Marginal Costing and Cost-Volume-Profit Analysis Online Test

Q.1 The cost behaviour pattern for a company is as follows :

Activity (units) 500 700 900

Total cost (Rs.) 2,500 3,100 4,600

If fixed cost remains unchanged throughout all activity levels, which of the following statement is true in relation to cost behaviour?

Which of the following is true at break-even point?

The margin of safety may be defined as :

An increase in bariable costs where selling price and fixed cost and fixed cost remain constant will result in which of the following?

The present unit cost data for a product are : Selling price Rs. 15, variable cost Rs.8,. If selling price are reduced by 10% and variable costs are increased by 12.5%, which of the following is the amended contribution to sales ratio?


CIMA defines marginal costing as "the accounting system in which variable costs are charged to the cost units and fixed costs of the period are written off in full against the aggregate contribution. Its special value is in decision-making." Marginal costing is not a distinct method of costing like job costing or process costing. It is a technique which provides presentation of cost data in such a way that true cost-volume-profit relationship is revealed. Under this technique, it is presumed that costs can be divided in two categories, i.e., fixed cost and variable cost. Fixed cost is charged to contribution of the period in which it is incurred and is considered period cost.

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