Multiple choice

Directions: Choose the correct option for the given question.

In marginal costing, managerial decisions are guided by ____ than by profit.

  1. marginal cost

  2. variable cost

  3. incremental cost

  4. contribution margin

  5. margin of safety
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In marginal costing, the contribution margin (Sales - Variable Cost) is the primary indicator for managerial decisions because it shows how much each unit contributes to covering fixed costs and generating profit.

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