ICWA:Interview Preparation

Question : 1       Explain cost sheet?

Cost Sheet is a periodical statement of cost designed to show in detail the various elements of cost of goods produced like Prime Cost, Factory Cost of Production & Total Cost. It is prepared at regular intervals eg, weekly, monthly quarterly, yearly etc. Comparative figures of the various period may also be shown in the cost sheet so that assessement can be made aboput the progress of the business.

In Short, cost sheet is a detailed statement of cost of a product for a given period of time.

Question: 2    how to make a table for to calculate the prime cost,factroy cost, total cost of production and cost of sales?

Question : 3       Explain the information about cost sheets?

Question : 4       What does the name costing mean and what are the importance of costing?

Costing means the ascertainment of cost whether for a specified thing or activity.

To ascertain cost, we need to apply accounting and costing principles, methods and techniques.

Importance:

1)It assist management to make decision

for example make or buy, whether to accept a special order and others;

2)It assist management in planning and control;

3) Understanding costing assist in cost awareness, cost control / management;

4) Costing assists management to appreciate scarce resources in the increasingly complex business operations;

5) Is vital to an organization’s survival re: using marginal cost in competitive tendering and others.

Question : 5       What are fixed costs?

The costs that are fixed irrespective of production are fixed costs.

EX: Rent ,Depreciation

Question : 6       What are variable costs?

Variable cost or Marginal cost is the cost that is directly proportionate to the number of units being produced (unit being a Tangible item produced or an Intangible service that is provided).

 It increases proportionately if the number of units that are being produced/provided are increased and decreases proportionately when the number of units that are being produced/provided are decreased.

Question : 7       What is difference between cost accounting and financial accounting?

Question : 8       Why is interest on loan not included in cost sheet ?

Interest on loan is not included in cost sheet because it is treated as an item of finance.

in cost sheet items of financial nature are not included.

Interest on loan is a financial charge and debited to Profit & Loss account.

Question : 9 What is the difference between cash flow statement and funds flow statement?

Question: 10 What is the difference between Expenses & Expenditure?

Question : 11     What is BEP in Cost Accounting?

BEP: Break Even Point                                     

A point at which there is no profit and no loss.

The level of activity at which total revenues = total costs.

In Other words, Here, Contribution is just equal to Fixed Cost. (C=F.C)

In simple terms, Total Sales = Total cost

If the company make sales above that point it would earn profit or below then it would be in loss.

Question: 12      Tell us about your experience in cost accounting.

I think its Very Fantastic to work on Cost Accounting because the ordinary people does not know,

How to find cost of a particular product precisely, how to control cost, how to prepare budget and planning for low cost.

Question : 13     What is CMMI?

Capability Maturity Model  Integration (CMMI)

It is a process improvement approach that provides organizations with the essential elements of effective processes.

It can be used to guide process improvement across a project, a division, or an entire organization. CMMI helps integrate traditionally separate organizational functions, set process improvement goals and priorities, provide guidance for quality processes, and provide a point of reference for appraising current processes.

Question : 14     What is CMM?

 (CMM)The Capability Maturity Model .

CMM is an internationally recognized standard for measuring the maturity of an organization's software development processes and has become the primary benchmark multinational corporations use to judge IT service providers ' abilities to deliver high quality software. Bleum is now one of only a few companies in China to be assessed SEI CMM Level 5.

Question : 15     "cost accounting has become an essential tool of management "- What is your opinion

Earlier cost accounting's meaning was just determining the cost of a particular product and classification of the same as per it's nature or behavior.

But in the modern context cost accounting means not mere determining the cost of the product but also includes project costing, budgeting, decision making, project financing.

all these are very important aspects from the company's management point of view.

As cost accounting facilitates all these things cost accounting today is becoming an essential tool of management

Question: 16      What is chargeback?

A process in the industry where a wholesaler requests an amount that is the difference between the manufacturer's price to the wholesaler and the contract price to the resale customer.

The actual chargeback occurs when the wholesaler sells the manufacturer's product at contract price that is below wholesaler acquisition cost (WAC).

Especially evident in pharmaceutical industry.

In electronic commerce, a charge back is a reversal of a credit card transaction, which is usually initiated by the card issuer as requested by the cardholder. It may also be requested by the merchant.

Charge backs usually occur due to fraudulent activity on the card (real or perceived), due to customer disputes, or from other authorization issues.

Question : 17     What are the freight charges ?

There are two types of freight charges one is Inward and the other one is Outward.

Inward is grouped under Direct expenses incurred before production and it may be taken into landed cost.

Eg.Freight given while purchasing of Raw Material.

Outward is grouped under Indirect expense and it will be incurred after production.

Eg.Freight given while selling of Finished Goods.

Question : 18     What is marginal cost?

Marginal cost is the change in total cost that arises when the quantity produced changes by one unit. That is, it is the cost of producing one more unit of a good.

Question :19      Define cost object  & define cost center ?

Cost object:

A cost object is a tangible input for a product manufactured/Service provided, like labor or material.

For example a cloth manufacturing firm requires some amount of predetermined labor and predetermined raw material for any amount of cloth being manufactured.

The cost of employing labor can be directly fixed as "per man per hour" or "per man per day per hour per minute per annum", so the labor is a cost object as you can directly associate cost with it.

Similarly the raw material like cotton or threads or fabric can be another cost object.

Cost center:

Companies may choose to classify business units as cost centers, profit centers, or investment centers.

A cost center is a division that adds to the cost of an organization, but only indirectly adds to its profit. Typical examples include research and development, marketing and customer service.

Question :20      What does Zero-Based Budgeting - ZBB Mean? How is it different from the Conventional Budgeting Exercise? Does it help in Cost Reduction?

A method of budgeting in which all expenses must be justified for each new period.

Zero-based budgeting starts from a “zero base” and every function within an organization are analyzed for its needs and costs. Budgets are then built around what is needed for the upcoming period, regardless of whether the budget is higher or lower than the previous one.

Here Cost Reduction  is, however, a time-consuming process that takes much longer than traditional, cost-based budgeting.