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_
Related questions
At the break-even point,A higher contribution to sales ratio implies thatIf the margin of safety is 21.875 per cent of sales, break-even sales are what share of saMargin of safety isFixed cost is 1,50,000 and contribution per unit is 15. Units needed to earn a profit of 2Fixed cost is 1,50,000 and contribution per unit is 15. The break-even point in units isSelling price is 30 per unit and variable cost is 15 per unit. The P/V ratio isContribution is defined as