Practice Comparison: Marginal Costing Vs Absorption Costing (22.14) - Break-even Analysis and Marginal Costing

Practice: Comparison: Marginal Costing vs Absorption Costing

Lesson 22.14Break-even Analysis and Marginal Costing

Practise this section

10 questions

Flashcard drill
5 cards from this section. Quick, good the night before a test.
Exercise
6 questions · about 4 min · pass mark 70%. Hints available.
Sign up to start the exercise
Quiz
4 questions · about 3 min · pass mark 70%. Hints available.
Sign up to start the quiz

6 sample questions

Question 1.
What costs are included in marginal costing?
Show hintHide hint
Think about what 'marginal' means in this context.
Question 2.
Which costing method is used for external reporting?
Show hintHide hint
Consider what standards companies must follow.
3Question 3.
What costs are assigned to products in marginal costing?
- Only fixed costs
- Only variable costs
- Both fixed and variable costs
Show hintHide hint
Remember, marginal means 'additional' or 'small'.
4Question 4.
Does absorption costing include fixed costs in product pricing?
- True
- False
Show hintHide hint
Think about what absorption means.
Question 5.
A tech company produces a software package at a variable cost of ₹500 per unit and has fixed costs of ₹30,000. If they sell each unit for ₹900, calculate the break-even point in units using both methods, and discuss the advantages or disadvantages of each.
Show hintHide hint
Focus on how each method treats fixed costs in the break-even calculation.
Question 6.
Evaluate a scenario where a company experiences a sudden increase in production volume. Discuss how both costing methods would represent changes in profit and inventory levels.
Show hintHide hint
Consider fixed costs' effect on profitability during different production levels.

6 more questions in this section. Enroll free to practise them all.