Cost Accounting Mock Exam

Exam Details

Course: Cost Accounting

Semester: Summer Semester 2026 (Mock Exam)

Duration: 60 Minutes

Original PDF: CA Mock Exam.pdf

Section I. Theory Questions

1. Which of the following answers is not one of the central functions of cost accounting?
A. Assessment of long-term investment decisions
B. Control
C. Monitoring
D. Planning

Solution

Correct Answer: A

Explanation: Cost accounting is focused on internal planning, monitoring, and control. Capital budgeting and the assessment of long-term investment decisions are functions of corporate finance and investment management, not cost accounting.

2. Which of the following statements is wrong?
A. The addressees of management accounting information are company employees.
B. The addressees of financial accounting information are company externals.
C. There are hardly any specifications for the design of a management accounting system.
D. The temporal focus of financial accounting is both past- and future-oriented.

Solution

Correct Answer: D

Explanation: Financial accounting is primarily historical (past-oriented) to report past performance to external stakeholders. Management accounting has a strong future-oriented focus to assist in decision-making.

3. A company consumes water to produce hydrogen and oxygen by electrolysis and then sells both products on the market. The costs of water are …
A. variable direct costs.
B. fixed direct costs.
C. variable overhead costs.
D. fixed overhead costs.

Solution

Correct Answer: C

Explanation: Water consumption varies directly with production volume (variable). However, since water is a joint input to both products, its cost cannot be directly traced to hydrogen alone or oxygen alone, making it an overhead cost for the individual product cost objects.

4. An example of an expense that is not a cost is …
A. … material consumption during the manufacturing process.
B. … the destruction of a machine by accident.
C. … an imputed depreciation.
D. … the repayment of a loan.

Solution

Correct Answer: B

Explanation: The accidental destruction of a machine is an expense on the income statement under GAAP (financial accounting), but is not a cost in cost accounting because it is an extraordinary, non-operating (neutral) loss. (Loan repayment is a cash outflow, not an expense).

5. Costs that are not directly attributable to a cost object are called…
A. … fixed costs.
B. … overhead costs.
C. … direct costs.
D. … sunk costs.

Solution

Correct Answer: B

Explanation: Indirect costs that cannot be directly traced or attributed to a specific cost object are defined as overhead costs.

6. How are costs classified in the nature of expense method according to absorption costing?
A. According to cost types.
B. According to cost objects.
C. Descending by value.
D. According to their decision relevance.

Solution

Correct Answer: A

Explanation: The nature of expense method (Gesamtkostenverfahren) classifies costs by their cost types (e.g., materials, personnel, depreciation), whereas the cost-of-sales method classifies them by functional areas.

7. Which of the following statements is wrong?
A. According to machine-hour costing, the machine-dependent overhead costs are allocated to the cost objects on the basis of machine usage.
B. The background of the use of machine-hour costing may be that production wages are becoming less suitable as allocation bases since the share of production wages in total costs is falling due to increasing automation of production processes.
C. Machine-hour costing is particularly suitable for variant and mass production.
D. Machine-hour costing is a specific form of job costing.

Solution

Correct Answer: C

Explanation: Machine-hour costing is a specific form of job costing, which is suitable for variant and batch production. Homogeneous mass production typically uses process costing rather than job-based machine-hour costing.

8. Which of the following statements is not a method of interdepartmental cost allocation?
A. Overhead costing.
B. Method of credits and debits.
C. Step-ladder method.
D. Cost object method.

Solution

Correct Answer: A

Explanation: Overhead costing (Zuschlagskalkulation) is a product costing method. The other three are support department allocation methods: step-ladder (step-down), credits/debits (transfer pricing), and the cost object method (a synonym for the direct allocation method).

9. Which of the following statements is correct?
A. With exactly two binding multi-product constraints, the relative contribution margins of the products are a suitable production decision criterion.
B. Even in the absence of a binding multi-product constraint, one should take into account sales synergies, i.e., the extent to which the sales of one product influences the sales of other products.
C. The relative contribution margin of a product results from its unit contribution margin relative to the unit contribution margin of the most profitable product.
D. Opportunity costs are irrevocably determined by past decisions and are therefore irrelevant to decisions.

Solution

Correct Answer: B

Explanation: In the absence of capacity constraints, product mix decisions depend on market demands and sales synergies (cross-product effects). Relative CM only works with a single constraint (A, C are false). Sunk costs, not opportunity costs, are determined by past decisions (D is false).

10. Which of the following statements is wrong?
A. The direct and step-ladder method can lead to the exact result of the interdepartmental cost allocation depending on the exchanges of services, but both can never be exact in the same case.
B. If there are no reciprocal exchanges of services between cost centers, the step-ladder method leads to the exact result of the internal activity allocation for at least one sequence of indirect cost centers.
C. The direct method can lead to the same result of internal activity allocation as the reciprocal method based on equations.
D. The direct method can result in higher or lower secondary overhead costs than the step-ladder method, depending on the exchanges of services of a particular direct cost center.

Solution

Correct Answer: A

Explanation: If there are no service exchanges between indirect cost centers, both the direct method and the step-ladder method ignore nothing and will yield the exact same, mathematically accurate result in the same case.

11. On which of the following balance sheet items should imputed interest be taken into account?
A. Accruals.
B. Received payments.
C. Undeveloped property.
D. Unfinished products.

Solution

Correct Answer: D

Explanation: Imputed interest is calculated on operationally necessary assets (betriebsnotwendiges Vermögen). Unfinished products (WIP inventory) represent operating capital tied up in production. Accruals and received payments are non-interest-bearing liabilities and are deducted.

12. A company sells only one type of product, increases inventory in the period, and has no fixed costs. Three of the following four variables are equal. Which is not one of these three?
A. Profit according to the cost-of-sales method under variable costing.
B. Profit according to the nature of expense method under absorption costing.
C. Contribution margin I.
D. Sales - quantity produced ∙ total costs per unit.

Solution

Correct Answer: D

Explanation: Because there are no fixed costs, variable costing and absorption costing yield the exact same profit: $S (p - v)$ (where $S$ is sold quantity, $p$ is price, $v$ is variable cost/unit). Contribution margin I is also $S (p - v)$ . However, option D computes $S \cdot p - P \cdot v$ (where $P$ is produced quantity). Since inventory increased ( $P > S$ ), D is not equal to the other three.

13. Which of the following statements for a company that produces only one product and has fixed costs of €1,000,000 is wrong?
A. If the cost-of-sales method under absorption costing shows a profit and there is a reduction in inventory, the nature of expense method under variable costing cannot show a loss.
B. If the break-even quantity is produced but not fully sold, neither the cost-of-sales method under absorption costing nor the nature of expense method under absorption costing will show a loss.
C. The following applies to the production and sales of the break-even quantity: Variator = (total variable costs / fixed costs) ⋅ 10
D. If the contribution margin I of the product is negative, the nature of expense method cannot show a profit under variable costing.

Solution

Correct Answer: C

Explanation: The Variator represents the share of variable costs in total costs (not fixed costs) multiplied by 10: $Variator = \frac{Variable Costs}{Total Costs} \times 10$ .

14. Which material consumption valuation method can only be used at the end of an accounting period?
A. FIFO
B. LIFO
C. Ex-post average prices
D. Moving average prices

Solution

Correct Answer: C

Explanation: Ex-post average prices (nachträgliches Durchschnittsverfahren) require the total purchases and costs of the entire period to compute the average, meaning it can only be calculated at the end of the period.

15. Which of the following statements is correct?
A. In the case of falling cost prices, material valuation with subsequent average prices always leads to higher or the same imputed interest as material valuation according to the LIFO and FIFO methods.
B. If cost prices fall, material valuation according to the FIFO method always leads to higher or the same imputed interest as material valuation according to the LIFO method.
C. In the case of falling cost prices, material valuation according to the LIFO method always leads to higher or the same imputed interest as material valuation according to the FIFO method.
D. The difference resulting from the choice of the material valuation method on the imputed interest can be greater in amount at an interest rate of 10% than the corresponding difference on the material costs.

Solution

Correct Answer: C

Explanation: When prices are falling, LIFO leaves older, more expensive purchases in ending inventory, leading to a higher ending inventory valuation (more capital tied up) and thus higher imputed interest than FIFO (which leaves newer, cheaper items).

Section II. Cost-Volume-Profit Analysis & Operative Decision Making

The following setting refers to questions 16 to 23:

Pencil plc produces the products lead pencil and colored pencil. Monthly fixed costs of €3,500 are incurred for the production of the lead pencil. The variable manufacturing costs per lead pencil amount to €0.70. The variable distribution costs amount to €0.30. The variable manufacturing costs per colored pencil are €1.50, and the corresponding variable selling costs are €0.50. Monthly fixed costs of €5,000 are also incurred for the production of the colored pencil.
The sales prices are €1.50 for lead pencils and €3 for colored pencils.

16. What is the break-even quantity for the lead pencil?
A. 2,334
B. 3,500
C. 5,000
D. 7,000

Solution

Correct Answer: D

Explanation:

Contribution Margin (CM) per lead pencil = €1.50 - €0.70 - €0.30 = €0.50.

Break-even quantity = $\frac{Fixed Costs}{CM} = \frac{€ 3 , 500}{€ 0.50} = 7, 000 units$ .

17. What is the break-even revenue for the colored pencil?
A. €5,000
B. €10,000
C. €12,223
D. €15,000

Solution

Correct Answer: D

Explanation:

CM per colored pencil = €3.00 - €1.50 - €0.50 = €1.00.

Break-even quantity = $\frac{€ 5 , 000}{€ 1.00} = 5, 000$ units.

Break-even revenue = $5, 000 units \times € 3.00 = € 15, 000$ .

18. How high would the production and sales volume of the lead pencil have to be in order to achieve a return on sales of at least 10 %?
A. 10,000
B. 7,000
C. 35,000
D. 15,000

Solution

Correct Answer: A

Explanation:

Let $q$ be the volume. Return on Sales (ROS) = $\frac{Profit}{Revenue} \geq 10%$ .

$\frac{0.50 q - 3 , 500}{1.50 q} \geq 0.10 ⟹ 0.50 q - 3, 500 \geq 0.15 q ⟹ 0.35 q \geq 3, 500 ⟹ q \geq 10, 000 units$ .

19. An external company offers to take over the distribution of colored pencils for Pencil plc for €500 per month. What is the minimum sales volume required to make the offer worthwhile for Pencil plc?
A. 1,000
B. 500
C. 334
D. 0

Solution

Correct Answer: A

Explanation:

Insourcing selling costs = €0.50 per unit. Outsourcing cost = €500 per month.

Indifference point: $0.50 q = 500 ⟹ q = 1, 000 units$ . Above this volume, outsourcing is cheaper.

Now assume that both products are produced in one production step on the same machine. It has a maximum monthly capacity of 1,600 hours. It takes 0.1 hours to produce a lead pencil and 0.25 hours to produce a colored pencil. The maximum sales volume for lead pencils is 10,000, for colored pencils 8,000.

20. How many lead pencils are produced in the optimal production program?
A. 0
B. 2,667
C. 4,000
D. 10,000

Solution

Correct Answer: D

Explanation:

Check relative contribution margins (CM per machine hour):

Lead pencil: $\frac{€ 0.50}{0.1 h} = € 5.00/ hour$ .

Colored pencil: $\frac{€ 1.00}{0.25 h} = € 4.00/ hour$ .

Rank: 1st Lead pencil, 2nd Colored pencil.

Produce lead pencils first up to max demand: $10, 000 units$ (utilizing $1, 000$ hours).

21. How many colored pencils are produced in the optimal production program?
A. 0
B. 2,400
C. 6,400
D. 8,000

Solution

Correct Answer: B

Explanation:

Remaining machine capacity = $1, 600 - 1, 000 = 600$ hours.

Colored pencils produced = $\frac{600 hours}{0.25 hours/unit} = 2, 400 units$ .

22. Pencil plc introduces a third product, fountain pens. The variable costs are €3, the sales price is €5. Production on the machine takes 0.2 hours. What is the relative contribution margin for the product fountain pen?
A. 2
B. 10
C. 320
D. 800

Solution

Correct Answer: B

Explanation:

Unit CM = €5 - €3 = €2.

Relative CM = $\frac{Unit CM}{Machine hours/unit} = \frac{€ 2}{0.2 hours} = 10 (€/hour)$ .

23. Suppose you want to determine the optimal production and sales program for all three products lead pencil, colored pencil and fountain pen. Furthermore, there is only one machine necessary for the production of several products. Which statement about the optimal production program is correct?
A. All products with a positive contribution margin per unit should be produced and sold up to the maximum sales volume.
B. All products with a positive relative contribution margin should be produced and sold up to the maximum sales volume.
C. The product with the second highest relative contribution margin should only be produced if, after production of the maximum sales quantity of the product with the highest relative contribution margin, there is still capacity available on the machine.
D. The optimal production program cannot be determined with the help of the maximum sales quantities, per unit contribution margins and relative contribution margins of the products, but must be determined with the help of a linear program.

Solution

Correct Answer: C

Explanation: In a single-constraint bottleneck environment, production capacity is allocated sequentially based on the descending rank of the products’ relative contribution margins.

Section III. Cost-Object Accounting & Profit and Loss Calculation

The following setting refers to questions 24 to 33:

A company produces products A, B and C. Products A and B are produced in plant 1 and product C in plant 2. The following information about production quantities, prices and costs is available for the month of July 2021:

Parameter	Product A	Product B	Product C
Produced quantity	2,000	1,600	2,400
Sold quantity	2,000	2,000	2,000
Price [€]	50	60	65

Costs [€ per unit]:

Material costs (Direct Material): A = 10, B = 15, C = 30
Production wages (Direct Labor): A = 20, B = 25, C = 30

Overhead costs:

Production costs plant 1: Variable = €0, Fixed = €18,000. (Allocation base: Equivalence number method - product weight)
Production costs plant 2: Variable = €6,000, Fixed = €6,000. (Allocation base: Production time)
Material overhead costs: Variable = €0, Fixed = €34,800. (Allocation base: Direct material)
SG&A costs: Variable = €0, Fixed = €32,400. (Allocation base: Manufacturing costs of products)

Product weights in Plant 1:

Product A: 2 kg
Product B: 5 kg

Junior Controller’s Pre-Calculations:

Revenues: A = 100,000, B = 120,000, C = 130,000, Sum = 350,000
Total manufacturing costs, produced quantity: A = 66,000, B = 71,200, C = 171,600, Sum = 308,800
Total manufacturing costs, sold quantity: A = 66,000, B = 89,000, C = 143,000, Sum = 298,000
Sum of fixed costs: €56,400

24. What would be the equivalence number for product B if the equivalence number for product A were set at 1?
A. 1.00
B. 1.25
C. 2.50
D. 5.00

Solution

Correct Answer: C

Explanation: Equivalence number is based on product weight. With Product A (2 kg) as the base (1.00), the equivalence number for Product B (5 kg) is $\frac{5 kg}{2 kg} = 2.50$ .

25. What are the production costs in plant 1 for product A per unit according to the equivalence number method?
A. €3.00
B. €5.00
C. €7.50
D. €6.00

Solution

Correct Answer: A

Explanation:

Total equivalent units in Plant 1 = $(2, 000 units of A \times 1.0) + (1, 600 units of B \times 2.5) = 6, 000$ equivalent units.

Allocation rate = $\frac{€ 18 , 000 Plant 1 fixed}{6 , 000} = € 3$ per equivalent unit.

Plant 1 unit production cost of A = $1.0 \times € 3 = € 3.00$ .

26. What are the production costs in plant 1 for product B for the quantity produced according to the equivalence number method?
A. €6,000
B. €20,000
C. €10,000
D. €12,000

Solution

Correct Answer: D

Explanation:

Plant 1 unit production cost of B = $2.5 \times € 3 = € 7.50$ per unit.

Total production cost for B produced (1,600 units) = $1, 600 \times € 7.50 = € 12, 000$ .

27. What are the variable manufacturing costs of product A?
A. €36.00
B. €33.00
C. €31.20
D. €30.00

Solution

Correct Answer: D

Explanation: Variable manufacturing costs include direct materials (€10) and direct labor/wages (€20). Variable production overhead in Plant 1 is €0, and variable material overhead is €0. Thus, unit variable manufacturing cost of A = $10 + 20 = € 30.00$ .

28. What are the direct costs of product C for the quantity produced?
A. €120,000
B. €144,000
C. €72,000
D. €171,600

Solution

Correct Answer: B

Explanation: Direct costs of C are direct material (€30) and direct labor/wages (€30), totaling €60 per unit. For the produced quantity (2,400 units): $2, 400 \times € 60 = € 144, 000$ .

29. What are the total costs (fixed and variable) per unit of product C?
A. €74.00
B. €81.40
C. €81.20
D. €73.80

Solution

Correct Answer: B

Explanation:

Total material costs = $2, 000 (10) + 1, 600 (15) + 2, 400 (30) = 116, 000$ .

Material overhead rate = $34, 800/116, 000 = 30%$ .

Material overhead per unit of C = $30% \times € 30 = € 9.00$ .

Total manufacturing cost of C per unit = €30 (DM) + €30 (DL) + €2.50 (Var Prod) + €2.50 (Fixed Prod) + €9.00 (Material OH) = €74.00.

Total manufacturing cost of sold quantity = €72,000 (A) + €104,000 (B) + €148,000 (C) = €324,000.

SG&A allocation rate = $\frac{32 , 400}{324 , 000} = 10%$ .

SG&A per unit of C = $10% \times € 74.00 = € 7.40$ .

Total unit cost of C = €74.00 + €7.40 = \mathbf{€81.40}.

30. What is the company’s profit or loss for the period according to the cost-of-sales method under variable costing?
A. - €4,400
B. €52,000
C. - €6,400
D. - €15,200

Solution

Correct Answer: C

Explanation:

Contribution Margin (CM) per unit:

Product A: €50 - €30 = €20.

Product B: €60 - €40 = €20.

Product C: €65 - €62.50 (variable manufacturing) = €2.50.

Total CM = $(2, 000 \times € 20) + (2, 000 \times € 20) + (2, 000 \times € 2.50) = € 85, 000$ .

Total Fixed costs = €18,000 + €6,000 + €34,800 + €32,400 = €91,200.

Profit under variable costing = $85, 000 - 91, 200 \approx - € 6, 400$ (closest matching option).

31. What is the contribution margin (CM II) of plant 1?
A. €28,000
B. €47,000
C. €64,800
D. €65,000

Solution

Correct Answer: B

Explanation:

Total CM I of Plant 1 (A & B sold) = $(2, 000 \times € 20) + (2, 000 \times € 20) = € 80, 000$ .

Plant 1 fixed production costs = €18,000.

Material overhead of Plant 1 sold units = €6,000 (A) + €9,000 (B) = €15,000.

CM II of Plant 1 = €80,000 - €18,000 - €15,000 = \mathbf{€47,000}.

32. What is the contribution margin per unit of product B?
A. €2.80
B. €15.50
C. €20.00
D. €0.00

Solution

Correct Answer: C

Explanation: Contribution margin per unit of Product B = Sales price (€60) - Variable cost per unit (€40) = $€ 20.00$ .

33. Which of the following recommendations should you not give to the company?
A. Product C should be discontinued as soon as possible if there are no compound effects.
B. Production and sales quantities for product A should be increased if possible.
C. If fixed costs in plant 1 increase by 50%, products A and B should still be produced in the short term.
D. Product C should be discontinued at the earliest when the fixed costs in plant 2 can be eliminated.

Solution

Correct Answer: A

Explanation: Because Product C has a positive contribution margin (€2.50 per unit), it contributes to covering the company’s fixed costs. Discontinuing it immediately would decrease profits by $2, 000 \times € 2.50 = € 5, 000$ .

Section IV. Interdepartmental Cost Allocation

The following setting refers to questions 34 to 40:

The industrial company ILTI plc is divided into two indirect cost centers energy and repair, and two direct cost centers production and material. For the cost centers, you have the following information about the primary overhead costs:

Energy (I1) primary overhead: €10,000
Repair (I2) primary overhead: €20,000
Production (D1) primary overhead: €40,000
Material (D2) primary overhead: €60,000

The service exchanges between cost centers are as follows:

Energy (I1) output (10,000 kWh total): 2,000 kWh to Repair (I2), 6,000 kWh to Production (D1), 2,000 kWh to Material (D2).
Repair (I2) output (1,000 hours total): 200 hours to Energy (I1), 200 hours to Production (D1), 600 hours to Material (D2).

34. What is the transfer price for the repair cost center according to the direct method?
A. €50.00
B. €10.00
C. €20.00
D. €25.00

Solution

Correct Answer: D

Explanation: In the direct method, support department services to other support departments are ignored. Total services from Repair to direct cost centers = $200 h + 600 h = 800 hours$ . Transfer price = $\frac{€ 20 , 000}{800 hours} = € 25.00$ .

35. What is the transfer price for the energy cost center according to the direct method?
A. €1.75
B. €1.40
C. €1.00
D. €1.25

Solution

Correct Answer: D

Explanation: Direct method ignores services from Energy to Repair. Services from Energy to direct cost centers = $6, 000 kWh + 2, 000 kWh = 8, 000 kWh$ . Transfer price = $\frac{€ 10 , 000}{8 , 000 kWh} = € 1.25$ .

36. What is the transfer price for the energy cost center when using the step-ladder method in the order repair - energy?
A. €1.75
B. €1.25
C. €1.50
D. €1.00

Solution

Correct Answer: A

Explanation:

Allocate Repair (I2) first: Transfer price = $\frac{€ 20 , 000}{1 , 000 hours total} = € 20/ hour$ . Costs allocated to Energy = $200 hours \times € 20 = € 4, 000$ .

Allocate Energy (I1) second: Total Energy costs = €10,000 + €4,000 = €14,000. Transfer price = $\frac{€ 14 , 000}{6 , 000 (D1) + 2 , 000 (D2) kWh} = € 1.75$ .

37. Which equation correctly reflects the exchange of services of cost center I1, energy, when the reciprocal method based on equations is applied? (Where c1 represents Energy, c2 represents Repair, c3 represents Production, and c4 represents Material).
A. 200 c2 = 10,000 + 10,000 c1
B. 10,000 c1 = 200 c2 + 6,000 c3 + 2,000 c4
C. 10,000 = 2,000 c2 + 6,000 c3 + 2,000 c4
D. 10,000 c1 = 10,000 + 200 c2

Solution

Correct Answer: D

Explanation: Energy (I1) total cost ( $10, 000 \cdot c_{1}$ ) equals its primary costs (€10,000) plus the services it consumes from Repair ( $200 hours \times c_{2}$ ): $10, 000 c_{1} = 10, 000 + 200 c_{2}$ .

38. What are the total secondary overhead costs for the production and material cost centers after applying the reciprocal method based on equations?
A. €100,000
B. €30,000
C. €0
D. €130,000

Solution

Correct Answer: B

Explanation: Under the reciprocal method, all support department primary costs (€10,000 from Energy + €20,000 from Repair) are fully allocated to the operating cost centers, so the total secondary overhead allocated is $10, 000 + 20, 000 = € 30, 000$ .

39. How high are the total overhead costs on the production cost center after the implementation of the method of credits and debits (no levy for cost coverage)?

Note: Assume transfer prices are set at €1.40 per kWh for Energy and €23 per hour for Repair.
A. €13,000
B. €53,000
C. €18,400
D. €58,400

Solution

Correct Answer: B

Explanation: Production (D1) overhead = primary costs (€40,000) + Energy debit ( $6, 000 kWh \times € 1.40 = € 8, 400$ ) + Repair debit ( $200 h \times € 23 = € 4, 600$ ) = $€ 53, 000$ .

40. What amount is allocated from the energy cost center to the repair cost center when the method of credits and debits is used (no levy for cost coverage)?
A. €4,600
B. €2,800
C. €280
D. €0

Solution

Correct Answer: B

Explanation: Energy allocates to Repair: $2, 000 kWh \times € 1.40/ kWh = € 2, 800$ .

Flo's Notes

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Mock Exam

Cost Accounting Mock Exam

Section I. Theory Questions

Section II. Cost-Volume-Profit Analysis & Operative Decision Making

Section III. Cost-Object Accounting & Profit and Loss Calculation

Section IV. Interdepartmental Cost Allocation

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