Marginal Costing Part II

12 Questions | By Anishbhardwaj | Last updated: Mar 21, 2022 | Total Attempts: 285

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1.

The contribution margin is also knows as
- A.
  
  Marginal costing
- B.
  
  Net income
- C.
  
  Net operating profit
2.

What will be the difference in net earning computed using direct costing as opposed to absorption costing if the ending inventory increases with respect to the beginning inventory in terms of units?
- A.
  
  There will be no difference in net earning
- B.
  
  Net earnings computed using direct costing will be higher
- C.
  
  The difference in net earnings can not be determined from the information given
- D.
  
  Net earning computed using direct costing will be lower
3.

Wilson company prepared the following preliminary forcast concerning product G for 2002 assuming no expenditure for advertising Selling price per unit….Rs.10 Unit sales …..Rs.100000 Variable costs ……..Rs.6,00,000 Fixed costs……Rs.3,00,000 Based on a market study in December 2001 , Wilson estimated that it could increase the unit selling price by 15%and increase the sales volume by 10% if Rs.1,00,000were spent on advertising . Assuming that Wilson incorporates these changes in its 2002 forecast, what should be the operating income from product G?
- A.
  
  Rs.1,75,000
- B.
  
  Rs.1,90,000
- C.
  
  Rs 2,05,000
- D.
  
  Rs.3,65,000
4.

Binny company is planning its advertising compaign for 2001 and has prepared the following budget data based on a zero advertising expenditure Normal plant capacity …..2,00,000units sales……..1,50,000units Variable manufacturing costs …Rs.15.00/unit selling price ……Rs.25.00/ units Fixed cost Manufacturing……Rs.8,00,000 Selling and administrative ….Rs.7,00,000 An advertising agency claim that an aggressive advertising campaign would enable Binny to increase its sales units by 20%. What is the maximum amount that Binny can pay for advertising and obtain an operating profit of Rs.2,00,000?
- A.
  
  Rs.1,00,000
- B.
  
  Rs.2,00,000
- C.
  
  Rs.3,00,000
- D.
  
  Rs.5,50,000
5.

In planning its operation for 2001 based on a sales forecast of Rs.60,00,000 wallace Inc., prepared the following estimated data: Costs and expenses Direct materials Direct labour Factory overheads Selling expenses Administrative expenses Variable Rs28,60,000 1,40,000 6,00,000 2,40,000 60,000 fixed Rs.9,00,000 3,60,000 1,40,000 Rs.39,00,000 Rs.14,00,000 What would be the amount of sales at the break-even point?
- A.
  
  Rs.22,50,000
- B.
  
  Rs.35,00,000
- C.
  
  Rs.40,00,000
- D.
  
  Rs.53,00,000
6.

31Warfield company is planning to sell 1,00,000 units of product T for Rs.12.00 a unit . The fixed cost are Rs.2,80,000. In order to relies a profit of Rs.2,00,000, what would be the variable cost be?
- A.
  
  Rs.4,80,000
- B.
  
  Rs.7,20,000
- C.
  
  Rs.9,00,000
- D.
  
  Rs.9,20,000
7.

The Seahawk company is planning to sell 2,00,000 units of product B, the fixed cost are Rs.4,00,000 and variable cost are 60% of the selling price. In order to release a profit of Rs.1,00,000 the selling price per unit would have to be
- A.
  
  Rs.3.75
- B.
  
  Rs.4.17
- C.
  
  Rs.5.00
- D.
  
  Rs.6.25
8.

At a break even point of 400 unit sold the variable cost were Rs.400 and the fixed cost were Rs.200. What will the 401^st unit sold contribute to profit before income taxes?
- A.
  
  0
- B.
  
  Rs.0.50
- C.
  
  Rs.1.00
- D.
  
  Rs.1.50
9.

Tom company has sales of Rs.2,00,000 with variable expenses of Rs.1,50,000,fixed expenses of Rs.60,000 and an operating loss of Rs.10,000. By how much would Tom have to increase its sales in order to achieve an operating income of 10%of sales?
- A.
  
  Rs.4,00,000
- B.
  
  Rs.2,51,000
- C.
  
  Rs.2,31,000
- D.
  
  Rs.2,00,000
10.

If the fixed cost attendant to a product increases while variable cost and sales price remains constant, what will happen to (1) contribution margin, and (2) break even point? Contribution margin break even point
- A.
  
  Contribution margin Increase and Break even point Decrease
- B.
  
  Contribution margin Decrease and Break even point Increase
- C.
  
  Contribution margin Unchanged and Break even point Increase
- D.
  
  Contribution margin Unchanged and Break even point Unchanged
11.

The ship company is planning to produce two products, Alt and Tude. Ship is planning to sell 1,00,000 units of Alt at Rs.4 a unit and 2,00,000 units of Tude at Rs.3 a unit. Variable costs are 70% of sales for Alt and 80% of sales for Tude. In order to realise a total profit of Rs.1,60,000, what must the total fixed cost be?
- A.
  
  Rs.80,000
- B.
  
  Rs.90,000
- C.
  
  Rs.2,40,000
- D.
  
  Rs.6,00,000
12.

Which of the following best describes a fixed cost?
- A.
  
  It may change in total where such change is unrelated to change in production
- B.
  
  It may change in total where such change is related to changes in production
- C.
  
  It is constant per unit of change in production
- D.
  
  It may change in total where such change depends on production within the relevant range.