Statement I: When a factory operates at full capacity, Fixed cost also becomes relevant for make or buy decision. Statement II: Margin of safety is the difference of actual sales and standard sales. Select the correct an

CS Executive · Cost and Management Accounting · PYQS · June 2019
Statement I: When a factory operates at full capacity, Fixed cost also becomes relevant for make or buy decision. Statement II: Margin of safety is the difference of actual sales and standard sales. Select the correct answer from the options given below:
(A) Both statements are correct
(B) Both statements are incorrect
(C) Statement I is incorrect, but statement II is correct
(D) Statement I is correct, but statement II is incorrect

Answer & Explanation:

Correct Answer: Option (D)

Official answer key: (D).

Topics: Marginal Costing / Decision Making

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