Questions from Cost Accounting

Q: Define variable cost and fixed cost. Give an example of each

Define variable cost and fixed cost. Give an example of each.

Q: What is a cost driver? Give one example.

What is a cost driver? Give one example.

Q: Describe how manufacturing-, merchandising-, and service-sector companies differ

Describe how manufacturing-, merchandising-, and service-sector companies differ from one another.

Q: As a new controller, reply to this comment by a plant

As a new controller, reply to this comment by a plant manager: “As I see it, our accountants may be needed to keep records for shareholders and Uncle Sam, but I don’t want them sticking their noses in...

Q: Give an example of how a manager can decrease variable costs while

Give an example of how a manager can decrease variable costs while increasing fixed costs.

Q: Give an example of how a manager can increase variable costs while

Give an example of how a manager can increase variable costs while decreasing fixed costs.

Q: There is no such thing as a fixed cost. All costs

There is no such thing as a fixed cost. All costs can be ‘unfixed’ given sufficient time.” Do you agree? What is the implication of your answer for CVP analysis?

Q: Describe the assumptions underlying CVP analysis.

Describe the assumptions underlying CVP analysis.

Q: Distinguish between operating income and net income.

Distinguish between operating income and net income.

Q: Describe three methods that managers can use to express CVP relationships.

Describe three methods that managers can use to express CVP relationships.