From the following two statements of Assertion (A) and Reason (R), indicate the correct answer. Assertion (A) From the marginal costing approach point of view, the marginal cost is compared with the purchase price. Reason (R) If the marginal cost is less than the purchase price it should be purchased rather than manufactured.

The correct answer is: A. Both (A) and (R) are correct

Marginal costing is a cost accounting technique that focuses on the costs that vary with the production volume. The marginal cost of a product is the additional cost incurred to produce one more unit of the product. The purchase price is the price that a company pays to purchase a product from another company.

If the marginal cost of a product is less than the purchase price, then the company should purchase the product rather than manufacture it. This is because the company will save money by purchasing the product rather than manufacturing it.

The following is a brief explanation of each option:

• Option A: Both (A) and (R) are correct. This is the correct answer because marginal costing focuses on the costs that vary with the production volume, and the purchase price is the price that a company pays to purchase a product from another company. If the marginal cost of a product is less than the purchase price, then the company should purchase the product rather than manufacture it.
• Option B: (A) is correct, but (R) is not correct. This is not the correct answer because (R) is correct. If the marginal cost of a product is less than the purchase price, then the company should purchase the product rather than manufacture it.
• Option C: (A) is not correct, but (R) is correct. This is not the correct answer because (A) is correct. Marginal costing focuses on the costs that vary with the production volume.
• Option D: Both (A) and (R) are incorrect. This is not the correct answer because both (A) and (R) are correct.