BUSINESS ADMINISTRATION
ACCOUNTING FOR MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Detailed explanation-1: -The technique of marginal costing is based on the distinction between product costs and period costs. Only the variables costs are regarded as the costs of the products while the fixed costs are treated as period costs which will be incurred during the period regardless of the volume of output.
Detailed explanation-2: -Marginal costs are a function of the total cost of production, which includes fixed and variable costs.
Detailed explanation-3: -Marginal cost is only variable cost, it does not include fixed cost. Because, marginal cost is additional cost and additional cost cannot be fixed cost.
Detailed explanation-4: -The correct answer is: B. Marginal Cost is the incremental cost of one unit. Reason: Marginal cost is the additional cost incurred in producing one extra unit of output.
Detailed explanation-5: -Marginal cost is the expense incurred by a business for producing an additional unit of a good or service. It is calculated by taking the total cost of producing additional products and dividing it by the total number of extra units produced.