by nstracke
Understanding the intricacies of product costing is essential for making informed business decisions. This quiz will guide you through the key elements that influence product costs, from raw materials to pricing strategies. Get ready to enhance your knowledge and see how well you grasp the financial principles that shape product pricing. Good luck and enjoy the challenge!
We recommend that you do not leave the page that you are taking this quiz in. Stay honest 🙂
Product Cost Quiz Questions Overview
1. What is the primary purpose of a cost sheet?
To determine the selling price of a product
To record daily sales
To track employee performance
To manage inventory levels
2. Which of the following is considered a direct cost?
Factory rent
Direct labor
Office supplies
Utilities
3. What is the formula for calculating the cost of goods sold (COGS)?
Beginning Inventory + Purchases – Ending Inventory
Total Revenue – Total Expenses
Net Sales – Gross Profit
Operating Expenses + Net Income
4. Which pricing strategy involves setting a high price initially and then lowering it over time?
Penetration pricing
Skimming pricing
Cost-plus pricing
Competitive pricing
5. What is a variable cost?
A cost that remains constant regardless of production levels
A cost that varies with the level of production
A one-time cost
A cost that is fixed per unit
6. Which of the following is an example of a fixed cost?
Raw materials
Direct labor
Factory rent
Sales commissions
7. What is the break-even point?
The point at which total revenue equals total costs
The point at which total revenue exceeds total costs
The point at which total costs exceed total revenue
The point at which total revenue equals total variable costs
8. Which method of inventory valuation assumes that the earliest goods purchased are the first to be sold?
FIFO (First In, First Out)
LIFO (Last In, First Out)
Weighted Average
Specific Identification
9. What is the main advantage of using a cost-plus pricing strategy?
It guarantees a profit margin
It leads to lower prices
It is easy to implement
It considers competitor prices
10. Which of the following is NOT a component of product cost?
Direct materials
Direct labor
Manufacturing overhead
Marketing expenses
11. What is the purpose of activity-based costing (ABC)?
To allocate costs based on activities
To reduce direct labor costs
To simplify cost accounting
To increase production volume
12. Which of the following is a characteristic of a job order costing system?
It is used for mass production
It assigns costs to specific jobs or batches
It uses process costing
It does not track individual job costs
13. What is the contribution margin?
Total revenue minus total costs
Sales price per unit minus variable cost per unit
Fixed costs minus variable costs
Gross profit minus operating expenses
14. Which of the following is an example of a period cost?
Direct materials
Factory rent
Sales commissions
Direct labor
15. What is the main goal of target costing?
To set a price based on competitor prices
To determine the maximum allowable cost for a product
To calculate the break-even point
To allocate overhead costs accurately
16. Which of the following best describes marginal cost?
The total cost of producing all units
The cost of producing one additional unit
The average cost per unit
The fixed cost per unit
17. What is the significance of the gross profit margin?
It measures the total revenue
It indicates the efficiency of production
It shows the percentage of revenue that exceeds COGS
It calculates the net income
We recommend that you do not leave the page that you are taking this quiz in. Stay honest 🙂
