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B Com Exam  >  B Com Tests  >  Cost Management  >  Test: Marginal Costing - 1 - B Com MCQ

Test: Marginal Costing - 1 - B Com MCQ


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10 Questions MCQ Test Cost Management - Test: Marginal Costing - 1

Test: Marginal Costing - 1 for B Com 2024 is part of Cost Management preparation. The Test: Marginal Costing - 1 questions and answers have been prepared according to the B Com exam syllabus.The Test: Marginal Costing - 1 MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Marginal Costing - 1 below.
Solutions of Test: Marginal Costing - 1 questions in English are available as part of our Cost Management for B Com & Test: Marginal Costing - 1 solutions in Hindi for Cost Management course. Download more important topics, notes, lectures and mock test series for B Com Exam by signing up for free. Attempt Test: Marginal Costing - 1 | 10 questions in 10 minutes | Mock test for B Com preparation | Free important questions MCQ to study Cost Management for B Com Exam | Download free PDF with solutions
Test: Marginal Costing - 1 - Question 1
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What is the primary objective of absorption costing?

Detailed Solution for Test: Marginal Costing - 1 - Question 1
Absorption costing aims to allocate all production costs, including both fixed and variable costs, to products. This method is used for financial reporting and provides a comprehensive view of the cost of producing inventory.
Test: Marginal Costing - 1 - Question 2
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Which costing method is more suitable for short-term decision-making and pricing decisions?

Detailed Solution for Test: Marginal Costing - 1 - Question 2
Marginal costing is more suitable for short-term decision-making and pricing decisions because it focuses on variable costs and helps in understanding the impact of production volume changes on profitability.
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Test: Marginal Costing - 1 - Question 3
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What is the key difference between marginal costing and absorption costing?

Detailed Solution for Test: Marginal Costing - 1 - Question 3
The primary difference is that marginal costing excludes fixed costs from product costs, while absorption costing includes both fixed and variable costs in product costs.
Test: Marginal Costing - 1 - Question 4
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In marginal costing, what does the term "contribution margin" represent?
Detailed Solution for Test: Marginal Costing - 1 - Question 4
The contribution margin in marginal costing is the difference between total sales revenue and total variable costs. It indicates the amount available to cover fixed costs and contribute to profit.
Test: Marginal Costing - 1 - Question 5
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Why is marginal costing considered useful for decision-making during periods of fluctuating production levels?
Detailed Solution for Test: Marginal Costing - 1 - Question 5
Marginal costing is useful for decision-making during fluctuating production levels because it emphasizes variable costs, making it easier to analyze the effects of changing production volumes on profitability.
Test: Marginal Costing - 1 - Question 6
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Which costing method is commonly used for external financial reporting and tax purposes?
Detailed Solution for Test: Marginal Costing - 1 - Question 6
Absorption costing is commonly used for external financial reporting and tax purposes as it includes all production costs and provides a comprehensive view of costs.
Test: Marginal Costing - 1 - Question 7
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What does the marginal cost formula calculate?
Detailed Solution for Test: Marginal Costing - 1 - Question 7
The marginal cost formula calculates the change in total costs when producing additional units, specifically focusing on the variable costs associated with producing those additional units.
Test: Marginal Costing - 1 - Question 8
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Which costing method is more suitable for pricing decisions that consider all production costs?
Detailed Solution for Test: Marginal Costing - 1 - Question 8
Absorption costing is more suitable for pricing decisions that consider all production costs, including both fixed and variable costs, ensuring that all costs are covered in pricing.
Test: Marginal Costing - 1 - Question 9
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What does the term "breakeven point" refer to in the context of marginal costing?
Detailed Solution for Test: Marginal Costing - 1 - Question 9
In the context of marginal costing, the breakeven point is the point at which total costs equal total revenue, resulting in neither profit nor loss.
Test: Marginal Costing - 1 - Question 10
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Why is marginal costing considered a valuable tool for optimizing cash flow in financial modeling?
Detailed Solution for Test: Marginal Costing - 1 - Question 10
Marginal costing is valuable for optimizing cash flow in financial modeling because it accounts for changes in variable costs with production volume, providing insights into how cash flow can be managed effectively as production levels change.
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