Marginal Costing and Cost-Volume-Profit Analysis Online Test

Which of the following statements summarises the recommendations of SSAP 9 as to the normal treatment of overheads cost for finished goods stock valuation?

Which of the following statements may be used as the basis of the valuation of work-in-progress in order to conform with the recommendations of SSAP 9?

Product A has a contribution : sales ratio of 0.50. Product B has a contribution: sales ratio of 0.40. At present, 100 units of each product are sold. If total sales units remain at the present level but an extra 20 units of B are substituted for 20 units of A, which of the following is true of the overall position?

An increase in fixed costs will result in which of the following?

Existing sales arre Rs. 1,00,000 (500 units), variables costs are Rs. 60,000, fixed costs are Rs. 24,000. If selling price is reduced by 10%, which of the following is the break-even sales quantity?


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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