Question
Verbal Reasoning Question on Statements and Assumptions
Given below are two statements: One is labelled as Assertion A and the other is labelled as Reason R:
Assertion A: If the production volume in unit is 10,000 unit and total sales units are 5000. Selling price per unit ₹12, variable cost per unit ₹ 6 and the fixed cost per year is ₹ 40,000. In this case, the Absorption costing shows more profit than variable costing.
Reason R: The variable costing considered full cost for product costing and Inventory valuations.
In the light of the above statements, choose the most appropriate answer from the options given below:
Both A and R are correct and R is the correct explanation of A
Both A and R are correct but R is NOT the correct explanation of A
A is correct but R is not correct
A is not correct but R is correct
A is correct but R is not correct
Solution
The correct answer is (C) : A is correct but R is not correct.