Marginal Costing Basics - Case Studies MCQ & Objective Questions
Understanding "Marginal Costing Basics - Case Studies" is crucial for students aiming to excel in their exams. This topic not only forms a core part of the syllabus but also helps in grasping key concepts that frequently appear in objective questions. Practicing MCQs and important questions on this subject can significantly enhance your exam preparation and boost your confidence.
What You Will Practise Here
Fundamentals of marginal costing and its significance in decision-making.
Key concepts such as contribution margin and break-even analysis.
Formulas related to marginal costing, including cost-volume-profit analysis.
Case studies illustrating real-world applications of marginal costing.
Definitions of essential terms and their relevance in exam scenarios.
Diagrams that simplify the understanding of marginal costing principles.
Analysis of different case studies to reinforce theoretical knowledge.
Exam Relevance
The topic of marginal costing is highly relevant for students preparing for CBSE, State Boards, NEET, JEE, and other competitive exams. Questions often focus on case studies, requiring students to apply their knowledge to practical scenarios. Common patterns include numerical problems, theoretical questions, and case-based MCQs that test students' understanding of marginal costing principles.
Common Mistakes Students Make
Confusing marginal costing with absorption costing, leading to incorrect application of concepts.
Misunderstanding the contribution margin and its role in decision-making.
Overlooking the importance of fixed and variable costs in case studies.
Failing to interpret case study data accurately, resulting in wrong answers.
FAQs
Question: What are the key benefits of studying marginal costing? Answer: Studying marginal costing helps in making informed business decisions, understanding cost behavior, and improving profitability analysis.
Question: How can I effectively prepare for marginal costing MCQs? Answer: Regular practice of MCQs, reviewing case studies, and understanding key concepts will enhance your preparation.
Don't miss the opportunity to solidify your understanding of "Marginal Costing Basics - Case Studies". Start solving practice MCQs today and test your knowledge to achieve better results in your exams!
Q. A company has a fixed cost of $60,000 and a contribution margin of $15 per unit. How many units must be sold to achieve a profit of $24,000?
A.
5,600
B.
4,000
C.
3,200
D.
6,000
Solution
Required units = (Fixed costs + Target profit) / Contribution margin per unit = ($60,000 + $24,000) / $15 = 5,600 units.
Q. A company produces a product with a variable cost of $25 and a selling price of $50. If the company wants to achieve a profit of $15,000 with fixed costs of $30,000, how many units must be sold?
A.
1,000
B.
800
C.
600
D.
1,200
Solution
Required units = (Fixed costs + Target profit) / Contribution margin per unit = ($30,000 + $15,000) / ($50 - $25) = 800 units.
Q. A product has a selling price of $50, variable costs of $30, and fixed costs of $40,000. What is the margin of safety if the break-even sales are $100,000?
A.
$20,000
B.
$30,000
C.
$10,000
D.
$50,000
Solution
Margin of safety = Actual sales - Break-even sales = $120,000 - $100,000 = $20,000.
Q. If a company has a contribution margin ratio of 40% and fixed costs of $50,000, what is the sales revenue needed to achieve a target profit of $10,000?
