Cost Concepts Quiz - CBSE Class 12 Accountancy

Free practice quiz: Cost Concepts (CBSE Class 12 Accountancy). 19 multiple-choice questions with answers and explanations. Play online, no sign-up needed.

Sample questions

1. What are fixed costs?

   1. Costs that vary with production
   2. Costs that remain constant regardless of production
   3. Costs that decrease with production
   4. Costs that are not related to production
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   Answer: B. Costs that remain constant regardless of production

   Fixed costs remain constant in total regardless of the volume of goods or services produced.

2. Which cost is not included in the cost of a product?

   1. Direct labor
   2. Direct materials
   3. Selling expenses
   4. Overhead costs
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   Answer: C. Selling expenses

   Selling expenses are not included in the cost of a product, as they are incurred after the production process.

3. What does cost-volume-profit analysis focus on?

   1. Change in profit due to pricing
   2. Relationship between costs, volume, and profitability
   3. Evaluating market competition
   4. Examining fixed costs only
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   Answer: B. Relationship between costs, volume, and profitability

   Cost-volume-profit analysis examines how changes in costs and volume affect a company's operating income and net income.

4. Which of the following is a characteristic of fixed costs?

   1. Change with output level
   2. Constant in total but fluctuates per unit
   3. Directly traceable to a product
   4. Remain constant regardless of production level
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   Answer: D. Remain constant regardless of production level

   Fixed costs do not change with the level of production but can vary on a per-unit basis as production levels change.

5. Why should fixed costs be eliminated when deciding on product line discontinuation?

   1. They are variable costs
   2. They are already incurred
   3. They forecast future sales
   4. They can be avoided in future
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   Answer: B. They are already incurred

   Fixed costs should not affect the decision to discontinue a product since they are incurred regardless of the decision and will not change.

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