Marginal costing assumes fixed cost remains constant:
AAfter full capacity
BAt all output
CAbove BEP only
DWithin relevant range
Answer & Solution
Correct answer: D. Within relevant range
1. The marginal costing model treats fixed cost as truly fixed in total only within a defined relevant range.
2. Outside that range, step-fixed costs can change.
3. The model's assumption is therefore bounded to the relevant range.
4. Hence the answer is within relevant range.
_Source: ICAI BoS Inter Paper 3, Ch 14 "Marginal Costing", §14.10 ¶3_
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