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Test: Decision Making - B Com MCQ


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10 Questions MCQ Test Cost Management - Test: Decision Making

Test: Decision Making for B Com 2024 is part of Cost Management preparation. The Test: Decision Making questions and answers have been prepared according to the B Com exam syllabus.The Test: Decision Making MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Decision Making below.
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Test: Decision Making - Question 1

According to marginal costing, what is the formula for contribution per unit?

Detailed Solution for Test: Decision Making - Question 1
Contribution per unit is calculated by subtracting the variable cost per unit from the sale per unit. This represents the amount that contributes towards covering fixed costs and generating profit.
Test: Decision Making - Question 2

What is the formula for calculating total profit or loss in marginal costing?

Detailed Solution for Test: Decision Making - Question 2
Total profit or loss is determined by subtracting the total fixed costs from the total contribution. This gives an indication of the overall financial performance of the company.
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Test: Decision Making - Question 3

What is the formula for calculating the profit volume ratio in marginal costing?

Detailed Solution for Test: Decision Making - Question 3
The profit volume ratio is calculated by dividing the contribution by the sale and multiplying it by 100. This ratio indicates the percentage of each sale that contributes towards profit.
Test: Decision Making - Question 4
How is the break-even point in units calculated in marginal costing?
Detailed Solution for Test: Decision Making - Question 4
The break-even point in units is determined by dividing the total fixed expenses by the contribution per unit. This gives the number of units that need to be sold in order to cover all fixed costs.
Test: Decision Making - Question 5
What is the break-even point in sales value calculated in marginal costing?
Detailed Solution for Test: Decision Making - Question 5
The break-even point in sales value is calculated by multiplying the break-even point in units by the selling price per unit. This gives the total sales value required to cover all fixed costs.
Test: Decision Making - Question 6
What is the formula for calculating the break-even point at a specific net profit margin in marginal costing?
Detailed Solution for Test: Decision Making - Question 6
The break-even point at a specific net profit margin is determined by dividing the total contribution by the contribution per unit. This gives the number of units that need to be sold in order to earn the desired net profit margin.
Test: Decision Making - Question 7
What is the make-or-buy decision?
Detailed Solution for Test: Decision Making - Question 7
The make-or-buy decision is the strategic choice made by a company to either produce an item internally (in-house) or purchase it from an outside supplier. It involves evaluating factors such as cost, capacity, expertise, and strategic alignment.
Test: Decision Making - Question 8
What are the factors that favor making a part in-house in the make-or-buy decision?
Detailed Solution for Test: Decision Making - Question 8
Factors that favor making a part in-house include cost considerations (lower cost to make the part), the desire to integrate plant operations, and the ability to have better quality control over the production process.
Test: Decision Making - Question 9
What are the factors that may influence firms to buy a part externally in the make-or-buy decision?
Detailed Solution for Test: Decision Making - Question 9
Factors that may influence firms to buy a part externally include cost considerations (lower cost to buy the part), limited production facilities or insufficient capacity to produce the part in-house, and the desire to maintain a multiple-source policy for risk management purposes.
Test: Decision Making - Question 10
What is the break-even point in marginal costing?
Detailed Solution for Test: Decision Making - Question 10
The break-even point is the level of sales at which the company neither makes a profit nor incurs a loss. It is the point where total sales equal total costs.
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