Limitations of Marginal Costing
Write down the limitations of Marginal Costing?
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Limitations of Marginal Costing are illustrated below: - The categorization of total costs into variable and fixed cost is hard. - In this method fixed costs are completely eliminated for the valuation of inventory of finished and semi-finished goods. Such removal affects the profitability adversely.
- In marginal costing historical data is employed while management decisions are related to prospect events. - It doesn’t give any standard for the valuation of performance. - Selling price fixed on the base of marginal cost will be useful only for short period. - Estimation of profitability on the marginal cost base can be employed only in the short period.
If the wage rate increases from $25 per hour to $40 per hour, in that case the elasticity of the supply of labor from this worker is roughly: (i) zero. (ii) 7/15. (iii) 13/15. (iv) one. (v) minus 13/15. Q : Conventional theories of the labor As per most conventional theories of the labor market, the: (w) supply curve of labor is positively sloped since higher wages attract additional workers in the labor market. (x) firms should contend with increasing returns from additional employment.
As per most conventional theories of the labor market, the: (w) supply curve of labor is positively sloped since higher wages attract additional workers in the labor market. (x) firms should contend with increasing returns from additional employment.
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When, for a specified output level, an absolute or perfectly competitive firm's price is less in that case its average variable cost, so the firm: w) is earning a profit. x) must shut down. y) must increase output. z) must increase price. Q : Social Welfare and Labor Market A labor market operates inefficiently when labor is hired only up to a point where, that the last worker: (1) VMP = w. (2) VMP minus MRC exceeds zero and is maximized. (3) P x MPPL = w. (4) added total revenue equals added total cost. Q : Define the term full cost concept Define the term full cost concept.
A labor market operates inefficiently when labor is hired only up to a point where, that the last worker: (1) VMP = w. (2) VMP minus MRC exceeds zero and is maximized. (3) P x MPPL = w. (4) added total revenue equals added total cost. Q : Define the term full cost concept Define the term full cost concept.
Define the term full cost concept.
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