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B Com Exam  >  B Com Tests  >  Test: Introduction to Cost Accounting- 2 - B Com MCQ

Test: Introduction to Cost Accounting- 2 - B Com MCQ


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10 Questions MCQ Test - Test: Introduction to Cost Accounting- 2

Test: Introduction to Cost Accounting- 2 for B Com 2024 is part of B Com preparation. The Test: Introduction to Cost Accounting- 2 questions and answers have been prepared according to the B Com exam syllabus.The Test: Introduction to Cost Accounting- 2 MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Introduction to Cost Accounting- 2 below.
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Test: Introduction to Cost Accounting- 2 - Question 1
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According to the cost classification, costs can be classified into three categories based on their nature. What are these categories?

Detailed Solution for Test: Introduction to Cost Accounting- 2 - Question 1
According to the cost classification by nature, costs are classified into three categories: materials, labor, and expenses. Materials include raw materials, components, spare parts, consumable stores, and packing materials. Labor refers to the cost of the workforce involved in the production process. Expenses include various expenses incurred by the organization, such as administrative expenses and selling and distribution expenses.
Test: Introduction to Cost Accounting- 2 - Question 2
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According to the cost classification by functions, costs are divided into manufacturing and production costs and commercial costs. What are commercial costs?

Detailed Solution for Test: Introduction to Cost Accounting- 2 - Question 2

Commercial costs, according to the cost classification by functions, include administration costs and selling and distribution costs. Administration costs are the costs incurred in the administrative function of the organization, such as salaries of administrative staff and office expenses. Selling and distribution costs are the costs incurred in the selling and distribution function, such as advertising expenses and transportation costs.

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Test: Introduction to Cost Accounting- 2 - Question 3
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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?

Detailed Solution for Test: Introduction to Cost Accounting- 2 - Question 3
Direct costs, according to the cost classification by degree of traceability to the product, are costs incurred for a particular product and can be identified with a particular cost center or cost unit. Examples of direct costs include the cost of materials used in the production of a specific product and the labor cost specifically assigned to the production of that product.
Test: Introduction to Cost Accounting- 2 - Question 4
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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?
Detailed Solution for Test: Introduction to Cost Accounting- 2 - Question 4
Fixed costs, according to the cost classification by changes in activity or volume, are costs that remain fixed in total amount with changes in the level of activity or volume of production. These costs do not change with the increase or decrease in production and remain constant over a given period of time. Examples of fixed costs include rent, insurance of factory buildings, and salaries of managers.
Test: Introduction to Cost Accounting- 2 - Question 5
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According to the cost classification by association with the product, costs can be classified as product costs and period costs. What are period costs?
Detailed Solution for Test: Introduction to Cost Accounting- 2 - Question 5
Period costs, according to the cost classification by association with the product, are costs incurred on the basis of time, such as rent and salaries. These costs are not directly related to the production of a specific product and are incurred for a certain period of time. Period costs are treated as expenses and are not included in the cost of inventory.
Test: Introduction to Cost Accounting- 2 - Question 6
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According to the cost classification by controllability, costs can be classified as controllable costs and non-controllable costs. What is a controllable cost?
Detailed Solution for Test: Introduction to Cost Accounting- 2 - Question 6
According to the cost classification by controllability, a controllable cost is a cost which can be influenced by the action of a specified member of an undertaking. This means that the cost can be controlled or managed by a specific individual or department within the organization. Examples of controllable costs include labor costs, material costs, and certain overhead costs.
Test: Introduction to Cost Accounting- 2 - Question 7
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According to the cost classification by normality, costs can be classified as normal costs and abnormal costs. What are normal costs?
Detailed Solution for Test: Introduction to Cost Accounting- 2 - Question 7
Normal costs, according to the cost classification by normality, are costs which are normally incurred at a given level of output under normal conditions. These costs are incurred in the normal course of production and are expected to be incurred regularly. Examples of normal costs include the cost of raw materials, labor costs, and certain overhead costs.
Test: Introduction to Cost Accounting- 2 - Question 8
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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?
Detailed Solution for Test: Introduction to Cost Accounting- 2 - Question 8
A capital cost, according to the cost classification by relationship with the accounting period, is a cost incurred in purchasing an asset to earn income or increase the earning capacity of the business. Capital costs are incurred at one point in time but the benefits from the asset are spread over multiple accounting years. Examples of capital costs include the cost of purchasing machinery or equipment for a factory.
Test: Introduction to Cost Accounting- 2 - Question 9
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According to the cost classification by time, costs can be classified as historical costs and predetermined costs. What are predetermined costs?
Detailed Solution for Test: Introduction to Cost Accounting- 2 - Question 9
Predetermined costs, according to the cost classification by time, are costs that are computed in advance of production based on past actual costs and factors affecting such costs. These costs are estimated costs and are used for planning and budgeting purposes. Predetermined costs can become standard costs when calculated scientifically. Standard costs are used to compare with actual costs and analyze variances for future correction.
Test: Introduction to Cost Accounting- 2 - Question 10
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According to the cost classification by time, costs can be classified as historical costs and predetermined costs. What are historical costs?
Detailed Solution for Test: Introduction to Cost Accounting- 2 - Question 10
Historical costs, according to the cost classification by time, are costs that are ascertained and recorded after they have been incurred. These costs are based on recorded facts and can be verified with supporting evidence. Historical costs provide an accurate record of the actual costs incurred in the past. They are useful for analyzing past performance and identifying areas for improvement.
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