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.
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For labor Plastibristle’s demand for labor is least wage elastic at: (i) point a. (ii) point b. (iii) point c. (iv) point d. Q : Introduction of the term Break Even Give a brief introduction of the term Break Even Point. How does BEP aid in making business decision?
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