Questions:
1. State how the ascertainment of behaviour of overhead expenses under varying conditions of production and sales facilitates both, cost control and decision making.
2. Discuss the importance of the following terms in relation to marginal costing. A] Key factor B] Breakeven point C] Margin of safety
3. The effect of price reduction is always to reduce the profit/volume ratio, to raise the break even point and to shorten the margin of safety. Explain and illustrate by numerical example.