📘 Marginal Costing Basics – 100 MCQs
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Marginal costing is based on:
A. Total cost
B. Variable cost
C. Fixed cost
D. Historical cost
Answer: B
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Marginal cost means:
A. Total cost
B. Fixed cost
C. Cost of one additional unit
D. Average cost
Answer: C
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Contribution =
A. Sales – Fixed cost
B. Sales – Variable cost
C. Fixed cost – Variable cost
D. Profit – Cost
Answer: B
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In marginal costing, fixed cost is treated as:
A. Product cost
B. Period cost
C. Variable cost
D. Direct cost
Answer: B
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Marginal costing ignores:
A. Variable cost
B. Fixed cost per unit
C. Contribution
D. Sales
Answer: B
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Profit =
A. Contribution – Fixed cost
B. Sales – Total cost
C. Variable cost – Fixed cost
D. None
Answer: A
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Contribution first covers:
A. Profit
B. Fixed cost
C. Variable cost
D. Sales
Answer: B
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After covering fixed cost, contribution becomes:
A. Loss
B. Profit
C. Cost
D. None
Answer: B
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Marginal costing is useful for:
A. Long-term decisions
B. Short-term decisions
C. Audit
D. Tax
Answer: B
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Contribution per unit =
A. SP – VC
B. SP – FC
C. VC – FC
D. SP – Profit
Answer: A
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SP ₹50, VC ₹30 → contribution =
A. 20
B. 30
C. 50
D. 10
Answer: A
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Contribution ₹20, fixed cost ₹10,000 → profit at 1,000 units =
A. 10,000
B. 20,000
C. 30,000
D. 5,000
Answer: A
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If contribution < fixed cost →
A. Profit
B. Loss
C. No effect
D. Zero
Answer: B
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If contribution = fixed cost →
A. Profit
B. Loss
C. BEP
D. None
Answer: C
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P/V ratio =
A. Contribution/Sales
B. Profit/Sales
C. FC/Sales
D. VC/Sales
Answer: A
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P/V ratio increases when:
A. SP increases
B. VC increases
C. FC increases
D. None
Answer: A
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If VC increases, contribution:
A. Increases
B. Decreases
C. Same
D. Zero
Answer: B
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Fixed cost per unit:
A. Constant
B. Decreases with output
C. Increases
D. Zero
Answer: B
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Variable cost per unit:
A. Constant
B. Decreases
C. Increases
D. Zero
Answer: A
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Total contribution =
A. Contribution per unit × units
B. Sales – FC
C. VC – FC
D. None
Answer: A
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In Railways, marginal costing helps in:
A. Pricing
B. Cost control
C. Decision making
D. All
Answer: D
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Marginal costing assumes:
A. Fixed cost constant
B. VC constant per unit
C. Both
D. None
Answer: C
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Marginal costing ignores:
A. Time value
B. Cost
C. Sales
D. Profit
Answer: A
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Marginal costing is also called:
A. Variable costing
B. Absorption costing
C. Financial costing
D. None
Answer: A
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Marginal costing is useful for:
A. Make or buy
B. Shut down
C. Pricing
D. All
Answer: D
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Decision is based on:
A. Contribution
B. Profit
C. Cost
D. None
Answer: A
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Higher contribution means:
A. Higher profit potential
B. Loss
C. No effect
D. Cost
Answer: A
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Contribution ratio =
A. P/V ratio
B. Profit ratio
C. Cost ratio
D. None
Answer: A
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Key factor analysis is used when:
A. Limiting factor exists
B. No limit
C. Profit
D. Loss
Answer: A
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Limiting factor is:
A. Constraint
B. Cost
C. Profit
D. None
Answer: A
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Product mix decision depends on:
A. Contribution per unit
B. Contribution per limiting factor
C. Profit
D. Cost
Answer: B
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Marginal costing excludes:
A. Fixed overhead
B. Variable cost
C. Contribution
D. Sales
Answer: A
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Break-even analysis is part of:
A. Marginal costing
B. Financial accounting
C. Audit
D. None
Answer: A
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Margin of safety indicates:
A. Risk
B. Profit
C. Cost
D. Sales
Answer: A
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High margin of safety =
A. Low risk
B. High risk
C. Loss
D. None
Answer: A
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Marginal costing is useful for:
A. Short-term decisions
B. Long-term
C. Audit
D. Tax
Answer: A
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Profit planning uses:
A. Contribution
B. Cost
C. Sales
D. None
Answer: A
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Contribution helps in:
A. Cost recovery
B. Profit
C. Both
D. None
Answer: C
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Fixed cost is:
A. Period cost
B. Product cost
C. Variable
D. None
Answer: A
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Variable cost is:
A. Product cost
B. Period cost
C. Fixed
D. None
Answer: A
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Marginal costing is useful for:
A. Decision making
B. Planning
C. Control
D. All
Answer: D
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Marginal costing assumes:
A. Linear cost behavior
B. Non-linear
C. Random
D. None
Answer: A
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Contribution analysis helps in:
A. Profit planning
B. Cost control
C. Decision
D. All
Answer: D
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Marginal costing ignores:
A. Inventory valuation effect
B. Cost
C. Sales
D. Profit
Answer: A
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Marginal costing is used in:
A. Managerial accounting
B. Financial accounting
C. Audit
D. None
Answer: A
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Marginal costing helps in:
A. Pricing decisions
B. Make or buy
C. Shut down
D. All
Answer: D
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Contribution is key for:
A. Decision making
B. Profit
C. Cost
D. None
Answer: A
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Marginal costing simplifies:
A. Decision making
B. Costing
C. Profit
D. None
Answer: A
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Marginal costing is important for:
A. Railway pricing
B. Cost control
C. Planning
D. All
Answer: D
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Contribution is:
A. Surplus
B. Profit
C. Cost
D. Loss
Answer: A
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Marginal costing helps in:
A. Efficiency
B. Control
C. Planning
D. All
Answer: D
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Marginal costing uses:
A. Variable cost
B. Fixed cost
C. Total cost
D. None
Answer: A
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Marginal costing excludes:
A. Fixed cost
B. Variable cost
C. Contribution
D. Sales
Answer: A
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Marginal costing is based on:
A. Cost behavior
B. Profit
C. Sales
D. None
Answer: A
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Marginal costing is useful for:
A. Decision
B. Planning
C. Control
D. All
Answer: D
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Contribution helps in:
A. Covering fixed cost
B. Profit
C. Both
D. None
Answer: C
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Marginal costing is:
A. Analytical tool
B. Ledger
C. Journal
D. None
Answer: A
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Marginal costing is essential for:
A. Management decisions
B. Audit
C. Tax
D. None
Answer: A
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Marginal costing helps in:
A. Profit planning
B. Cost control
C. Decision
D. All
Answer: D
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Marginal costing is foundation of:
A. CVP analysis
B. Audit
C. Ledger
D. None
Answer: A
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