Marginal Cost

If the total cost of 1000 units is Rs.60000 and that of 1001 units is Rs.60400,

then the increase of Rs.400 in the total cost is _________.

• Prime cost

• All variable overheads

• Marginal cost

• None of the above

Which of the following statements are true about marginal costing?

• In marginal costing, fixed costs are treated as product costs

• Marginal costing is not an independent system of costing

• The elements of cost in marginal costing are divided into fixed and

  variable components

• Both b and c

1. While computing profit in marginal costing, ________.

• 1. The fixed cost gets added to the contribution

• The total marginal cost gets deducted from total sales revenue

• 1. The total marginal cost gets added to total sales revenue

• 1. None of the above

1. Which of the following techniques of costing differentiates between fixed and variable costs?

• 1. Marginal costing

• 1. Standard costing

• 1. Absorption costing

• 1. None of the above

1. An increase in the variable cost ________.

• 1. Decreases the break-even point

• 1. Improves margin of safety

• 1. Improves the profit/volume ratio

• 1. All of the above

The profit at which total revenue is equal to the total cost is known as

___________.

• Margin of safety

• Break-even point

• Both a and b are incorrect

• Both a and b are correct

The cost that does not fluctuate based on the volume of the production is

known as ___________.

• Variable cost

• Fixed cost

• Semi-variable cost

• None of the above

Fixed cost includes _________.

• . Property taxes

• Rent

• Insurance premium

• All of the above

Variable cost includes _________.

• Cost of raw materials

• Salaries and wages

• Electricity bills

• All of the above

How is the break-even point affected by the fixed cost?

• If the fixed cost decreases, the break-even point decreases

• If the fixed cost increases, the break-even point decreases

• If the fixed cost remains constant, the break-even point decreases

• None of the above