➡️QUESTION⬅️
A company’s profits using marginal costing and absorption costing principles were identical.
Which statement is true about the company’s production units?
A they were greater than break-even units
B they were greater than the sales units
C they were the same as the break-even units
D they were the same as the sales units
ANSWER D
➡️QUESTION⬅️
When is marginal costing less useful than absorption costing?
A when choosing to make or buy a product
B- when dealing with a limiting factor
C when producing a special order
D when valuing closing inventory
ANSWER D
➡️QUESTION⬅️
A company calculates its profit using marginal costing as $90000 for a month.
Opening inventory was 4000 units and closing inventory 6000 units.
The fixed production overhead absorption rate is $20 per unit.
What is the profit under absorption costing?
A $10000
B $50000
C $130000
D $170000
ANSWER C
➡️QUESTION⬅️
Which statements about the limitations of marginal costing are correct?
1. Finance costs are not included in the manufacturing overheads.
2 Variable cost per unit changes at different levels of activity.
3 Some costs may be semi-variable costs.
A 1and2
B 1only
C 2and3
D 3only
ANSWER D
➡️QUESTION⬅️
Which item is a direct cost?
A cost of production materials
B factory supervisor's salary
C machine cleaning materials
D stores staff wages
ANSWER A
➡️QUESTION⬅️
Samuel manufactures a single product. Total cost per unit is $70 when production is 100 units
per week, and $62.50 when production is 160 units per week.
What are the total fixed costs per week?
A $450 B $750 Cc $1200 D $2000
ANSWER D
➡️QUESTION⬅️
A company uses absorption costing and makes and sells one product. In the last month budgeted
overheads totalled $60000. Budgeted production was 15000 units and budgeted sales were 14000 units.
The company now decides to apply marginal costing principles for last month.
What effect will this have on profits?
A $3500 decrease
B $3500 increase
C $4000 decrease
D $4000 increase
ANSWER C
➡️QUESTION⬅️
The direct material cost of 20000 units is $8000. 400 direct labour hours are required at a cost of
$6000. Overheads are absorbed at 150% of the cost of direct labour.
What is the cost per unit?
A $0.40
B $0.70
C $0.85
D $1.15
ANSWER D
➡️QUESTION⬅️
A company makes a single product and sells it for $12 per batch.
The variable cost is $4 per batch.
Fixed costs have been absorbed based on a normal activity level of 1000 batches at
$3 per batch.
What is the profit under marginal costing if the company makes and sells 1500 batches?
A $6000
B $7500
C $9000
D $12000
ANSWER C
➡️QUESTION⬅️
A company produces less than it sells in a particular period.
Which statement is correct?
A Reported profit is the same whether absorption or marginal costing is used.
B Reported profit is the difference between absorption and marginal costing closing
inventories.
C Reported profit is lower using absorption costing.
D Reported profit is lower using marginal costing.
ANSWER C