Page 64 - DCOM206_COST_ACCOUNTING_II

Unit 3: Absorption Costing and Marginal Costing

3.6 Review Questions Notes

1. Define ‘Marginal Cost’ and ‘Marginal Costing’. How variable and fixed costs are treated in
marginal costing? Give a journal entry for overhead accounts under marginal costing.
2. State the utility of marginal costing in price fixation during trade depression and for
export purposes.
3. What do you mean by key factor analysis?
4. Explain the features of marginal costing.

5. Discuss the differences between the marginal costing and absorption costing.
6. Discuss fully the applications of marginal costing.
7. Discuss the reasons for difference between profits under marginal costing and absorption
costing.
8. Discuss the limitations of marginal costing.
9. Explain the concept of profit planning and cost control as an application of marginal
costing.
10. Throw light on some of the crucial areas of decision-making.

Answers: Self Assessment

1. Marginal Costing 2. Costs
3. profit 4. Fixed

5. Variable 6. Inventory
7. information 8. Absorption
9. Production 10. Indirect
11. Rise 12. Variable

13. Profit 14. decision-making
15. Managerial

3.7 Further Readings

Books Bhar. K.B. (2008) Cost Accounting, Methods & Problem, Academic Publishers.
th
Lal, Jawahar & Srivastava, Seema (2009) Cost Accounting, 4 Edition, Tata McGraw-
Hill Education.
Nigam, Lal B.M. & Jain I. C. (2001) Cost Accounting: An Introduction, PHI Learning
Pvt. Ltd.

Thakur. S.K, (2009). Cost Accounting: Theory and Practice, Excel Books.

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