Intro To Cost Accounting

Question 1

What is cost accounting?

Answer 1

Refers to the process of collecting, summarizing, analyzing and reporting in monetary terms, cost information by the management to help carry out its function of planning, organizing, coordinating, controlling and dec-making

Question 2

Purposes of Cost Accounting

Answer 2

1) Cost ascertainment of job, product or process
2) cost ascertainment of stock to be carried to the financial statement
3) to check the accuracy of the profit gotten financial statement
4) Helps in setting prices
5)helps in setting standards for control purposes

Question 3

Who are the users of cost accounting information?

Answer 3

The internal decision makers I.e management

Question 4

Who are the users of financial accounting information?

Answer 4

Internal and external decision makers

Question 5

Primary purpose of financial accounts?

Answer 5

To render accounts for stewardship

Question 6

Primary Purpose of CA

Answer 6

To help the mgt in decision making

Question 7

What is the unwritten rule of CA information ?

Answer 7

That the information must be useful and timely to aid decision making

Question 8

Primary emphasis of cost accounting?

Answer 8

Segment reporting

Question 9

What is segment reporting?

Answer 9

Reporting of information (in monetary terms) of different segments of an organization or for a job

Question 10

When is Cost accounting information prepared?

Answer 10

On-demand of the mgt

Question 11

What are Costing Methods?

Answer 11

Used for determining the cost of a job, product or process

Question 12

What are costing techniques?

Answer 12

Used for determining the value of finished goods

Question 13

_____ are the tools and ______ are the ways / approaches to ascertain the cost of a job, product or process?

Answer 13

Techniques and Methods

Question 14

What is process costing?

Answer 14

Method used in determining cost of standardized/ homogeneous products involving a series of processes

Question 15

What is job costing?

Answer 15

Method used for non-homogeneous/standardized products made based on customer requirements

Question 16

Job/_______ costing?

Answer 16

Contract costing

Question 17

What method is used when:
A standardized product is made based on customer requirements
When the duration for the job is long

Answer 17

Contract Costing

Question 18

When the duration of completing the job is small, what costing method is to be used?

Answer 18

Contract costing

Question 19

What is batch costing?

Answer 19

Costing method used for homogeneous products made in batches

Question 20

Standard costing facilitates which management function and how?

Answer 20

Controlling by setting standard performance and providing feedback for control purposes

Question 21

______ is the estimated input cost for producing a given output?

Answer 21

Standard cost

Question 22

Cost Variance =?

Answer 22

Standard Cost - Actual Cost

Question 23

________is a costing technique where only the variable costs of producing a product is considered in ascertaining the cost

Answer 23

Marginal costing

Question 24

Marginal costing is also known as?

Answer 24

Direct or Variable Costing

Question 25

What is absorption costing ?

Answer 25

Refers to the costing technique that considers Actual Direct Materials, Actual Direct Labour Cost and Predetermined Production OH rate in cost ascertainment of a product

Question 26

What is contribution??

Answer 26

Difference between sales and variable cost and addition of profit and fixed cost

Question 27

Profit =

Answer 27

Contribution - FC

Question 28

What are variable costs?

Answer 28

They vary with the level of production or sale I.e the cost of producing/selling 3 cars will be different from the cost of producing/selling 10 cars.

Question 29

Another name for semi variable cost?

Answer 29

Mixed cost

Question 30

What are mixed costs?

Answer 30

Costs that are party fixed and variable

Question 31

What are direct fixed costs?

Answer 31

Costs that are directly related to the production of a commodity and do not vary with the level of production or sales

Question 32

What are common fixed costs?

Answer 32

They are costs that are shared across multiple products or services and do not vary with the level of production or sales