Scribd
Upload
279 views3 pages

Absorption and Marginal Costing Multiple Choice Questions: The Difference Between Selling Price and Variable Cost

The document contains a multiple choice quiz on concepts related to absorption costing and marginal costing techniques. It tests understanding of key terms like contribution, marginal cost, break-even point, margin of safety, fixed and variable costs. The quiz contains 24 questions to assess knowledge of how these techniques can help management with decision making regarding pricing, production planning and cost control.

Uploaded by

Suresh Subramani
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
279 views3 pages

Absorption and Marginal Costing Multiple Choice Questions: The Difference Between Selling Price and Variable Cost

The document contains a multiple choice quiz on concepts related to absorption costing and marginal costing techniques. It tests understanding of key terms like contribution, marginal cost, break-even point, margin of safety, fixed and variable costs. The quiz contains 24 questions to assess knowledge of how these techniques can help management with decision making regarding pricing, production planning and cost control.

Uploaded by

Suresh Subramani
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 3

Absorption and Marginal Costing Multiple Choice Questions

1. The term contribution refers to ____


The difference between selling price and fixed cost
The difference between selling price and variable cost
Profit
None of these

2. Marginal costing technique helps the management in deciding _____


Pricing

To accept fresh orders at low price


To make or buy

All of the above

3. The other name of marginal costing is _______


Direct costing

Variable costing

Incremental costing
All of the above

4. The term gross margin refers to _______


Total profit

Contribution

Profit before tax

Profit before interest and tax

5. Sales Rs. 100000, variable cost Rs. 50000 and net profit ratio is 10% on sales, find out fixed cost.
50000

40000

20000


inadequate
The data

6. Profit volume ratio establishes the relationship between _______


Contribution and profit

Fixed cost and contribution


Profit and sales

Contribution
and sales value

7. Contribution/sales is equal to _______


P/V ratio

Net profit ratio


BEP

EPS

8. The profit of an undertaking is affected by _______


Selling price of the products

Volume of sales
Variable cost per unit and total fixed cost
All of the above

9. The profit at which total revenue is equal to total cost is called ______
BEP


of safety
Margin

Break even analysis


None

10. The break even chart helps the management in ______


Forecasting costs and profits

Cost control

Long term planning and growth


All of the above

11. Break even chart presents only cost volume profits. It ignores other considerations such as ________
Capital


aspects
Marketing
Government policy

All of the above

12. Expenses that do not vary with the volume of production are known as _______
Fixed expenses

Variable expenses

Semi‐variable expenses
None

13. ________ is the excess of sales over the break even sales.
Actual sales

Total sales

Margin of
safety
Net sales

14. __________ indicates the extent of which the sales can be reduced without resulting in loss.
BEP

Key factor

Contribution

Margin of safety

15. The formula for Margin of Safety is one of the following ________
PV ratio/profit

Profit/P/v ratio
Profit/sales

Contribution/fixed cost

16. Margin of safety can be improved by ________


Increasing production

Increasing selling price

Reducing the costs

All of the above

17. If a firm is dealing in several products the________ is calculated.


Composite BEP

BEP

Break
even sales
Cash BEP

18. _________ refers to a situation where the costs of operating two alternative plants are equal.
Simple BEP

Cost BEP


BEP
Contribution
None

19. The angle formed by the sales line and total cost line at the break even point is known as _________
Profit variable
Margin of safety
Angle of incidence
None

20. A high margin of safety indicates the more actual sales than break even sales.
True

False

21. The term contribution margin refers to _________


Marginal income

Marginal cost

Gross profit

Net income

22. Overvaluation of stock is practiced on absorption costing technique.


True

False

23. The BEP decreases if the fixed cost ________


Increases

Decreases

Remains constant
Inadequate data

24. Marginal costing is the most useful technique for the ______
Shareholders

Management

Auditors

Creditors

You might also like