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Approach to Profit Reporting

Authored by Asmahwati Rahim

Business

1st Grade

Used 6+ times

Approach to Profit Reporting
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10 questions

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1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the key difference between marginal costing and absorption costing?

Marginal costing includes only fixed costs, while absorption costing includes only variable costs.

Marginal costing includes both fixed and variable costs, while absorption costing includes only variable costs.

Marginal costing includes only variable costs, while absorption costing includes both fixed and variable costs.

Marginal costing and absorption costing both include fixed and variable costs but allocate them differently.

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

In marginal costing, which cost is used to determine the contribution margin?

Only fixed costs

Only variable costs

Both fixed and variable costs

Non-production costs

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following is a limitation of absorption costing?

It simplifies the pricing process.

It ignores fixed costs in product cost calculation.

It may cause overstatement of profits by including fixed costs in unsold inventory.

It focuses on short-term decision making.

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which statement is true about marginal costing?

Fixed production costs are allocated to each unit of product.

Variable production costs are treated as period costs.

Fixed production costs are treated as period costs.

All production costs are included in the cost of the product.

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Under absorption costing, unsold inventory includes:

Only variable costs

Only fixed costs

Both fixed and variable costs

Neither fixed nor variable costs

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the main advantage of using marginal costing for decision making?

It includes all production costs in product cost calculations.

It is better for long-term profitability analysis.

It helps in determining the contribution margin by focusing on variable costs.

It ensures fixed costs are allocated to each product.

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following industries is more likely to benefit from using absorption costing?

Software development

Retail

Manufacturing

Marketing agencies

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