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Marginal Costing Principles

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Questions and Answers

What type of costs are excluded from costs and taken as expenses in the Profit and Loss Account?

Marginal costs

Contribution costs

Fixed costs (correct)

Variable costs

In marginal costing, how are products transferred from one process to another valued?

At fixed costs only

At variable costs only

At marginal costs only (correct)

At total costs only

What is the basis for determining prices in the context of marginal costing?

Variable cost and fixed cost

Contribution margin and fixed cost

Total cost and contribution margin

Marginal cost and contribution margin (correct)

How is the profitability of departments, products, etc., determined in marginal costing?

With reference to their contribution margin Signup and view all the answers

How does the difference in the magnitude of opening stock and closing stock affect unit cost according to the text?

It does not affect unit cost as all product costs are variable costs. Signup and view all the answers

What is the definition of 'marginal cost'?

The amount by which aggregate costs change with a one unit increase or decrease in output volume Signup and view all the answers

In marginal costing, how are variable costs treated?

Charged to cost units and written off against contribution Signup and view all the answers

What is the basis of categorizing costs in marginal costing?

By their behavior with changes in volume of output Signup and view all the answers

Why are fixed costs not included in product cost in marginal costing?

Because fixed costs are considered as period costs Signup and view all the answers

What is another name for marginal costing?

'Variable Costing' Signup and view all the answers