Accounting Midterm Exam: Multiple Choice Questions and Answers – Week 4, Week 4

Summary

Accounting is the practice of recording, classifying and summarising financial transactions. Cost accounting is a branch of accounting that focuses on capturing a company's total cost of production by assessing the variable costs of each step of production as well as fixed costs, such as a lease expense. This document covers multiple choice questions on cost accounting. A student can use it to practice and test their understanding of cost accounting concepts and calculations.

Manufacturing Costs

Manufacturing costs include direct materials, direct labor and manufacturing overhead. Direct labor cost is part of prime cost. Manufacturing overhead is the difference between total manufacturing costs and prime cost. It explains how to calculate manufacturing overhead and how to determine product and period costs.

Break-even Analysis

Break-even analysis helps to determine when total cost and total revenue are equal. It explains how to calculate the break-even point in sales. It also shows how to find sales when a company makes a loss, given its variable expenses and contribution margin ratio.

Job-order Costing

Job-order costing is a costing method that is used to track the costs of individual jobs. It explains how to calculate the unit product cost in a job-order costing system. It also shows how to determine the work in process inventory balance.

Costing Methods

Variable costing and absorption costing are two methods of costing. It explains the principal difference between them. It also shows how to construct a contribution format income statement under variable costing. It shows how to compute the unit product cost under variable costing.

Key terms

Prime cost

The sum of direct materials cost and direct labor cost.

Manufacturing overhead

All costs associated with the manufacturing process that are not direct materials or direct labor.

Break-even point

The point at which total cost and total revenue are equal.

Contribution margin

The difference between sales and variable expenses.

Job-order costing

A costing method that tracks costs for individual jobs.

Variable costing

A costing method that includes only variable manufacturing costs in product costs.

Questions this document helps with

• How do you calculate manufacturing overhead?
• What is the break-even point in sales?
• How do you determine the unit product cost under variable costing?

Summary written with AI from the document's text.