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Absorption method is that in which predetermined overhead rate is use to allocate all overheads to departments or activities.

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Difference between absorption and marginal costing?

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.


What are the uses of marginal costing and absorption costing?

to calculate the profit easilly


Marginal costing and absorption costing which is favourable?

= http://wiki.answers.com/Q/Marginal_costing_and_absorption_costing_which_is_favourable" =


Marginal costing is useful in?

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.


Differences between costing method and costing techniques?

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

Related Questions

Difference between absorption and marginal costing?

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.


What are the uses of marginal costing and absorption costing?

to calculate the profit easilly


Marginal costing and absorption costing which is favourable?

= http://wiki.answers.com/Q/Marginal_costing_and_absorption_costing_which_is_favourable" =


Marginal costing is useful in?

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.


Differences between costing method and costing techniques?

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


When to use marginal costing?

Marginal costing is the method of costing for evaluating the changes in total cost due to change in number of units produced.


Which costing method is used for external reporting purpose?

absorption costing


Marginal costing and absorption costing?

These are different forms of costs that a business may deal with. They will each represent what could happen in a situation.


Why marginal costing method not Suitable to be used by manufacturer for external financial reporting and tax purpose?

I think..... In marginal costing method only variable cost is considered as product cost and fixed cost is not considered as product cost. But in reality product cost include fixed and variable, thus both variable and fixed costs should be considered while allocating cost. Marginal costing is used for inside reporting and absorption costing is used for outsider to clarify the real cost of product........ Am i right? Please confirm it


Absorption costing and marginal costing format?

These are different forms of costs that a business may deal with. They will each represent what could happen in a situation.


What are the three overhead absorption rates?

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.


What is an absorption costing?

An absorption costing is an accounting method used to calculate the total cost of a product by factoring in both direct and indirect costs.