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Which of the following statements are true?<br>1. Marginal costing is not an independent system of costing.<br>2. In marginal costing, all fundamentals of cost are divided into fixed and variable components.<br>3. In marginal costing, fixed costs are treated as product cost.<br>4. Marginal costing is not a technique of cost analysis.
A
Both 4 and 1
B
Both 2 and 3
C
Both 1 and 2
D
Both 2 and 4
Correct Answer:
Both 1 and 2
Consider the following statements.
1. Marginal costing and absorption costing are the same.
2. For decision-making, absorption costing is more suitable than marginal costing.
3. Marginal costing is based on the distinction between fixed and variable costs.
Which of the statement(s) given above is/are correct?
A
Both 1 and 2
B
Both 2 and 3
C
Both 1 and 3
D
None of these
Which of the following statements are the assumptions of marginal costing?
1. Per unit selling price remain unchanged at all levels of operating activity.
2. Total fixed cost remains constant for all the production units.
3. Total variable costs varies in proportion to the volume of output.
4. All the elements of cost can be divided into fixed and variable components.
A
Both 1 and 2
B
Both 2 and 3
C
Both 1 and 4
D
All of the above
Assertion (A): Only the relevant costs should be taken into consideration for decision-making.
Reason (R): All variable costs are relevant costs, and all fixed costs are irrelevant costs.
A
Both (A) and (R) are correct
B
(A) is correct, but (R) is incorrect
C
(R) is correct, but (A) is incorrect
D
Both (A) and (R) are incorrect
"S produces and sells one product, P, for which the data are as follows:
Selling price Rs 28
Variable cost Rs 16
Fixed cost Rs 4
The fixed costs are based on a budgeted production and sales level of 25,000 units for the next period. Due to market changes both the selling price and the variable cost are expected to increase above the budgeted level in the next period. If the selling price and variable cost per unit increase by 10% and 8% respectively, by how much must sales volume change, compared with the original budgeted level, in order to achieve the original budgeted profit for the period?"
A
10.1% decrease
B
11.2% decrease
C
13.3% decrease
D
16.0% decrease
"It is now expected that the variable production cost per unit and the selling price per unit will each increase by 10%, and fixed production cost will rise by 25%. What will be the new break even point?
Selling price - Rs 6 per unit
Variable production cost - Rs 1.20 per unit
Variable selling cost - Rs 0.40 per unit
Fixed production cost - Rs 4 per unit
Fixed selling cost - Rs 0.80 per unit
Budgeted production and sales for the year are 10,000 units."
A
8,788 units
B
11,600 units
C
11,885 units
D
12,397 units
Total costs in the short-term are classified into fixed costs and variable costs. Which one of the following is a variable cost?
A
Cost of raw material
B
Cost of equipment
C
Interest payment on past borrowing
D
Payment of rent on buildings
A manufacturer sells three products i.e A, B and C. Product A costs 200 and sells for 250, Product b costs 150 and sells for 180, product C costs 100 and sells for 110. On which product, he has maximum percentage of profit?
A
B only
B
A and both
C
A only
D
C only
From the following information, find out the number of units that must be sold by the firm to earn profit of Rs. 80,000 per year.
Sales price: Rs. 25 per unit
Variable manufacturing costs: Rs. 12 per unit
Variable selling costs: Rs. 3 per unit
Fixed factory overheads: Rs. 5,00,000
Fixed selling costs: Rs. 3,00,000
A
60,000 units
B
88,000 units
C
98,000 units
D
1,00,000 units
A manufacturer sells three products i.e A, B and C . Product A costs 200 and sells for 250, Product B costs 150 and sells for 180 , product C costs 100 adn sells for 110. On which product, he has maximum percentage of profit?
A
B only
B
A and B both
C
A only
D
C only
Consider the following statements-
1. The increasing returns to scale imply that the marginal product of a variable factor will always increase.
2. The constant returns to scale imply that the marginal product of a variable factor will always diminish
3. Managerial diseconomies constitute an important cause of decreasing returns to scale
Which of these statements is/are correct?
A
1, 2 and 3
B
1 and 3
C
2 only
D
2 and 3