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Cost Accounting Interview Questions and Answers

Cost Accounting Interview Questions and Answers

Question - 1 : - Why are you interested in this role?

Answer - 1 : -

I am an experienced accountant, having spent twenty years in this field. I have gained lots of insight and knowledge, which I can apply here to better your organization. This job’s description also fits my expertise, which is an added advantage.

Question - 2 : - What do you understand by costing?

Answer - 2 : -

Costing can be defined as the process of ascertaining costs. It, therefore, refers to the technique of ascertaining costs. It encompasses all the principles applied in determining the cost of products and services. Different types of costing exist depending on the industry. These are historical, absorption, marginal, and standard costing.

Question - 3 : - Define the term cost accounting.

Answer - 3 : -

Cost accounting is the application of accounting and costing principles to determine costs. It also refers to analyzing savings or expenses and comparing them with previous expenses or standards. It uses different costing methods and techniques to classify, record, and appropriately allocate expenses to determine the price of products and services and their relations to sales values. It aims at determining profitability.

Question - 4 : - Mention three main reasons for cost accounting

Answer - 4 : -

Cost accounting plays three major roles. First, it is used to determine the cost of a product through different costing methods. Its second use is to determine the selling price of a given product, which helps the business recover the production cost and earn some profit. Lastly, it is used to analyze and classify the cost of production. This helps the business know what went to waste and how it can improve as time goes by.

Question - 5 : - How does your work as a cost accountant help businesses?

Answer - 5 : -

Through cost accounting, the business obtains lots of data used to determine whether a venture is profitable or not. They can either choose to drop it or improve on key areas for maximum profitability. It also helps businesses minimize wastages and thus widen the profit margin.

Lastly, this job reveals the cost of all the possible alternatives, allowing the business to settle on one that seems advantageous.

Question - 6 : - How can you advise organizations that want to install a costing aystem?

Answer - 6 : -

Such organizations should develop systems that will satisfy the needs of their different concerns.  They should also consider several principles as follows. First, there should be little disturbance of the current organization of the unit. The system should also be introduced gradually and be easy to operate. Lastly, the staff should be involved, given that the success of any system is pegged on them.

Question - 7 : - Define Production Volume Variance?

Answer - 7 : -

The production volume variance is associated with a standard costing system used by some manufacturers. This variance indicates the difference between:
1) the company's budgeted amount of fixed manufacturing overhead costs.
2) the amount of the fixed manufacturing overhead costs that were assigned to (or absorbed by) the company's production output.

Question - 8 : - Define Incremental Cost?

Answer - 8 : -

An incemental cost is the increase in total costs resulting from an increase in production or other activity.

Question - 9 : - Define Net Incremental Cash Flows In Cost Accounting?

Answer - 9 : -

Net incremental cash flows are the combination of the cash inflows and the cash outflows occurring in the same time period, and between two alternatives. For example, a company could use the net incremental cash flows to decide whether to invest in new, more efficient equipment or to retain its existing equipment.

Question - 10 : - Define Variable Cost?

Answer - 10 : -

A variable cost is a constant amount per unit produced or used. Therefore, the total amount of the variable cost will change proportionately with volume or activity. Generally, a product's direct materials are a variable cost.

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