CMA Foundation · Fundamentals of Financial and Cost Accounting · Meaning and Significance of Cost Accounting and its Relationship with Financial Accounting
In a cost accounting system, a location, person or item of equipment for which costs are accumulated before being charged to cost units is called a:
The correct answer is a cost centre. It is a location, person or item of equipment for which costs are first accumulated and later assigned to cost units. A cost unit is the final product or service measure, and a cost driver is the factor causing cost to change.
- ACost centreCorrect
- BProfit centre
- CCost driver
- DCost unit
Explanation
A cost centre is a location, person or equipment for which costs are collected and later charged to cost units. A cost unit is the unit of product or service to which costs are finally attached, so it is not the answer. A cost driver is the factor that causes cost to change.
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