Cost Accountancy

If you are looking for a job in Cost Accounting, then referring these interview questions will help you to ace the job interview.

Q.1 When in a negative amount, define the Coefficient Of Correlation?
Lets consider when the coefficient of correlation is negative, such as -0.80, there is an inverse relationship. While, an increase in the independent variable will mean a decrease in the dependent variable. And on the other hand a decrease in the independent variable will mean an increase in the dependent variable.
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Q.2 Consider the situation when In a positive amount, define the Coefficient Of Correlation?
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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Q.3 Please describe the Coefficient Of Correlation?
In simple linear regression analysis, the coefficient of correlation (or correlation coefficient) is a statistic which leaves the indication that 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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Q.4 How is Coefficient Of Determination 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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Q.5 What is the Coefficient Of Determination?
It's a statistic indicating the Percentage change in the amount of the dependent variable that is "explained by" the changes in the independent variables.
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Q.6 What do you understand by the Sales Mix?
It is the relative proportion or ratio of a business's products that are already sold. As a company's products are likely to vary in their profitability, so the Sales is is important.
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Q.7 What are 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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Q.8 Describe the Contribution Margin Ratio?
It is the percentage of sales, service revenues or selling price that remains as balance 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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Q.9 Define Simple Linear Regression Analysis?
It is a statistical tool for quantifying the relationship between just one independent variable (hence "simple") and one dependent variable based on past experience (observations). For example, simple linear regression analysis can be used to express how a company's electricity cost (the dependent variable) changes as the company's production machine hours (the independent variable) change.
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Q.10 In Cost Accounting what is Bep?
That level of activity at which total revenues are equal to the total costs. Therefore, a point at which there is no profit and no loss.
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Q.11 Can you tell what difference Expenses And Expenditure posess?
The main they both posess is:
Expense is the outflow from a profit oriented organization while expenditure is the outflow from non-profit organization.
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Q.12 What are the methods used to allocate the Support Costs?
There are two main methods for this:
the headcount or number of pc's per cost center.
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Q.13 Tell me something you know about the Cost Sheets?
They consist of the direct and indirect expenses incurred in producing a given product and classifying the expenses incurred according to office, administration, selling and distribution overheads.
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Q.14 Please give tth difference between Cost Accounting and Financial Accounting?
One of the basic differences cost accounting is helpfully in controlling the cost of production whereas financial accounting is concerned is helpfully in determining financial position of a concern .
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Q.15 What is a Cost sheet?
Cost sheet is a statement of cost for a product for given period of time.
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Q.16 What is Incremental Cost?
Incremental cost is the increase in total costs resulting from an increase in production or other activity.
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Q.17 What is production volume variance?

Production volume variance is concerned with a standard costing system used by manufacturers. Such that this variance indicates the difference between -

1. Company's budgeted amount of fixed manufacturing overhead costs.

2. Amount of the fixed manufacturing overhead costs that were assigned to the company's production output.

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Q.18 What is Net Incremental Cash Flows in Cost Accounting?
We can define net incremental cash flows as the combination of the cash inflows and the cash outflows occurring in the same time period, and between two alternatives. For instance a company could use the net incremental cash flows to decide whether to invest in new, more efficient equipment or to retain its existing equipment.
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Q.19 What will happen when a fixed cost remains constant in total?
When the fixed cost remains constant in total, the fixed cost per unit of output or input will change inversely with the change in the quantity of output or input
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Q.20 What are independent variables?
In general, independent variable are defined as factors that causes a change in the total amount of the dependent variable. In other words, independent variable drives a mixed cost to increase or decrease.
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Q.21 What is In-direct Materials in Cost Accounting?
Indirect materials such as oil for greasing 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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Q.22 What is the Contribution Margin Ratio?
Contribution margin ratio refers to the percentage of sales, service revenues or selling price that remains after all variable costs and variable expenses have been covered.
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Q.23 What is a standard cost?
Standard cost is described as a predetermined cost, an estimated future cost, an expected cost, a budgeted unit cost, a forecast cost, or a "should be" cost. Often standard costs are considered as a part of a manufacturer's annual profit plan and operating budgets.
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Q.24 What is a cost sheet?
Cost sheet is a statement of cost for a product for given period of time.
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Q.25 In which cases do you practice (DCF) Discounted cash flow?
(DCF) Discounted cash flow is a valuation technique used to determine the value of an investment based on its anticipated future cash flows. DCF analysis strives to figure out the amount of an investment today, based on predictions of how much money it will create in the future.
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Q.26 What are the 4 kinds of costs?
Direct, fixed, indirect, and variable are the 4 main from of cost. In accession to this, we might also need to look into opportunity costs, operating costs, and controllable costs sunk costs.
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Q.27 Explain Production Volume Variance.

The production volume variance is connected with a conventional costing system operated by any manufacturers. This variance intimates the distinction between:

1) the company's budgeted amount of fixed manufacturing overhead costs.

2) the volume of the established manufacturing overhead costs that were committed to the company's product output.

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Q.28 What is break-even point?
The break-even point is that at which level of activity at which the business makes neither a profit nor a loss.
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Q.29 What are the 5 cost thoughts?
Besides the theory of opportunity cost, there are various other theories of cost namely explicit costs, social costs, implicit costs, fixed costs, social costs, and replacement costs.
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Q.30 How is cost of goods calculated?
The cost of goods sold is equal to Opening stock + Total Purchases – Closing Stock + Direct Costs
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Q.31 Why is interest on loan not covered in the cost sheet?
Interest on the loan is not involved in the cost sheet because it is managed as an object of finance. In the cost sheet, details of the financial nature are not covered. Interest on a loan is a financial charge and debited to a Profit & Loss account.
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Q.32 What does inventory turnover ratio express?
Inventory turnover ratio that how many times the inventory is turning over towards the cost of goods sold.
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Q.33 What is the best idea of the cost concept?
The cost concept can properly be characterized by stating that for ideas of accounting, all transactions are listed at their monetary cost of purchase, i.e. the price paid for getting the asset or for obtaining the services rendered.
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Q.34 What is Absorption costing?
The costing method in which fixed factory overheads are added to inventory is absorption costing.
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Q.35 What are the five purposes of cost accounting?
The main purposes of Cost Accounting are Ascertainment of cost, Determination of selling price, Cost control, and cost minimization, Determining the profit of each activity and Supporting management in decision-making.
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Q.36 What are the advantages of integral accounting?

The advantages of integral accounting are:

1. System tends to coordinate the functions of different selections of the accounts department since all efforts are integrated and directed towards the achievement of one aim that is providing a high level of efficiency.

2. Accounting procedures can be simplified and the system can be centralized with the object of achieving greater control over the organization.

3. System creates conditions that are eminently suitable for the introduction of mechanized accounting

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Q.37 Explain Postponable costs.
A postponable cost is an expense that can be limited to a future date without having an important impact on short-term outcomes. Examples of postponable costs are employee training, facility repairs, and certain types of advertising.
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Q.38 What are the objectives of costing?
It is to determine the cost of every product, method, or operation and to make sure that all the charges have been incorporated in the cost of products, the techniques, and the process of costing as used. This matching method helps in determining the profitability of the product.
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Q.39 What are the seven types of cost?
Real Cost Selling Costs Fixed and Variable Costs Production Costs Money Cost Fixed Costs or Supplementary Costs Opportunity Cost Average and Marginal Cost
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Q.40 What is Incremental Cost?
An incremental cost is an increase in total costs following an increase in production or other activity.
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Q.41 What are the 3 principles of cost?
The cost principle, appreciation, and depreciation
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Q.42 Explain the 2 methods of costing.
Job costing and process costing are the 2 fundamental methods of costing. Job costing is fitting to industries that manufacture or complete the work according to the stipulations of the customers.
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Q.43 Tell us some techniques of cost accounting.
Uniform Costing Historical Costing Direct Costing Standard Costing Marginal Costing
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Q.44 What is the difference between cost accounting and financial accounting?
Cost Accounting essentially assists in Cost ascertainment and its direction. Financial Accounting is an accounting that helps in ascertaining the financial position of the firm. It provides the profit or loss of the firm for a contracted period and does not assist in controlling cost.
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Q.45 What is inventory management in material management?
Inventory management applies to the method of ordering, storing, and utilizing a company's inventory. This encompasses the administration of raw materials, ingredients, and finished commodities, as well as the warehousing and processing of such items.
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Q.46 What are the kinds of storekeeping?
There are 4 kinds of inventories collected by stores that are raw materials, tools, stores and supplies, and equipment, work-in- progress or semi-finished goods.
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Q.47 What is the distinction between a cash flow statement and funds flow statement?
Cash flow is a statement that shows cash inflow and outflow during a particular duration of time. A cash flow statement is a statement of modifications in cash position. Whereas funds flow is a statement that shows inflow and outflow of funds. A fund flow statement is a statement of variations in financial position.
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Q.48 What are the purposes of the cost accounting department?
The cost accounting department assists the financial accounting department in making budgets. It also serves the financial accounting department to perform the payment of the bills by properly maintaining them. Past figures are presented to the cost accountant by financial accounting for preparing estimations for the future.
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Q.49 What are the duties of store keeper?
Hold a record of sales and restock the store respectively. Supervise and qualify store staff. Program promotional operations for new products or specials. Guarantee that the store is maintained clean and organized. Negotiate any confrontations among staff and clients, and de-escalate the situation.
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Q.50 How is the Labour cost calculated?
Calculate an employee's labor cost per hour by calculating their gross wages to the total cost of expenses (annual payroll taxes and annual cost), then dividing by the number of hours the employee works every year. This will assist determine how much an employee costs their employer per hour.
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Q.51 What is the job costing method?
Job costing is a costing system used to manage the cost of particular jobs, which are produced according to the customer's stipulations. It is a fundamental costing method that is suitable where work includes separate projects or contract jobs.
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Q.52 What are cost classifications?
Cost classification includes the division of a collection of expenses into different sections. A classification system is utilized to produce to management's attention specific costs that are granted more crucial than others or to fasten in financial modeling.
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Q.53 Does labor cost more than materials?
Because labor costs are more manageable than material costs when budget cuts become important labor is often targeted first.
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Q.54 State some examples of direct expenses.
raw materials. manufacturing supplies. direct labor. purchase of goods to be sold. sales commissions. customer service. transit of goods from the supplier.
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Q.55 What is BEP in Cost Accounting?
BEP stands for Break-Even Point. A point at which there is no loss and no profit. The level of exercise at which total revenues = total costs.
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Q.56 Which is the best technique in inventory control?
ABC Analysis. VED Analysis. JIT method. Economic Order Quantity (EOQ) Model. Minimum Safety Stocks. Material Requirements Planning Method. Fast, Slow & Non-moving (FSN) Method.
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Q.57 Define Independent Variable.
In accounting, an independent variable is a factor that makes a change in the total amount of the subject variable. In different words, an independent variable must be something that provokes a mixed cost to improve or decrease.
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Q.58 Tell us about your experience in cost accounting.
I believe its Very Wonderful to work on Cost Accounting because the common people does not understand, how to obtain cost of a special product specifically, how to control cost, how to make budget and preparation for low cost.
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Q.59 Explain Direct Materials In Cost Accounting.
Direct materials are the obvious matter employed in manufacturing a outcome. The direct materials for a business of dessert outputs will include sugar, flour, milk, eggs, vegetable oil, spices, and other elements in the recipes. In production, the direct materials are placed in each product's bill of materials.
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Q.60 What are the freight charges?
There are 2 kinds of freight charges, one is Inward and the another one is Outward. Inward is classified under Direct expenses caught before making and it may be put into landed cost. For Eg. Freight delivered while obtaining Raw Material. Outward is classified under Indirect account and it will be incurred after making. For Eg. Freight given while selling of Finished Goods.
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Q.61 What do you understand by sunk cost?
Sunk cost shows the historical price which has been acquired in the past. This kind of cost is not relevant in the decision making method.
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Q.62 Which parts should be viewed before establishing a costing system?
Nature of the Organization Nature of the Product Simplicity and Cost Manufacturing method Reporting Systems
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