Question

What is the relation between marginal cost and average variable cost when marginal cost is rising and average variable cost is falling?

Answer 1

when marginal cost is rising and average variable cost is falling, marginal cost lies below the average variable cost.

Answer 2

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Marginal costing system is very useful for internal purposes – decision making, planning and control.

Calculation of cost of sales, under marginal costing system, is very simple to understand.

Marginal costing system is very simple to operate as it does not require complex apportionments of overheads.