costs can be classified as historical costs and predetermined costs. What are predetermined costs?

Costs that are incurred for a particular product and included in inventory cost

Costs that are ascertained and recorded after they have been incurred

Costs that vary in direct proportion to the volume of output

Costs that are computed in advance of production based on past actual costs and factors affecting such costs

According to the cost classification by time, costs can be classified as historical costs and predetermined costs. What are historical costs?

Costs that are incurred for a particular product and included in inventory cost

Costs that are ascertained and recorded after they have been incurred

Costs that vary in direct proportion to the volume of output

Costs that are incurred under abnormal conditions and not normally incurred in the normal course of production

Introduction to Cost Accounting- 2 Free MCQ Practice Test with Solutions

	Cost Accounting 106 videos\|173 docs\|18 tests

	Cost Accounting 106 videos\|173 docs\|18 tests

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