Cambridge International AS Level · Accounting (9706)

Costs and cost behaviour: Practice Questions

5 multiple-choice questions marked as you go, and 3 written questions with worked solutions. All on Costs and cost behaviour.

8 questions13 marksFree, no account

Question 1

1 mark

Which of the following is an example of an indirect labour cost in a furniture manufacturing business?

Question 2

1 mark

Which of the following identifies the effect on closing inventory value and profit if a company switches from the AVCO method to the FIFO method during a period of consistently rising prices?

Question 3

1 mark

A business has the following costs for a period:
Direct materials: \$50,000
Production wages (Direct): \$40,000
Factory supervisor salary: \$15,000
Factory power (Variable): \$5,000
Factory insurance (Fixed): \$8,000
Lubricants for machines: \$2,000

What is the total indirect manufacturing cost?

Question 4

1 mark

A business provides the following information regarding its cost structure for the last period:
Direct materials: \$24,000
Direct labour: \$18,000
Factory rent: \$12,000
Indirect materials: \$4,500
Sales commissions: \$6,000
Depreciation of office equipment: \$2,000

What is the total of the prime costs?

Question 5

1 mark

Which of the following descriptions best fits a semi-variable cost in relation to production levels?

Question 6

2 marks

Define a stepped cost and provide one example of such a cost in a manufacturing environment.

Write your answer out first, then check it against the worked solution.

Question 7

3 marks

Define the term semi-variable cost<\\\/b> and provide one specific example of such a cost in a manufacturing environment.<\\\/p>

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Question 8

3 marks

Identify the three components that typically make up a semi-variable cost in a manufacturing environment, and state whether the total cost of this item increases proportionally with output.

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