10+ Cost Accountant Interview Questions and Answers

The cost of utility can be allocated to different product lines using marginal costing.

• Allocate the cost of utility based on the proportion of usage by each product line.

• Calculate the marginal cost per unit of utility for each product line.

• Multiply the marginal cost per unit by the quantity of utility used by each product line.

• Allocate the calculated cost to each product line accordingly.

Machine hour rate is the cost incurred per hour of machine usage. It is computed by dividing total machine costs by total machine hours.

• Machine hour rate is used to allocate overhead costs to products or services based on the amount of machine usage.

• Total machine costs include all expenses related to the machine, such as depreciation, maintenance, and repairs.

• Total machine hours are the number of hours the machine is expected to be used during a given period.

• To compute the ma...read more

The formulas for preparing a budget and comparing it with actuals involve calculating variances and analyzing the reasons behind them.

• The formula for preparing a budget is: Budgeted Amount = Previous Year's Actual Amount + Expected Changes

• The formula for comparing budget with actuals is: Variance = Actual Amount - Budgeted Amount

• To analyze the reasons behind variances, further calculations and investigation may be required

• Examples of budget preparation formulas include foreca...read more

Financial instruments are assets that can be traded and have a monetary value.

• Financial instruments include stocks, bonds, options, futures, and derivatives.

• They are used to manage risk, raise capital, and speculate on market movements.

• Examples of financial instruments include Apple stock, US Treasury bonds, and S&P 500 futures.

• They can be classified as debt, equity, or hybrid instruments depending on their characteristics.

• Financial instruments are regulated by government age...read more

As a cost accountant, I am responsible for implementing and monitoring cost control measures to ensure efficient use of resources and minimize expenses.

• Analyze financial data to identify areas of cost savings

• Develop and implement cost reduction strategies

• Monitor and report on budget variances

• Collaborate with other departments to identify cost-saving opportunities

• Ensure compliance with accounting standards and regulations

• Provide recommendations to management on cost control me...read more

FIFO stands for First-In-First-Out. It is a method of inventory valuation.

• The cost of the first items purchased or produced is assigned to the first items sold or used.

• The cost of the ending inventory is based on the cost of the most recent purchases.

• FIFO assumes that the oldest items are sold first.

• Example: A company purchases 100 units of a product at $10 each on January 1st and 200 units at $12 each on February 1st. If the company sells 150 units on March 1st, the cost of ...read more

Break-even point is the level of sales at which total costs equal total revenue.

• It is the point where a company neither makes a profit nor incurs a loss

• It is calculated by dividing fixed costs by contribution margin per unit

• It helps in determining the minimum sales required to cover costs

• It is affected by changes in variable costs, fixed costs, and selling price

New product cost is the total cost incurred in developing and producing a new product.

• It includes research and development costs, design costs, material costs, labor costs, and overhead costs.

• New product cost is important in determining the selling price of the product.

• It is also used to evaluate the profitability of the product.

• Examples of new product costs include the cost of developing a new software program, the cost of designing a new car model, and the cost of creating ...read more

Auditing is a systematic examination of financial records and statements to ensure accuracy and compliance with laws and regulations.

• Auditing involves reviewing financial records and statements to ensure accuracy and compliance with laws and regulations

• Methods of performing audit include risk assessment, testing of controls, substantive testing, and analytical procedures

• Auditors use various techniques such as sampling, observation, inquiry, and documentation to gather evidenc...read more

Marginal costing is a technique of cost accounting which deals with the ascertainment of marginal cost and its use in decision making.

• Marginal cost is the cost of producing one additional unit of a product.

• Fixed costs are not considered in marginal costing.

• It helps in determining the profitability of a product.

• It is useful in making short-term decisions like pricing, make or buy, etc.

• It is also known as variable costing.

The Golden rules are basic principles of accounting that serve as the foundation for recording financial transactions.

• Golden Rule of Personal Account: Debit the receiver, credit the giver. Example: Cash received from a customer is debited to the Cash account.

• Golden Rule of Real Account: Debit what comes in, credit what goes out. Example: Purchase of machinery is debited to Machinery account.

• Golden Rule of Nominal Account: Debit all expenses and losses, credit all incomes and ...read more

Accounts payable is the amount of money a company owes to its suppliers or vendors for goods or services purchased on credit.

• Accounts payable represents a company's short-term debt obligations to suppliers or vendors.

• It is recorded as a liability on the balance sheet.

• Accounts payable is typically settled within a short period, often 30 to 90 days.

• Examples include invoices from suppliers for raw materials, utilities, or services rendered.

• Managing accounts payable effectively i...read more

Costing process in Pharma involves determining the cost of producing a pharmaceutical product.

• Costing process includes identifying direct and indirect costs

• Direct costs include raw materials, labor, and packaging

• Indirect costs include overhead expenses such as rent, utilities, and depreciation

• Costing process helps in determining the selling price of the product

• Costing process also helps in identifying areas where cost reduction can be done

• Example: Costing process for producin...read more

Inventory refers to the goods and materials a business holds for the purpose of resale or production.

• Inventory includes raw materials, work-in-progress, and finished goods.

• It is an important asset on a company's balance sheet.

• Inventory management involves tracking, storing, and replenishing inventory to meet demand.

• Examples of inventory include merchandise in a retail store, components in a manufacturing plant, and supplies in a hospital.

Ind AS 2 is a standard that deals with the accounting treatment of inventories.

• Ind AS 2 provides guidelines on the measurement and valuation of inventories.

• It requires inventories to be measured at the lower of cost and net realizable value.

• Examples of inventories include raw materials, work in progress, and finished goods.

• The standard also outlines the cost formulas that can be used to determine the cost of inventories, such as FIFO and weighted average cost.

• Disclosure requi...read more

Product costing in SAP HANA involves determining the cost of producing a product or service.

• SAP HANA provides real-time data for accurate product costing

• It considers direct and indirect costs such as materials, labor, and overhead

• Allows for cost analysis and optimization

• Enables tracking of cost variances and profitability analysis

• Integration with other SAP modules such as production planning and sales and distribution

• Example: A company can use SAP HANA to determine the cost o...read more