# Marginal Costing As A Tool For Decision-Making - Part 2 - MCQs

## Marginal Costing As A Tool For Decision-Making - Part 2 - MCQs

1. While selecting optimum product mix ___________ is the real index of profitability.

a) Contribution per unit
b) Contribution per unit of key factor
c) Profit and sales
d) None of the above

ANSWER: b) Contribution per unit of key factor

2. While selecting optimum product mix,

a) Ranks are assigned on the basis of highest contribution per unit of key factor
b) Ranks are assigned on the basis of lowest contribution per unit of key factor
c) No ranks are assigned
d) None of the above

ANSWER: a) Ranks are assigned on the basis of highest contribution per unit of key factor

3. Product X is manufactured By ABC company, The sales is Rs 50,000 Direct Materials is Rs 20,000, Direct Labour is Rs 10,000, Variable overheads is Rs 5,000 and Fixed overheads is Rs 10,000. ABC Company now intends to introduce a new product Y so that sales may be increased by Rs 10,000. There will be no rise in fixed costs and the estimated variable costs of Product Y are Labour Rs 2,200 Materials Rs 4,800 Overheads Rs 1,400. If the company introduces Product Y, what will be the impact?

a) Total profit will decrease by Rs 1,600
b) Total profit will increase by Rs 1,600
c) No impact
d) None of the above

ANSWER: b) Total profit will increase by Rs 1,600

4. In a competitive market, the price is determined by the

a) Individual concern
b) Market forces
c) Both a and b
d) None of the above

5. Marginal costing is helpful in

a) Price determination only in long term
b) Monopoly conditions
c) Both a & b
d) None of the above

6. The various aspects of a price policy are

A) Normal price

B) Minimum price

C) Depression price

D) Special price including dumping

a) Both A and B
b) Both B and C
c) Both C and D
d) None of the above

ANSWER: d) None of the above

7. If desired profit is decided, then normal price should be

a) Marginal cost + Contribution
b) Marginal cost + Fixed cost – profit
c) Both a & b
d) None of the above

ANSWER: a) Marginal cost + Contribution

8. In a purely competitive market, 10,000 mobiles can be manufactured and sold for a certain profit. Profit targeted is Rs 2,00,000. The variable cost per mobile is Rs 100 and the total fixed costs are Rs 40,000. Find out unit selling price.

a) Rs 124 per mobile
b) Rs 1.24 per mobile
c) Rs 1240 per mobile
d) None of the above

ANSWER: a) Rs 124 per mobile

9. 4000 mobiles need to be made and sold in a monopoly market. The desired profit is Rs 2,00,000. The variable cost per mobile is Rs 100 and the total fixed costs are Rs 40,000. Find out unit selling price.

a) Rs 160 per mobile
b) Rs 1,600 per mobile
c) Rs 1.60 per mobile
d) None of the above

ANSWER: b) Rs 1,600 per mobile

10. When there is tough competition and price-cut is on war, the focus should be on

a) Normal price
b) Depression price
c) Minimum price
d) None of the above