Company C is a pen manufacturing company. This company is a successful one. This is a public limited company, and there are many shareholders who have bought the shares of this company. Person F, the CEO of the company, is responsible to provide the shareholders with the relevant information for the purpose of decision making. For this, he approaches the manager to provide him and the management with relevant information that is needed for decision making. What are the two elements that are to be compared in the process of relevant costing? Which costs are relevant, whether fixed costs or variable costs?

Choose an answer

A.Marginal costs and marginal revenues are to be compared in the process of relevant costing. Both fixed costs as well as variable costs are relevant. B None of the given options is the correct answer. C Differential costs and differential revenues are to be compared in the process of relevant costing. Fixed costs are relevant. D Incremental costs and incremental revenues are to be compared in the process of relevant costing. Variable costs are relevant.

Question 2

Identify which of the following statements are sunk costs.

1. Depreciation cost of the machine.

2. Purchase cost of the machine.

3. Direct materials purchased for the manufacture of the chair.

4. Cost of the forklift drive to take the direct materials to the production department floor.

5. Cost of the crane which is used to move the direct materials to the production department.