Which of the Following Statements Is False

question 3

Multiple Choice

Which of the following statements is false?

• A) One of the limitations of marginal costing is that it is difficult to assess profitability when there are limiting factors such as machine capacity
• B) Marginal costing can identify the minimum selling price that would not produce a loss
• C) Marginal costing focuses on how costs will behave as a result of changes in the volume of production
• D) Marginal costing focuses on the contribution each product can make towards fixed costs and towards profit

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Definitions:

Lost Or Stolen Goods

This term refers to inventory items that are missing due to theft or misplacement and represent a loss to the business.

Sales Returns and Allowances

A reduction in sales revenue that occurs when customers return products or receive discounts for unsatisfactory goods.

Income Statement

A financial statement that shows a company's revenues, expenses, and profits over a specific period, providing insight into operational efficiency.

Periodic Inventory System

An accounting approach where inventory and cost of goods sold are calculated at set periods, rather than continuously.