Preview Questions Cost Accountant | Role Specific Skill

Question 1: What is the role of activity-based costing (ABC) in cost allocation for FMCG companies?

Which action should you take?

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ABC is less accurate than traditional cost allocation methods.

ABC should only be used for small-scale companies.

ABC focuses only on direct labor costs and ignores overhead.

ABC helps assign overhead costs based on activities that drive costs, improving accuracy.

Question 2: Which of the following is a disadvantage of using "variable costing" for cost allocation in FMCG?

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It ignores fixed costs, which may lead to underestimating the total cost of producing goods.

It automatically includes all costs, both fixed and variable, in the cost of goods sold.

It distorts product pricing by allocating too many costs to fixed costs.

It is complex and difficult to implement in companies with diverse product lines.

Question 3: How do you incorporate "exchange rate fluctuations" into an FMCG company's financial forecasts?

Which action should you take?

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By excluding foreign sales and purchases from the forecast

By keeping exchange rate assumptions constant throughout the forecast period

By adjusting revenue and cost projections based on expected changes in exchange rates

By relying on the average historical exchange rate for the entire period

Question 4: What is the role of cost allocation in setting appropriate transfer prices between divisions in FMCG?

Which action should you take?

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It ensures that transfer prices reflect the actual costs incurred by each division.

It avoids any internal pricing arrangements altogether.

It only affects external customer pricing, not internal transfers.

It reduces the complexity of setting transfer prices by ignoring cost allocation.

Question 5: How can break-even analysis be used to assess the financial health of an FMCG company?

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It helps identify the most profitable product in the company's portfolio.

It forecasts future market growth without considering fixed costs.

It eliminates the need to track variable costs.

It helps determine the level of sales needed to cover fixed and variable costs, indicating financial stability.

Question 6: How do you forecast the impact of new product launches on the overall budget in FMCG?

Which action should you take?

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By excluding new products from the overall company forecast

By assuming product launch costs will be equal to the budgeted figures

By estimating the costs of production, marketing, and distribution, and adjusting for potential market response

By using historical data of similar product launches in the industry