22.11. Advantages of Marginal Costing

Try these first

1. 1.

   What is marginal costing?

   Hint

   Think about costs that change with production levels.

2. 2.

   List one advantage of marginal costing.

   Hint

   Consider decision-making benefits.

3. 3.

   What is the main focus of marginal costing?

   • A) Only fixed costs
   • B) Only variable costs
   • C) Both fixed and variable costs

   Hint

   Remember the key term: variable costs.

4. 4.

   True or False: Marginal costing is useful for long-term financial planning.

   • True
   • False

   Hint

   Consider the time frame discussed.

5. 5.

   A technology startup is considering two projects. Project A has high variable costs but potentially high returns, while Project B has low variable costs but stable returns. Which project should they choose based on marginal costing?

   Hint

   Think about risk and reward dynamics!

6. 6.

   A clothing brand relies solely on marginal costing for pricing strategy. What factors might they need to consider to avoid pitfalls?

   Hint

   Consider what happens when costs are not constant.