Difference between Absorption & Marginal Costing - MCQs

Difference between Absorption & Marginal Costing - MCQs


1. Which of the following statements are true?

a) In absorption costing, cost is divided into three major parts while in marginal costing cost is divided into two main parts.

b) IN absorption costing period is important and in marginal costing product is important.

c) Both a and b

d) None of the above

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ANSWER: c) Both a and b



2. In context of net operating profit, which of the following statements are true?

a) If all costs are variable, the amount of profit obtained in marginal costing and absorption costing will be same.

b) If the volume of sales and output is equal in a period, profit will be same in absorption costing and marginal costing.

c) Both a and b

d) None of the above

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ANSWER: c) Both a and b



3. Under absorption costing, managerial decisions are based on

a) Profit
b) Contribution
c) Profit volume ratio
d) None of the above

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ANSWER: a) Profit



4. If sales is less than production and there is no opening stock, it suggests there is closing stock. In such a scenario, profit under marginal costing will be less than the one shown by absorption costing.

a) True
b) False

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ANSWER: a) True


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