Question

Given below are two statements: Assertion (A): Cost \(A_1\) includes 16 items cost. Reason (R): It is cost \(A_2\) plus imputed rental value of own land and imputed interest on owned fixed capital.

• A. Both A and R are correct and R is the correct explanation of A
• B. Both A and R are correct but R is not the correct explanation of A
• C. A is correct but R is not correct
• D. A is not correct but R is correct

Hint:

Cost \(A_1\) mainly includes actual paid-out costs, while imputed value of owned land and fixed capital belongs to higher cost concepts.

Answer 1

The Correct Option is C

Concept:
Cost concepts in farm management include \(A_1\), \(A_2\), \(B_1\), \(B_2\), \(C_1\), \(C_2\), etc. These are used to calculate cost of cultivation.

Step 1: Check Assertion (A).
Cost \(A_1\) includes several actual paid-out costs such as hired labour, seed, fertilizer, manure, plant protection, irrigation, depreciation, land revenue, interest on working capital, and other expenses. \[ A \text{ is correct} \]

Step 2: Check Reason (R).
The reason says that it is cost \(A_2\) plus imputed rental value of own land and imputed interest on owned fixed capital. This description does not represent cost \(A_1\). It represents a higher cost concept related to \(B\)-type costs. \[ R \text{ is not correct} \]

Step 3: Final conclusion.
Assertion is correct but Reason is incorrect. \[ \therefore \text{Correct Answer is (C)} \]