20.1. What is Cost Accounting?

Try these first

1. 1.

   What is the main focus of cost accounting?

   Hint

   Think about who uses this information.

2. 2.

   Name one objective of cost accounting.

   Hint

   Consider what might help manage a project’s finances.

3. 3.

   What is the primary role of cost accounting?

   • External reporting
   • Internal decision-making
   • Tax calculation

   Hint

   Think about who benefits from this information.

4. 4.

   Cost accounting is primarily aimed at _____.

   • True
   • False

   Hint

   Focus on who uses this data.

5. 5.

   A company produces two products: A and B. Product A has a fixed cost of $10,000 and a variable cost of$5 per unit. Product B has a fixed cost of $15,000 and a variable cost of$7 per unit. Calculate the breakeven point for both products in units if they sell for $20 each.

   Hint

   Think about how fixed and variable costs play into breakeven calculations.

6. 6.

   A software company estimates that the cost to develop a new software application will be $100,000 in fixed costs and$25,000 in variable costs per project. If the company plans to run 10 projects per year, what is the total cost and how should they price the projects for profitability considering they wish to make a profit of $20,000?

   Hint

   Consider how fixed and variable costs contribute to total expenses.