22.13. Decision-Making Using Marginal Costing

Try these first

1. 1.

   What is marginal costing?

   Hint

   Focus on the definition involving costs.

2. 2.

   What should you consider in a make or buy decision?

   Hint

   Think about cost comparisons.

3. 3.

   What is marginal costing primarily focused on?

   • Fixed Costs
   • Variable Costs
   • Total Costs

   Hint

   Think about the costs that change with production levels.

4. 4.

   Make or Buy Decision is concerned with?

   • True
   • False

   Hint

   Consider whether outsourcing is being evaluated.

5. 5.

   A company has fixed costs of ₹60,000, variable costs of ₹300, and sells a product for ₹500. They receive a special order for 300 units at ₹450. Should they accept it? Show your calculations.

   Hint

   Remember to compare the contribution margins.

6. 6.

   Evaluate a scenario where a business needs to decide on product C, which has a variable cost of ₹120 and contributes ₹50. Product B has an existing contribution of ₹70 with higher sales. Discuss the implications.

   Hint

   Look at the contributions and how they relate to sales volume.