Commercial Applications
Assertion (A): Indirect costs can be traced directly to a specific product or service.
Reason (R): Indirect costs are typically overheads that benefit multiple products or services.
Which of the following is correct?
- Both A and R are true, and R explains A.
- Both A and R are true, but R does not explain A.
- A is true, but R is false.
- A is false, but R is true.
Answer
A is false, but R is true.
Reason — The Assertion is FALSE because indirect costs, by definition, cannot be traced directly to a specific product or service. They are common costs that benefit several products or departments and therefore have to be apportioned. The Reason is TRUE because indirect costs are typically overheads (factory, office, selling) which jointly benefit multiple products or services rather than being chargeable to any one of them.
Related Questions
Variable costs per unit decrease as the level of production increases.
- True
- False
Assertion (A): Indirect costs are always fixed costs.
Reason (R): Indirect costs are expenses that cannot be directly attributed to a specific cost object.
- A is true but R is false
- A is false but R is true
- Both A and R are true and R explains A.
- Both A and R are true but R does not explain A.
Total variable cost per unit increases ……………
- When production grows
- When demand decreases
- Change in government rules
- Change in availability of raw material
'The product has some value which can be measured in terms of money' it is called ……………
- Historical value
- Exchange value
- Zero value
- Positive value