## Marginal Costing Practical Questions and Answers

Question 1. A company producing 500 units its variable cost \$200 per unit and sale price 250 per unit, fixed expenses are \$12,000 per month. Required Calculate BEP in units and sales and show profit at 90% capacity. Answer (i). BEP (units) = Fixed Expenses / C = (\$5,42,000 + \$2,52,000) / 6 = 7,92,000 …

## Marginal Costing

Marginal Costing definition Marginal costing refers to the method of costing which is concerned with changes in costs resulting from changes in the volume or range of output and sales. Increase or decrease in total costs which are brought about by an increase or decrease in the volume of production and sale is known as …

## Q. 2. Define Contribution and Break-Even Point (BEP)

Answer Contribution: The term contribution refers to the excess of selling price over variable cost of a product. Thus, it is a difference between sale price and variable cost. Contribution (C) = Sales – Variable Cost or Fixed Cost + Profit Example When sale is \$80,000 variable cost 40,000, fixed cost \$30,000. Calculate contribution. Contribution …

## Q. 3. Define Cost Volume Profit (C.V.P), Profit Volume Ratio (PVR) and Margin of Safety (MOS).

Answer Cost Volume Profit (C. V. P.). Profit depends upon many factors, but most important is the cost of Manufacturer, volume of sales and selling price of the product. The three factors of cost, volume and profit are inter-connected and dependent on each other. Profit depends upon sales, slaes price depends upon cost, volume of …