What does marginal costing focus on?
A) Total costs
B) Variable costs
C) Fixed costs
D) The cost of capital
What is the break-even point?
A) Where total revenue equals total fixed costs
B) Where total revenue equals total costs
C) Where total costs are minimized
D) Where profits are maximized
In marginal costing, what is considered a fixed cost?
A) Direct labor
B) Direct materials
C) Rent
D) Selling expenses
What is the formula for calculating the break-even point in units?
A) Fixed Costs / (Selling Price per Unit – Variable Cost per Unit)
B) Fixed Costs / Variable Costs
C) Variable Costs / Fixed Costs
D) (Fixed Costs – Variable Costs) / Selling Price per Unit
Which of the following is NOT a component of marginal cost?
A) Variable manufacturing costs
B) Fixed costs
C) Direct labor
D) Direct materials
The contribution margin is calculated as:
A) Selling Price – Variable Costs
B) Selling Price – Fixed Costs
C) Variable Costs – Fixed Costs
D) Revenue – Expenses
Which of the following is true for break-even analysis?
A) It helps to calculate profitability
B) It considers both fixed and variable costs
C) It does not consider the selling price
D) It is used to assess operational efficiency
If a company’s fixed costs increase, the break-even point:
A) Decreases
B) Stays the same
C) Increases
D) Cannot be determined
The contribution margin ratio is calculated as:
A) Contribution Margin / Fixed Costs
B) Contribution Margin / Selling Price
C) Selling Price / Contribution Margin
D) Variable Costs / Selling Price
What is the purpose of the break-even chart?
A) To predict future costs
B) To show the relationship between costs, revenue, and profit
C) To identify fixed costs only
D) To evaluate contribution margins
In marginal costing, which of the following is included in variable costs?
A) Rent
B) Administrative expenses
C) Raw materials
D) Depreciation
Which of the following statements about break-even analysis is false?
A) It helps in pricing decisions
B) It assumes that all costs are fixed
C) It can be used to set sales targets
D) It ignores the time value of money
What does the margin of safety represent?
A) The amount of profit a company makes
B) The volume of sales above the break-even point
C) The total sales a company generates
D) The amount by which fixed costs exceed variable costs
If the selling price per unit increases, the break-even point:
A) Increases
B) Decreases
C) Stays the same
D) Becomes irrelevant
In break-even analysis, if fixed costs are $50,000, the contribution margin per unit is $25, and the selling price per unit is $50, what is the break-even point in units?
A) 2,000 units
B) 1,000 units
C) 2,500 units
D) 5,000 units
The break-even point is useful for determining:
A) The optimal selling price
B) The level of output at which no profit or loss occurs
C) The cost structure of a business
D) The exact amount of profit at each sales level
The term “contribution margin” refers to:
A) Revenue minus fixed costs
B) Revenue minus total costs
C) Revenue minus variable costs
D) Fixed costs minus variable costs
If a company’s contribution margin is $10 per unit and they sell 2,000 units, what is their total contribution?
A) $20,000
B) $10,000
C) $5,000
D) $30,000
If a company has fixed costs of $100,000 and a contribution margin of $25 per unit, how many units must be sold to break-even?
A) 2,000 units
B) 4,000 units
C) 1,000 units
D) 5,000 units
In marginal costing, which cost is not included in the cost of goods sold?
A) Direct materials
B) Direct labor
C) Fixed overheads
D) Variable overheads
Break-even analysis is primarily used for:
A) Short-term profit planning
B) Long-term investment decisions
C) Capital budgeting decisions
D) Tax planning decisions
The relationship between break-even point and fixed costs is:
A) Direct
B) Inverse
C) No relation
D) Random
What would be the effect of a decrease in variable costs per unit on the break-even point?
A) The break-even point will increase
B) The break-even point will decrease
C) The break-even point will remain the same
D) It will depend on fixed costs
In marginal costing, fixed costs are treated as:
A) Part of the cost of goods sold
B) Product costs
C) Period costs
D) Variable costs
The break-even point is affected by changes in which of the following?
A) Selling price
B) Variable cost per unit
C) Fixed costs
D) All of the above
The contribution margin ratio is calculated by dividing:
A) Fixed costs by total sales
B) Contribution margin by total sales
C) Variable costs by sales
D) Profit by sales
In break-even analysis, if the margin of safety is 40%, it means:
A) The company is making a 40% profit
B) Sales could decrease by 40% before a loss occurs
C) The company’s fixed costs are 40% of sales
D) Variable costs represent 40% of sales
If the contribution margin ratio is 0.4 and fixed costs are $80,000, what is the break-even sales revenue?
A) $320,000
B) $120,000
C) $100,000
D) $150,000
The key difference between absorption costing and marginal costing is that:
A) Marginal costing includes fixed costs in the cost of goods sold
B) Absorption costing considers all costs, including fixed costs, in the cost of goods sold
C) Absorption costing is used for internal management decisions
D) Marginal costing ignores fixed costs
A company is planning to decrease its selling price by 10%. How will this affect the break-even point?
A) It will increase
B) It will decrease
C) It will stay the same
D) The effect cannot be determined
