These are different forms of costs that a business may deal with. They will each represent what could happen in a situation.
marginal costing is recommended by IAS and absorption costing is not recommended by IAS,marginal costing is used for internal purposes and absorption costing is ysed for external purposes,in marginal costing the fixed production overheads are not calculated as a product cost and in absorption costing the fixed prodution overheads are calculated as product cost.
to calculate the profit easilly
= http://wiki.answers.com/Q/Marginal_costing_and_absorption_costing_which_is_favourable" =
Absorption method is that in which predetermined overhead rate is use to allocate all overheads to departments or activities.
These are different forms of costs that a business may deal with. They will each represent what could happen in a situation.
marginal costing is recommended by IAS and absorption costing is not recommended by IAS,marginal costing is used for internal purposes and absorption costing is ysed for external purposes,in marginal costing the fixed production overheads are not calculated as a product cost and in absorption costing the fixed prodution overheads are calculated as product cost.
to calculate the profit easilly
= http://wiki.answers.com/Q/Marginal_costing_and_absorption_costing_which_is_favourable" =
Absorption method is that in which predetermined overhead rate is use to allocate all overheads to departments or activities.
These are different forms of costs that a business may deal with. They will each represent what could happen in a situation.
As far as I know there is only an overhead absorption rate and a full absorption rate. The alternative being marginal costing. There are 3 methods of absorption costing. These being Activity, Time and Efficiency but I'm not sure what you are asking exactly.
assumption of marginal costing
Marginal costing is one of the technique of costing and is usefull for the decision making process. As in decision making process decision are always made for the future activities and not for past activities so if exept marginal costing any other costing method for example absorption costing method is used then there is a chance of making wrong decisions as in future decision making past decision and past data is not relevent for decision making.
Yes marginal costing is also sometimes called direct costing.
Methods of Costing The cost of products or services is determined using several methods. The use of a given method is dictated by such factors as: the nature of cost units, the production process, the mode of cost accumulation, the duration of work etc. The following are the well established methods of costing a. Job / Batch costing b. Contract costing c. Process costing d. Service costing Techniques of Costing Irrespective of the type of costing method being applied there are various approaches that could be adopted. These are:  Full Absorption costing  Marginal costing  standard costing using  absorption costing  marginal costing
the following data of x ltd is provided to you.opening stock 20,000 units valued at marginal costing shs 123,800 and total costing shs 144,000.units produced 120,000 unitsclosing stock 8,000 unitsunits sold 132,000 unitsvariable costs 714,000 unitsfactory overheads fixed 140,400 unitsselling costs:variable shs. 680,000fixed shs. 100,000selling price per unit is shs. 40find the net profit undera) absorption costingb) marginal costing
The difference between marginal and absorption costing is that when preparing a statement based on marginal costing, you would subtract all variable costs, production or otherwise, from the sales revenue, to give the contribution, from which you subtract all fixed costs (production and non-production) to give profit made.Using absorption costing however, you subtract production costs (this will include both variable and fixed production costs) only from sales to give you the gross profit, from which you then subtract all non-production costs (fixed or variable) to give net profit.The final profit using both methods is always the same.