In a marginal costing system, which of the following is used to assess performan
Practice Questions
Q1
In a marginal costing system, which of the following is used to assess performance?
Net profit
Gross profit
Contribution margin
Total costs
Questions & Step-by-Step Solutions
In a marginal costing system, which of the following is used to assess performance?
Step 1: Understand what marginal costing is. It is a method of costing that focuses on the variable costs of production.
Step 2: Learn about the contribution margin. This is the amount remaining from sales revenue after variable costs have been deducted.
Step 3: Know that the contribution margin helps in assessing performance by showing how much money is available to cover fixed costs and generate profit.
Step 4: Realize that in a marginal costing system, businesses use the contribution margin to evaluate how well they are performing financially.
