40+ Marginal Costing MCQ | Cost Accounting MCQs (Free Resource)

21. In the break-even chart, the margin of safety point lies
(a) To the left of break-even point”
(b) To the right of break-even point
(c) On break even point
(d) Can’t say

22. Fixed cost is equal to
(a) Break-even sales x Margin of safety
(b) Sales x Margin of safety
(c) Sales x Profit-volume ratio
(d) Profit-volume ratio x Break even sales

23. Which of the following factors is to be multiplied with contribution margin ratio to calculate profit?
(a) Unit contribution margin
(b) Margin of safety
(c) Variable costs per unit
(d) Unit sales price
(e) Change in sales volume

24. In cost-volume-profit analysis, profit is equal to
(a) Sales Revenue x P/V ratio – Fixed Cost
(b) Sales units x contribution per unit – fixed costs
(c) Total contribution – Fixed cost
(d) All the above

25. The sales volume in value required to earn the target profit, the formula is
(a) Target profit / Contribution per unit
(b) (Fixed cost + Target profit) x P/V ratio
(c) (Fixed cost + Target profit) / Contribution on per unit
(d) (Fixed cost + Target profit) / PV ratio

26. There is a reduction in the selling price. This will, other factors remaining same –
(a) increase contribution margin
(b) reduce fixed costs
(c) increase variable costs
(d) reduce operating income

27. There is an increase in advertising expenses. This will, other factors remaining same –
(a) reduce operating income
(b) reduce contribution
(c) decrease selling price
(d) increase variable costs

28. Cost-volume-profit analysis is used Primarily by management :
(a) as a planning tool
(b) for control purposes
(c) to prepare external financial statements
(d) for correct financial results

29. The contribution to sales ratio of a company is 20% and profit is Rs 64,500. If the total sales of the company are Rs 7,80,000, the fixed cost is
(a) Rs 1,56,000
(b) Rs 1,21,500
(c) Rs 1,05,600
(d) Rs 91,500
(e) Rs 90,000

30. The total cost of manufacturing 4,000 units of a product is Rs 4,50,000 which includes fixed costs Rs 2,50,000. If the company desires to produce 5,000 units, then the total cost will be-
(a) Rs 5,27,778
(b) Rs 5,20,000
(c) Rs 5,00,000
(d) Rs 4,95,000
(e) Rs 4,83,500

Answer: 21)On break even point 22)Profit-volume ratio x Break even sales 23)Margin of safety 24)All the above 25)(Fixed cost + Target profit) / PV ratio 26)reduce operating income 27)reduce operating income 28)as a planning tool 29)Rs 91,500 30)Rs 5,00,000

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