Marginal Costing Quiz

Marginal costing considers only which type of cost?

• Fixed cost

• Historical cost

• Variable cost

• Capital cost

Contribution is calculated as:

• Sales – Variable Cost

• Sales – Fixed Cost

• Sales – Total Cost

• Sales – Gross Profit

One of the key uses of marginal costing is:

• Tax planning

• Cost auditing

• Decision making

• Asset valuation

Which cost is considered irrelevant in marginal costing?

• Variable cost

• Fixed cost

• Direct labor

• Selling expenses

A limitation of marginal costing is that:

• It ignores sales data

• It is hard to implement

• It ignores fixed costs in decision making

• It does not calculate variable costs

Marginal costing is best suited for:

• Long-term capital investment

• Short-term decision making

• Preparing cash budgets

• Legal compliance

Which statement is true in marginal costing?

• Profit changes proportionately with fixed cost

• Fixed cost remains constant

• Variable cost does not affect profit

• Contribution is not used

Absorption costing includes:

• Only variable costs

• Only fixed costs

• Both fixed and variable costs

• No costs

Absorption costing is also known as:

• Direct costing

• Full costing

• Variable costing

• Contribution costing

In absorption costing, fixed overheads are:

• Charged to the period

• Ignored completely

• Treated as period costs

• Absorbed into unit cost