. In context of net operating profit, which of the following statements are true?
a) If all costs are variable, the amount of profit obtained in marginal costing and absorption
costing will be same.
b) If the volume of sales and output is equal in a period, profit will be same in absorption
costing and marginal costing.
c) Both a and b
d) None of the above
Answers
Answer:
c
Explanation:
a) If all costs are variable, the amount of profit obtained in marginal costing and absorption
costing will be same.
b) If the volume of sales and output is equal in a period, profit will be same in absorption
NET OPERATING PROFIT AFTER TAX
In context of net operating profit, (C) both statements a and b are correct.
GETTING TO KNOW MORE ABOUT NET OPERATING PROFIT AFTER TAX:
* Net operating profit after tax (NOPAT) is a term used in corporate finance to describe a company's after-tax operating profit for all investors, including shareholders and debt holders.
* NOPAT is a precise and reliable assessment of profitability used by analysts and investors to analyse a company's financial results over time and against competitors.
* Because one-time losses and other non-recurring costs do not represent the genuine, continuous profitability of the firm, NOPAT excludes them.
* A corporation may, for example, incur purchase expenditures that are not anticipated in the future. These expenses would have a negative impact on current-year earnings, but they do not correctly reflect the company's activities.