Cost Accounting

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“Cost Accounting Interview Questions and Answers will guide you here that in management accounting, cost accounting establishes budget and actual cost of operations, processes, departments or product and the analysis of variances, profitability or social use of funds. Managers use cost accounting to support decision-making to cut a companies costs and improve profitability. Learn more about cost accounting with Cost Accounting Interview Questions and Answers and get preparation for accounting job”



47 Cost Accounting Questions And Answers

21⟩ List the contribution margin ratio facts?

★ Selling price per unit

★ Fixed manufacturing costs per month

★ Variable manufacturing costs per unit

★ Fixed SG&A expenses per month

★ Variable SG&A expenses per unit

★ Fixed interest expense per month

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22⟩ Describe the contribution margin ratio?

The contribution margin ratio is the percentage of sales, service revenues or selling price that remains after all variable costs and variable expenses have been covered. In other words, the contribution margin ratio is the percentage of revenues that is available to cover a company's fixed costs, fixed expenses, and profit. (The contribution margin ratio is different from the gross margin ratio or gross profit percentage and cannot be computed directly from the reported amounts on the company's external income statement.)

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26⟩ Describe the coefficient of correlation?

In simple linear regression analysis, the coefficient of correlation (or correlation coefficient) is a statistic which indicates the relationship between the independent variable and the dependent variable. The coefficient of correlation is represented by r and it has a range of -1.00 to +1.00.

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27⟩ Define coefficient of determination?

The coefficient of determination is a statistic which indicates the percentage change in the amount of the dependent variable that is "explained by" the changes in the independent variables.

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28⟩ How coefficient of determination is symbolized?

The coefficient of determination is symbolized by r-squared, where r is the coefficient of correlation. Hence, a coefficient of determination of 0.64 or 64% means that the coefficient of correlation was 0.8 or 80%. (The range for the coefficient of correlation is -1 to +1, and therefore the range for the coefficient of determination is 0 to +1.)

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29⟩ Describe sales mix?

Sales mix is the relative proportion or ratio of a business's products that are sold. Sales mix is important because a company's products are likely to vary in their profitability.

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30⟩ Define indirect manufacturing costs under traditional cost accounting?

Under traditional cost accounting, the indirect manufacturing costs are spread or allocated to the products manufactured based on direct labor hours, direct labor costs, or production machine hours. However, in recent decades the indirect manufacturing costs have increased significantly and are less likely to be caused by the quantity of direct labor or production machine hours.

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31⟩ List some examples of indirect manufacturing costs?

★ Depreciation, repairs and maintenance, electricity, etc. for the production facilities and equipment.

★ Salaries, wages and fringe benefits of the indirect manufacturing personnel such as production supervisors, material handlers, quality assurance, and other factory support personnel.

★ Factory supplies, outside services pertaining to manufacturing, and other manufacturing related costs.

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32⟩ Define in-direct materials in cost accounting?

Indirect materials such as oil for greasing the baking pans, etc. will likely be viewed as part of the manufacturing supplies and will be allocated to products along with other manufacturing overhead.

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33⟩ Define direct materials in cost accounting?

Direct materials are the traceable matter used in manufacturing a product. The direct materials for a manufacturer of dessert products will include flour, sugar, eggs, milk, vegetable oil, spices, and other ingredients in the recipes. In manufacturing, the direct materials are listed in each product's bill of materials.

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34⟩ Define the coefficient of correlation, When coefficient of correlation is squared?

When the coefficient of correlation is squared, it becomes the coefficient of determination. This means that an r of +0.80 or -0.80 will result in a coefficient of determination of 0.64 or 64%. This tells you that 64% of the change in the total of the dependent variable is associated with the change in the independent variable. An r of +0.20 or -0.20 indicates that only 4% (0.20 x 0.20) of the change in the dependent variable is explained by the change in the independent variable.

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35⟩ Define indirect manufacturing costs?

Indirect manufacturing costs are a manufacturer's product costs other than direct materials and direct labor. Indirect manufacturing costs are also referred to as manufacturing overhead, factory overhead, factory burden, or burden.

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36⟩ Define independent variable?

In accounting, an independent variable is ideally a factor that causes a change in the total amount of the dependent variable. In other words, an independent variable should be something that drives a mixed cost to increase or decrease.

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37⟩ Define the coefficient of correlation When in a negative amount?

When the coefficient of correlation is negative, such as -0.80, there is an inverse relationship. An increase in the independent variable will mean a decrease in the dependent variable. A decrease in the independent variable will mean an increase in the dependent variable.

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38⟩ Define dependent variable in cost accounting?

In accounting, a dependent variable is likely to be the total of a mixed cost that will change as the result of several factors. A factor that causes the change in the total cost is referred to as the independent variable.

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39⟩ Define the coefficient of correlation When in a positive amount?

When the coefficient of correlation is a positive amount, such as +0.80, it means an increase in the independent variable will result in an increase in the dependent variable. Also, a decrease in the independent variable will mean a decrease in the dependent variable.

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40⟩ Define fixed cost?

A fixed cost is one that does not change in total within a reasonable range of activity. For example, the rent for a production facility is a fixed cost if the rent will not change when there are reasonable changes in the amount of output or input. If there is a need to double the output the rent will change when the company occupies additional work space.

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