“Following information is available of XYZ Limited for quarter ended June, 20XX Fixed cost Rs 5,00,000 Variable cost Rs 10 per unit Selling price Rs 15 per unit Output level 1,50,000 units What will be amount of profit earned during the quarter using the marginal costing technique?”

The correct answer is A. Rs 2,50,000.

Marginal costing is a method of cost accounting that focuses on the costs that vary with the level of production. In other words, marginal costing only includes variable costs in the calculation of cost of goods sold. Fixed costs are not included in the calculation of cost of goods sold, but are instead treated as period costs.

To calculate profit using marginal costing, we first need to calculate the contribution margin. The contribution margin is equal to the selling price per unit minus the variable cost per unit. In this case, the contribution margin is equal to 15 – 10 = Rs 5 per unit.

We can then calculate the profit by multiplying the contribution margin per unit by the number of units sold and subtracting the fixed costs. In this case, the profit is equal to 5 * 150,000 – 5,00,000 = Rs 2,50,000.

Option B is incorrect because it includes fixed costs in the calculation of profit. Option C is incorrect because it does not include variable costs in the calculation of cost of goods sold. Option D is incorrect because it is the total revenue generated, not the profit.