# CPA Exam Deep Dive + Sample Questions: Cost Concepts

We’ve devoted a lot of our recent video lectures to the FAR section of the CPA Exam because, as you know, it covers an unbelievable amount of information. Second only to FAR in terms of breadth is BEC.

So, this time we’re featuring a great Deep Dive video lecture on the crucial top of Cost Concepts.

## Cost Concepts In Depth

The accounting concept of cost is as a measure of the money amount given up or the obligation incurred to acquire a resource. For economic and finance purposes, there are various other concepts of cost. Throughout the CPA Exam, you’ll be expected to identify and work with different concepts of cost, such as accounting cost, alternative costs and weighted averages.

In this Deep Dive lecture video from Wiley CPAexcel, Prof. Allen Bizzell, DBA, of the University of Texas at Austin (retired) walks us through many of the various Cost Concepts.

## Sample Questions

As has become our custom, here are a handful of sample questions to test you knowledge. You can check your answers by scrolling down to the bottom of this blog post. Good luck!

1) Which of the following is assigned to goods that were either purchased or manufactured for resale?

A. Relevant cost.
B. Period cost.
C. Opportunity cost.
D. Product cost.

2) For the year ended December 31, 2004, Abel Co. incurred direct costs of \$500,000 based on a particular course of action during the year. If a different course of action had been taken, direct costs would have been \$400,000. In addition, Abel’s 2004 fixed costs were \$90,000. The incremental cost was:

A. \$10,000
B. \$90,000
C. \$100,000
D. \$190,000

3) Egan Co. owns land that could be developed in the future. Egan estimates it can sell the land for \$1,200,000, net of all selling costs. If it is not sold, Egan will continue with its plans to develop the land. As Egan evaluates it options for development or sale of the property, what type of cost would the potential selling price represent in Egan’s decision?

A. Sunk.
B. Opportunity.
C. Future.
D. Variable.