# Marginal Approach to Profit Calculation - MCQs with answers

## Marginal Approach to Profit Calculation - MCQs with answers

1. Theory of contribution is the excess of sales over variable costs.

a)True
b)False

2. Which of the following statements related to Contribution Analysis are ture?

a) If contribution is zero, there is loss equal to fixed costs

b) If contribution is negative, loss is less than fixed costs

c) If contribution is positive and more than fixed cost there will be profit.

d) All of the above

ANSWER: a) If contribution is zero, there is loss equal to fixed costs

3. When contribution is negative but less than fixed cost,

a) There is loss equal to fixed costs
b) There is loss more than fixed costs
c) There will be loss less than fixed costs
d) All of above are false

ANSWER: c) There will be loss less than fixed costs

4. When contribution is positive but equal to fixed cost,

a) There is loss equal to fixed costs
b) There is loss more than fixed costs
c) There will be loss less than fixed costs
d) There will be neither profit not loss

ANSWER: d) There will be neither profit not loss

5. Opportunities to achieve further growth within current businesses are:

a) Intensive Opportunities
b) Integrative Opportunities
c) Diversification Opportunities
d) None of the above

6. Absorption costing is also known as

a) Historical costing
b) Total costing
c) Both a and b
d) None of the above

ANSWER: c) Both a and b

7. Given production is 1,00,000 units, fixed costs is Rs 2,00,000 Selling price is Rs 10 per unit and variable cost is Rs 6 per unit. Determine profit using technique of marginal costing.

a) Rs 2,00,000
b) Rs 8,00,000
c) Rs 6,00,000
d) None of the above