## MCQ on Marginal Costing | Corporate and Management Accounting MCQs for CS Executive and Other Competitive Exams

MCQ on Marginal Costing: Check the below Corporate and Management Accounting MCQ on Marginal Costing with Answers Pdf free download. Corporate and Management Accounting MCQ on Marginal Costing Questions for Corporate and Management Accounting with Answers were prepared based on the latest exam pattern. We have provided Corporate and Management Accounting MCQ on Marginal Costing with Answers to help students understand the concept very well. Students should practice CS Executive MCQ on Marginal Costing Questions with Answers based on the latest syllabus.

## MCQ on Marginal Costing

1. Which of the following costs tire treated as product cost under variable costing ?
(A) Only direct costs
(B) Only variable production costs
(C) Only material and labour costs
(D) All variable and fixed manufacturing costs

(B) Only variable production costs

2. Profit-Volume ratio can be improved by
(A) Increasing selling price per unit
(B) Reducing the direct and variable costs
(C) Switching the production to products showing the higher profit-volume ratio
(D) All of the above

(D) All of the above

3. The costing method in which fixed factory overheads are added to inventory is
(A) Activity-based costing
(B) Marginal costing
(C) Direct costing
(D) Absorption costing

(D) Absorption costing

4. Assertion (A):
In management accounting, firm decisions on pricing policy can be taken.
Reason (R):
As the marginal cost per unit is constant from period to period within a short span of time.
Select the correct answer from the option given below
(A) Both A and R are true and R is the correct explanation of A
(B) Both A and R are true, but R is not the correct explanation of A
(C) A is true, but R is false
(D) A is false, but R is true

(A) Both A and R are true and R is the correct explanation of A

5. Make or buy decisions are made by comparing cost with the outside purchase price.
(A) Fixed
(B) Variable
(C) Sunk
(D) Joint

(B) Variable

6. Which of the following formula cannot be used for calculating the contribution ?
(A) Fixed cost plus profit
(B) Fixed cost minus loss
(C) Sales minus variable cost
(D) Fixed cost plus loss

(D) Fixed cost plus loss

7. Assertion (A):
The business earns a surplus of sale revenue over variable costs, which is called a contribution.
Reason (R):
Once fixed costs are fully recovered such excess contribution is termed as profit.
Select the correct answer from the options given below.
(A) Both A and R are true and R is the correct explanation of A
(B) Both A and R are true, but R is not the correct explanation of A
(C) A is true, but R is false
(D) A is false, but R is true

(B) Both A and R are true, but R is not the correct explanation of A

8. The costing method in which fixed factory overheads are added to inventory is known as ______.
(A) Direct costing
(B) Marginal costing
(C) Absorption costing
(D) Activity-based costing

(C) Absorption costing

9. Assertion (A):
The profit volume ratio is considered to be the best indicator of the profitability of the business.
Reason (R):
If the profit volume ratio is improved, it will result in better profits.
Select the correct answer from the options given below.
(A) Both A and R are true and R is the correct explanation of A
(B) Both A and R are true, but R is not the correct explanation of A
(C) A is true, but R is false
(D) A is false, but R is true

10. Which of the following formula cannot be used for calculating the P/V ratio ?
(A) (Sales value minus variable cost) / Sales value
(B) (Fixed cost plus profit)/Sales value
(C) Change in profits/Change in sales
(D) Profit/Sales value

(D) Profit/Sales value

11. Cost-volume-profit (CVP) analysis is based on several assumptions. Which one of the following is not relevant for such an analysis.
(A) Inventory quantity changes in the year
(B) Sales mix of the products is constant
(C) Material price and labour rates do not change
(D) Behaviour of both sales and variable cost is linear throughout the year

(A) Inventory quantity changes in the year

12. Cost-Volume-Profit analysis is based on several assumptions. Which one of the following is not one of these assumptions
(A) Sales mix of the products is constant
(B) The behaviour of both sales and variable cost is linear throughout the relevant range
(C) Variable cost per unit will remain constant
(D) Productivity and operational efficiency will change according to output

(D) Productivity and operational efficiency will change according to output

13. Under marginal costing system, product costs are:
(A) Equal to fixed cost plus variable costs
(B) Equal to only marginal costs
(C) Equal to semi-variable costs
(D) None of the above

(B) Equal to only marginal costs

14. Prime cost plus variable overheads gives:
(A) Cost of sales
(B) Marginal costs
(C) Works cost
(D) Cost of production

(B) Marginal costs

15. Under marginal costing, unit product cost would most likely be increased by
(A) A decrease in the number of units produced
(B) An increase in the number of units produced
(C) An increase in the commission paid to the salesman for each unit sold
(D) A decrease in the commission paid to the salesman for each unit sold

(A) A decrease in the number of units produced

16. Marginal Costing in America is called as:
(A) Differential costing
(B) Out-of-pocket costing
(C) Direct costing
(D) Variable costing

(C) Direct costing

17. Which of the following techniques of costing is also known as out-of-pocket costing?
(A) Standard Costing
(B) Historical Costing
(C) Marginal Costing
(D) Uniform Costing

(C) Marginal Costing

18. Contribution is the difference between:
(A) Selling price and Fixed cost
(B) Selling price and Total cost
(C) Selling price and Variable cost of sales
(D) Selling price and Profit

(C) Selling price and Variable cost of sales

19. Based on cost accounting information, which is the tool of Management Accounting for decision-making?
(A) Marginal Costing
(B) Standard Costing
(C) Differential Costing
(D) All of the above

(D) All of the above

20. The effect of sale price reduction always reduces the P/V ratio to raise and shorten the
(A) BEP and Margin of Safety
(B) Fixed Cost and BEP
(C) Margin of Safety and BEP
(D) Profit and BEP

(A) BEP and Margin of Safety

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