# Marginal Costing - MCQs with answer

## Marginal Costing - MCQs with answer

1. Fixed expenses decrease per unit with the increases in production and increases per unit with the decrease in production.

a) True
b) False

2. Marginal costs is taken as equal to

a) Prime Cost plus all variable overheads
b) Prime Cost minus all variable overheads
d) None of the above

3. If total cost of 100 units is Rs 5000 and those of 101 units is Rs 5030 then increase of Rs 30 in total cost is

a) Marginal cost
b) Prime cost
d) None of the above

4. Marginal cost is computed as

a) Prime cost + All Variable overheads
b) Direct material + Direct labor + Direct Expenses + All variable overheads
c) Total costs – All fixed overheads
d) All of the above

5. Marginal costing is also known as

a) Direct costing
b) Variable costing
c) Both a and b
d) None of the above

ANSWER: c) Both a and b

6. Which of the following statements are true?

A) Marginal costing is not an independent system of costing.

B) In marginal costing all elements of cost are divided into fixed and variable components.

C) In marginal costing fixed costs are treated as product cost.

D) Marginal costing is not a technique of cost analysis.

a) A and B
b) B and C
c) A and D
d) B and D

7. While computation of profit in marginal costing

a) Total marginal cost is deducted from total sales revenues
b) Total marginal cost is added to total sales revenues
c) Fixed cost is added to contribution
d) None of the above

ANSWER: a) Total marginal cost is deducted from total sales revenues

8. Which of the following are the assumptions of marginal costing?

A) All the elements of cost can be divided into fixed and variable components.

B) Total fixed cost remains constant at all levels of output.

C) Total variable costs varies in proportion to the volume of output.

D) Per unit selling price remain unchanged at all levels of operating activity.

a) A and B
b) B and C
c) A and D
d) A, B C and D