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Manufacturing Economics and Cost Analysis

Description: This quiz is designed to assess your understanding of the fundamental concepts and principles of Manufacturing Economics and Cost Analysis. It covers topics such as cost estimation, cost control, pricing strategies, and profit analysis.
Number of Questions: 15
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Tags: manufacturing economics cost analysis cost estimation cost control pricing strategies profit analysis
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Which of the following is NOT a primary cost in manufacturing?

  1. Direct materials

  2. Direct labor

  3. Manufacturing overhead

  4. Selling and administrative expenses


Correct Option: D
Explanation:

Selling and administrative expenses are considered period costs, not product costs.

The purpose of cost estimation in manufacturing is to:

  1. Determine the cost of a product or service before it is produced

  2. Control costs during production

  3. Analyze costs after production is complete

  4. All of the above


Correct Option: D
Explanation:

Cost estimation is used for all of the above purposes.

Which of the following is NOT a method of cost estimation?

  1. Activity-based costing

  2. Standard costing

  3. Historical costing

  4. Target costing


Correct Option: D
Explanation:

Target costing is a pricing strategy, not a method of cost estimation.

The primary objective of cost control in manufacturing is to:

  1. Reduce costs without sacrificing quality

  2. Increase profits

  3. Improve efficiency

  4. All of the above


Correct Option: D
Explanation:

Cost control aims to achieve all of the above objectives.

Which of the following is NOT a common pricing strategy in manufacturing?

  1. Cost-plus pricing

  2. Target pricing

  3. Value-based pricing

  4. Penetration pricing


Correct Option: D
Explanation:

Penetration pricing is not commonly used in manufacturing.

The break-even point in manufacturing is the point at which:

  1. Total revenue equals total costs

  2. Total revenue exceeds total costs

  3. Total costs exceed total revenue

  4. None of the above


Correct Option: A
Explanation:

The break-even point is the point at which the company is neither making a profit nor a loss.

Which of the following is NOT a factor that affects the profitability of a manufacturing company?

  1. Cost of goods sold

  2. Selling price

  3. Production volume

  4. Customer satisfaction


Correct Option: D
Explanation:

Customer satisfaction is not directly related to profitability.

The time value of money (TVM) is a concept that:

  1. Recognizes that money has different values at different times

  2. Is used to calculate the present value of future cash flows

  3. Is used to calculate the future value of present cash flows

  4. All of the above


Correct Option: D
Explanation:

TVM is used for all of the above purposes.

Which of the following is NOT a type of cost analysis?

  1. Cost-volume-profit analysis

  2. Break-even analysis

  3. Sensitivity analysis

  4. Regression analysis


Correct Option: D
Explanation:

Regression analysis is a statistical technique, not a type of cost analysis.

The purpose of profit analysis in manufacturing is to:

  1. Determine the profitability of a product or service

  2. Identify areas where costs can be reduced

  3. Set pricing strategies

  4. All of the above


Correct Option: D
Explanation:

Profit analysis is used for all of the above purposes.

Which of the following is NOT a common type of profit margin?

  1. Gross profit margin

  2. Operating profit margin

  3. Net profit margin

  4. Contribution margin


Correct Option: D
Explanation:

Contribution margin is not a type of profit margin.

The DuPont analysis is a financial analysis tool that is used to:

  1. Decompose the return on equity (ROE) into its component parts

  2. Identify areas where profitability can be improved

  3. Both of the above

  4. None of the above


Correct Option: C
Explanation:

The DuPont analysis is used for both of the above purposes.

Which of the following is NOT a common type of manufacturing cost system?

  1. Job costing

  2. Process costing

  3. Activity-based costing

  4. Standard costing


Correct Option: D
Explanation:

Standard costing is not a type of manufacturing cost system.

The purpose of a cost-volume-profit (CVP) analysis is to:

  1. Determine the relationship between costs, volume, and profit

  2. Identify the break-even point

  3. Both of the above

  4. None of the above


Correct Option: C
Explanation:

CVP analysis is used for both of the above purposes.

Which of the following is NOT a common type of manufacturing overhead cost?

  1. Indirect materials

  2. Indirect labor

  3. Factory rent

  4. Factory utilities


Correct Option: D
Explanation:

Factory utilities are not a type of manufacturing overhead cost.

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