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.

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. Cost volume profit relationship also denote break-even point.
4. Marginal costing is based on the distinction between fixed and variable costs.
Which of the statements given above are correct?

While computation of profit in marginal costing

Calculate the prime cost from the following information
Direct material purchased Rs. 1,00,000
Direct material consumed Rs. 90,000
Direct labour Rs. 60,000
Direct expenses Rs. 20,000
Manufacturing overheads Rs. 30,000

Why is profit volume ratio used?
1. To compute the variable cost for any volume of sales.
2. To determine break-even point and the level of output required to earn a desired profit.
3. To decide most profitable sales mix.
Select the correct answer:

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