Q.Rectify the underlined portions of the following sentences :

Variable cost per unit remains constant — option (c).

Cost behaviour is a standard CHSE +2 Cost Accounting topic. A variable cost (e.g., direct material, direct wages) changes in total in direct proportion to output. But per unit it is fixed: if material costs ₹10 per unit, it is ₹10 whether you make 100 or 1,000 units.

• (a)/(d) describe TOTAL variable cost behaviour, not per-unit.
• (b) is wrong — variable cost is unrelated to fixed cost. …

Primary packing expenses form part of prime cost — option (c).

Packing is classified by purpose in the +2 syllabus. PRIMARY packing is the first, essential packing that holds and protects the product and is inseparable from it (the tube of a toothpaste, the bottle of a syrup). Being essential to the product, it is treated as a direct material cost and so is included in PRIME COST (direct material + direct labour + direct expenses).

…

Prime cost is the sum of all direct costs: Direct Material + Direct Labour + Direct Expenses.

Prime cost (also called basic or first cost) is the aggregate of the three direct elements of cost that can be identified with and charged directly to a product or job:

• Direct Materials + Direct Labour (direct wages) + Direct/Chargeable Expenses = Prime Cost. …

Correct word: per-unit fixed cost VARIES (decreases with more output), it is not constant.

Total fixed cost (e.g., rent) stays the same over a range of output, but when it is divided among units, the fixed cost PER UNIT changes inversely with output:

• Higher production → fixed cost spread over more units → lower per-unit fixed cost.
• Lower production → spread over fewer units → higher per-unit fixed cost. …

Prime cost = Direct materials + Direct wages (+ Direct expenses) — overheads are excluded.

Prime cost is the aggregate of the direct elements of cost — those that can be conveniently traced to a cost unit:

• Direct materials
• Direct wages (direct labour)
• Direct (chargeable) expenses …

Cost of raw materials is a Variable cost.

Costs are classified by behaviour with respect to the level of output:

• Variable cost — total cost changes in direct proportion to output; per-unit cost stays constant. Raw materials consumed go up as more units are made and down as fewer are made → variable. ✓ …

Depreciation of building (straight-line) is constant in total irrespective of output volume, making it a fixed cost — option (a).

Costs are classified by behaviour in this CHSE Odisha +2 Cost Accounting topic:

• Fixed cost — remains constant in total within a range of activity (rent, building depreciation, manager salary).
• Variable cost — changes in direct proportion to output (direct material, direct wages). …

A general manager is paid a fixed salary irrespective of how many units are produced, so it is a fixed cost — option (a).

In this +2 Class-12 Cost Accounting topic (CHSE Odisha), classifying by behaviour: …

Direct material is consumed in proportion to the number of units made, so it is a variable cost — option (a).

This CHSE Odisha +2 Cost Accounting question tests variable vs fixed costs:

• (a) Direct material — more units → more material → varies with output. Variable. Correct. …

Building depreciation does not change with output, so it is the fixed cost among the options — (a).

In this CHSE Odisha +2 Cost Accounting item:

• (a) Depreciation of building — fixed (constant per period). Correct.
• (b) Direct material — variable. …

Carriage inward is added to the cost of the raw material it brings in, so it is traceable to the product — a direct cost (b).

In this CHSE Odisha +2 Cost Accounting question, a direct cost is one that can be identified with and charged to a specific product/job, while indirect costs cannot be so traced:

• (a) Rent of factory building — indirect (overhead). …

The aggregate of all direct costs is (b) Prime cost.

Prime cost = Direct material + Direct labour + Direct expenses. It is the first stage of cost build-up. Adding factory overhead gives factory/works cost; adding office overhead gives cost of production; adding selling & distribution …