Bcom Bachelor of Commerce Cost Accounting 1 — Questions and Answers
Question 1: Which costing method assigns all manufacturing costs—fixed and variable—to products?
- Absorption costing (Correct answer)
- Variable costing
- Activity-based costing
- Standard costing
Correct answer: Absorption costing
Absorption costing (also called full costing) includes both fixed and variable manufacturing overhead in the product cost.
Question 2: What is the formula for calculating the Contribution Margin?
- Sales Revenue – Variable Costs (Correct answer)
- Sales Revenue – Fixed Costs
- Gross Profit – Operating Expenses
- Net Income + Depreciation
Correct answer: Sales Revenue – Variable Costs
Contribution margin equals sales revenue minus all variable costs and shows how much revenue contributes toward covering fixed costs and profit.
Question 3: In a job-order costing system, costs are accumulated by:
- Individual job or customer order (Correct answer)
- Department or process
- Product line
- Time period
Correct answer: Individual job or customer order
Job-order costing tracks direct materials, direct labor, and overhead for each distinct job, making it ideal for custom or unique products.
Question 4: What is 'overapplied overhead'?
- When applied overhead exceeds actual overhead incurred (Correct answer)
- When actual overhead exceeds applied overhead
- When overhead is not allocated to products
- When fixed costs exceed variable costs
Correct answer: When applied overhead exceeds actual overhead incurred
Overapplied overhead occurs when the amount of overhead assigned to products using the predetermined rate is greater than actual overhead costs incurred.
Question 5: The Break-Even Point in units is calculated as:
- Fixed Costs ÷ Contribution Margin per Unit (Correct answer)
- Fixed Costs ÷ Selling Price per Unit
- Variable Costs ÷ Selling Price per Unit
- Total Costs ÷ Units Produced
Correct answer: Fixed Costs ÷ Contribution Margin per Unit
The break-even point in units equals total fixed costs divided by the contribution margin per unit, showing how many units must be sold to cover all costs.
Question 6: Which cost behavior remains constant in total regardless of changes in activity level?
- Fixed cost (Correct answer)
- Variable cost
- Semi-variable cost
- Step cost
Correct answer: Fixed cost
Fixed costs—such as rent or salaries—remain constant in total across a relevant range of activity regardless of production volume.
Bcom Bachelor of Commerce Cost Accounting 1
Which costing method assigns all manufacturing costs—fixed and variable—to products?