Q. If a company has a contribution margin of $15,000 and fixed costs of $10,000, what is the net profit?
-
A.
$5,000
-
B.
$15,000
-
C.
$10,000
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D.
$0
Solution
Net Profit = Contribution Margin - Fixed Costs = $15,000 - $10,000 = $5,000.
Correct Answer:
A
— $5,000
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Q. If a company has a margin of safety of 20% and its break-even sales are $50,000, what are its actual sales?
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A.
$60,000
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B.
$50,000
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C.
$40,000
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D.
$70,000
Solution
Actual Sales = Break-even Sales / (1 - Margin of Safety) = $50,000 / (1 - 0.20) = $60,000.
Correct Answer:
A
— $60,000
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Q. If a company sells 1,000 units at $20 each and has variable costs of $12 per unit, what is the contribution margin?
-
A.
$8,000
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B.
$12,000
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C.
$20,000
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D.
$8
Solution
Contribution margin = (Selling Price - Variable Cost) * Quantity = ($20 - $12) * 1,000 = $8,000.
Correct Answer:
A
— $8,000
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Q. If a product has a selling price of $100, variable costs of $60, and fixed costs of $20, what is the contribution per unit?
-
A.
$40
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B.
$20
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C.
$60
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D.
$100
Solution
Contribution per unit = Selling Price - Variable Costs = $100 - $60 = $40.
Correct Answer:
A
— $40
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Q. In a marginal costing system, how are fixed costs treated?
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A.
Included in product costs
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B.
Expensed in the period incurred
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C.
Allocated to each unit produced
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D.
Ignored completely
Solution
In marginal costing, fixed costs are expensed in the period incurred and not included in product costs.
Correct Answer:
B
— Expensed in the period incurred
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Q. In marginal costing, how is contribution margin calculated?
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A.
Sales - Total Costs
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B.
Sales - Variable Costs
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C.
Sales - Fixed Costs
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D.
Sales - Direct Costs
Solution
Contribution margin is calculated as Sales minus Variable Costs.
Correct Answer:
B
— Sales - Variable Costs
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Q. What happens to the contribution margin if the selling price increases while variable costs remain constant?
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A.
Decreases
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B.
Increases
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C.
Remains the same
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D.
Becomes negative
Solution
If the selling price increases while variable costs remain constant, the contribution margin increases.
Correct Answer:
B
— Increases
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Q. What is the break-even point in units if fixed costs are $10,000, selling price per unit is $50, and variable cost per unit is $30?
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A.
500 units
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B.
1,000 units
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C.
250 units
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D.
750 units
Solution
Break-even point (units) = Fixed Costs / (Selling Price - Variable Cost) = $10,000 / ($50 - $30) = 500 units.
Correct Answer:
B
— 1,000 units
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Q. Which costing method is best for short-term decision-making?
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A.
Absorption costing
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B.
Marginal costing
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C.
Activity-based costing
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D.
Standard costing
Solution
Marginal costing is best for short-term decision-making as it focuses on variable costs and contribution margin.
Correct Answer:
B
— Marginal costing
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Q. Which of the following is NOT a benefit of marginal costing?
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A.
Simplifies decision-making
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B.
Helps in cost control
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C.
Provides detailed fixed cost analysis
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D.
Aids in pricing decisions
Solution
Marginal costing does not provide detailed fixed cost analysis as it primarily focuses on variable costs.
Correct Answer:
C
— Provides detailed fixed cost analysis
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Q. Which of the following is NOT a benefit of using marginal costing?
-
A.
Simplifies decision-making
-
B.
Helps in cost control
-
C.
Provides detailed fixed cost analysis
-
D.
Aids in pricing decisions
Solution
Marginal costing does not provide detailed fixed cost analysis as it primarily focuses on variable costs.
Correct Answer:
C
— Provides detailed fixed cost analysis
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Q. Which of the following scenarios best illustrates the application of marginal costing?
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A.
Deciding whether to accept a special order at a lower price
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B.
Calculating total production costs for a new product
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C.
Analyzing historical cost trends
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D.
Setting long-term pricing strategies
Solution
Marginal costing is often used to decide whether to accept special orders at lower prices, as it focuses on variable costs.
Correct Answer:
A
— Deciding whether to accept a special order at a lower price
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