by Auria Gooch
Understanding the intricacies of product costs is essential for anyone involved in business or economics. This quiz will take you through a series of questions designed to test your knowledge on the factors that influence product pricing, including production costs, market demand, and distribution expenses. Get ready to challenge yourself and see how well you grasp these critical concepts!
We recommend that you do not leave the page that you are taking this quiz in. Stay honest 🙂
Product Cost Quiz Questions Overview
1. What is the term for the cost of raw materials used in production?
Fixed Cost
Variable Cost
Direct Material Cost
Overhead Cost
2. Which of the following is considered a fixed cost?
Wages for production workers
Rent for factory space
Cost of raw materials
Utility bills
3. What is the break-even point?
The point where total revenue equals total costs
The point where total revenue exceeds total costs
The point where total costs exceed total revenue
The point where variable costs equal fixed costs
4. Which pricing strategy involves setting a high price initially and then lowering it over time?
Penetration Pricing
Skimming Pricing
Cost-Plus Pricing
Competitive Pricing
5. What is the primary objective of cost-plus pricing?
To match competitors’ prices
To maximize market share
To cover costs and achieve a target profit
To attract price-sensitive customers
6. Which of the following is an example of a variable cost?
Depreciation
Salaries of administrative staff
Cost of raw materials
Insurance premiums
7. What does the term ‘economies of scale’ refer to?
Higher costs per unit with increased production
Lower costs per unit with increased production
Higher fixed costs with increased production
Lower fixed costs with increased production
8. What is the term for the cost incurred in the process of producing one additional unit of a product?
Total Cost
Marginal Cost
Average Cost
Fixed Cost
9. Which cost is not directly attributable to the production of goods?
Direct Material Cost
Direct Labor Cost
Overhead Cost
Variable Cost
10. What is the main goal of penetration pricing?
To maximize short-term profits
To achieve a high market share quickly
To cover production costs
To match competitors’ prices
11. Which type of cost remains constant regardless of the level of production?
Variable Cost
Fixed Cost
Marginal Cost
Direct Material Cost
12. What is the primary focus of target costing?
Setting prices based on competitors’ prices
Determining the allowable cost based on market price
Maximizing profit margins
Minimizing production costs
13. What is the term for the total cost of producing a specific quantity of goods?
Marginal Cost
Average Cost
Total Cost
Fixed Cost
14. Which of the following is a common method for allocating overhead costs?
Direct Labor Hours
Direct Material Cost
Fixed Cost Allocation
Marginal Cost Allocation
15. What is the main advantage of using activity-based costing (ABC)?
Simplifies the costing process
Provides more accurate cost information
Reduces overall production costs
Increases profit margins
16. Which of the following is a direct cost?
Factory Rent
Administrative Salaries
Direct Labor
Utility Bills
We recommend that you do not leave the page that you are taking this quiz in. Stay honest 🙂
