Multiple Choice Questions: Marginal Costing
Multiple Choice Questions: Marginal Costing
3. The accountant’s concept of marginal cost differs from the Economist’s concept of marginal
cost in the matter of exclusion of…
a. Variable cost
b. Semi‐variable cost
c. Fixed cost
d. None of these
4. Direct material cost + direct labor cost + other variable costs is equal to…
a. Contribution
b. Total cost
c. Marginal cost
d. Sales
5. The other name of marginal costing is…
a. Direct costing
b. Variable costing
c. Incremental costing
d. All of the above
6. The term gross margin refers to…
a. Total profit
b. Contribution
c. Profit before tax
d. Profit before interest and tax
7. Sales Rs. 100000, variable cost Rs. 60000 and net profit ratio is 10% on sales, find out fixed
cost.
a. 40000
b. 60000
c. 50000
d. The data inadequate
8. Sales Rs. 100000, variable cost Rs. 50000 and net profit ratio is 10% on sales, find out fixed
cost.
a. 50000
b. 40000
c. 20000
d. The data inadequate
12. The factor which limits the volume of output of different products of an understanding at a
particular point of time is known as…
a. Key factor
b. BEP
c. Contribution
d. None
14. The profit at which total revenue is equal to total cost is called…
a. BEP
b. Margin of safety
c. Break even analysis
d. None
16. Break even chart presents only cost volume profits. It ignores other considerations such as…
a. Capital
b. Marketing aspects
c. Government policy
d. All of the above
17. Expenses that do not vary with the volume of production are known as…
a. Fixed expenses
b. Variable expenses
c. Semi‐variable expenses
d. None
18. ________ is the excess of sales over the break even sales.
a. Actual sales
b. Total sales
c. Margin of safety
d. Net sales
19. __________ indicates the extent of which the sales can be reduced without resulting in loss.
a. BEP
b. Key factor
c. Contribution
d. Margin of safety
23. _________ refers to a situation where the costs of operating two alternative plants are equal.
a. Simple BEP
b. Cost BEP
c. Contribution BEP
d. None
24. The angle formed by the sales line and total cost line at the break even point is known as…
a. Profit variable
b. Margin of safety
c. Angle of incidence
d. None
25. A high margin of safety indicates the more actual sales than break even sales.
a. True
b. False
31. Sales of two consecutive months of a company are Rs. 3,80,000 and Rs. 4,20,000. The
company’s net profits for these months amounted to Rs. 24,000 and Rs. 40,000 respectively.
There is no change in P/V ratio or fixed costs. The P/V ratio of the company is—
a. 33.33%
b. 40%
c. 25%
d. None of these
32. A key factor, which at a particular time or over a period, will not limit the activities of the
organization.
a. True
b. False
34. In break-even analysis it is assumed that variable costs fluctuate inversely with time.
a. True
b. False
35. Contribution earned after reaching Break Even Point is __________ of the firm.
36. Profit-volume graph shows the relationship between __________ and __________ .
39. A company has fixed cots of Rs. 6,00,000 per annum. It manufactures a single product which
it sells for Rs. 200 per unit. Its contribution to sales ratio is 40%. Its break-even in units is —
a. 7,500 units
b. 8,000 units
c. 3,000 units
d. 1,500 units
41. Opportunity cost is the value of benefit sacrified in favour of an alternative course of
action.
a. True
b. False
42. __________ cost is the difference in total cost that result from two alternative courses of
action.
43. In two consecutive periods, sales and profit were Rs. 1,60,000 and Rs. 8,000 respectively in
the first period and Rs. 1,80,000 and Rs. 14,000 respectively during the second period. If
there is not change in fixed cost between the two periods, then what would be profit if sales
are Rs. 2,00,000?
a. Rs. 16,000
b. Rs. 18,000
c. Rs. 20,000
d. Rs. 22,000