Cost and management accounting — Question Paper

C. The unit to which costs are assigned, such as a product or project

A cost object is the specific unit to which costs are allocated, such as a product or project.

C. To keep costs within budgeted limits

Cost control aims to ensure that actual costs remain within the limits of budgeted costs.

C. To provide a comprehensive plan for an entire organisation

A master budget integrates all the individual budgets of an organisation to provide an overall plan.

A. How costs change with changes in production levels

Cost behaviour refers to the way costs change as production or sales levels change.

C. Rent on factory building

Rent on a factory building is typically a fixed cost as it remains constant within a relevant range of production.

B. Direct costs can be traced to a specific cost object, while indirect costs cannot.

Direct costs can be traced to a specific cost object, while indirect costs cannot be easily traced to a specific cost object.

C. Contribution Margin Ratio = (Total Revenue - Variable Costs) / Total Revenue

The contribution margin ratio expresses the contribution margin as a percentage of total revenue.

C. The salary of a specific consultant working on a project

In a service industry, direct costs may include the salary of specific employees working on a project.

D. Opportunity cost

Opportunity cost is the cost of forgoing the next best alternative when making a decision and provides the highest level of control in decision-making.