Cost centres and cost behaviour

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Cost centres are a major part of the ‘Costing Introduction Free Course’ and Accounting Trainees and cost accountants need a thorough understanding of cost centres and behaviour.

You are part way through the Costing Introduction Free Course and before reading this page you should have read:
-Costing Introduction Free Course
-Costing Systems

Accounting trainees should be able to define and provide examples of ‘cost centres’ and ‘profit centres’.
You should be able to discuss the nature and purpose of coding systems, so that each cost is allocated by a code to a cost centre. You should be familiar with the various types of codes such as numerical and alpha-numeric.

Another popular topic with Accounting examiners is the concept of ‘cost behaviour’. You should be able to discuss at length the way costs increase or decrease in relation to output.
Examiners do like to throw in questions on semi-variable costs.

cost centres
Cost Accountants

Below is the Amazon link to the relevant books covering cost centres:

Now lets test your knowledge of cost centres and cost behaviour – please attempt the quiz below.

Cost Centres and Cost Behaviour : QUIZ

Question 1
A cost which contains both a fixed element and a variable element is called a _______ _________ cost.

Question 2
A cost which changes in proportion to the level of output or activity is called a _________ cost.

Question 3
A section or part of an organization to which costs can be charged is called a _______ ________

Question 4
Rent of premises is a variable cost – true or false

Question 5
The way that costs alter with changes in levels of production is known as _________ _________

Question 6
A code made up of numbers and letters is known as an ________________________ code

Question 7
___________ is used extensively for the analysis of costs and income.

Question 8
Materials used in production would be classified as variable costs – true or false?

Question 9
Power used to run the lathes in a factory making tools would be classified as a __________ cost.

Click the link below to move onto the next topic
-Inventory Valuation

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