Practice Comparison: Marginal Costing vs Absorption Costing - 22.14 | 22. Break-even Analysis and Marginal Costing | Management 1 (Organizational Behaviour/Finance & Accounting)
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22.14 - Comparison: Marginal Costing vs Absorption Costing

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Learning

Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

What costs are included in marginal costing?

💡 Hint: Think about what 'marginal' means in this context.

Question 2

Easy

Which costing method is used for external reporting?

💡 Hint: Consider what standards companies must follow.

Practice 4 more questions and get performance evaluation

Interactive Quizzes

Engage in quick quizzes to reinforce what you've learned and check your comprehension.

Question 1

What costs are assigned to products in marginal costing?

  • Only fixed costs
  • Only variable costs
  • Both fixed and variable costs

💡 Hint: Remember, marginal means 'additional' or 'small'.

Question 2

Does absorption costing include fixed costs in product pricing?

  • True
  • False

💡 Hint: Think about what absorption means.

Solve 2 more questions and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

A tech company produces a software package at a variable cost of ₹500 per unit and has fixed costs of ₹30,000. If they sell each unit for ₹900, calculate the break-even point in units using both methods, and discuss the advantages or disadvantages of each.

💡 Hint: Focus on how each method treats fixed costs in the break-even calculation.

Question 2

Evaluate a scenario where a company experiences a sudden increase in production volume. Discuss how both costing methods would represent changes in profit and inventory levels.

💡 Hint: Consider fixed costs' effect on profitability during different production levels.

Challenge and get performance evaluation