Question

(ix) Interest on own capital is
(A) Cash Cost
(B) Notional Cost
(C) Part of Prime
Cost
(D) Semi-variable Cost​

Answer 1

interest on own capital is cash cost

Answer 2

(B) Notional cost.

Notional cost is not a real cost as this cost is charged by proprietor for the factors of production owned by him. this cost includes rent of any asset, land, machinery, labor cost, interest on own capital, etc. it is a indirect cost which incurs by the proprietor himself. such cost also occur if it is rendered by any third party.

the notional cost is calculated by the value of the same services and output charged by any other person in market.