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Is the marginal costing called direct costing?
Yes marginal costing is also sometimes called direct costing.
What is marginal costing techniques?
There are two type of costing are involved in a product or service. ie Direct cost and Indirect cost. In this two head there are two sub type costing are involved. ie Varriable cost and Fixed cost. Here the the total varriable cost are involved in a product of cost is called marginal costing. In another way the totoal cost -fixed cost is called marginal costing By M.Magesh 099948 33079
What is another name for marginal costing?
Another name for marginal costing is variable costing. This approach focuses on the variable costs associated with production while excluding fixed costs from product cost calculations. It is often used for internal decision-making and helps in assessing the impact of production volume on profitability.
What are the long term relationship between fixed cost and marginal costing?
In the long term, fixed costs and marginal costing interact significantly in decision-making and financial analysis. Fixed costs remain constant regardless of production levels, while marginal costing focuses on variable costs incurred for each additional unit produced. Businesses often use marginal costing to assess the impact of production decisions on profitability, as it highlights the contribution margin above fixed costs. Understanding this relationship helps companies in pricing strategies, budgeting, and optimizing resource allocation over time.
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
What are the uses of marginal costing and absorption costing?
to calculate the profit easilly
Limitation and assumption of marginal costing?
assumption of marginal costing
Is the marginal costing called direct costing?
Yes marginal costing is also sometimes called direct 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.
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.
Is direct costing the same as variable costing?
Variable costing is called marginal costing while direct costing is separate concept.
Marginal costing and absorption costing which is favourable?
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Limitations of marginal costing?
in marginal costing key factor and limitation factor is also available which may put limits on produduction unit and sales unit.
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.
State the arguments for using marginal costing approach in routine accounting?
- The Marginal costing technique is appropriate for decision making as it highlights those costs (and revenues) which will change as a result of the decision under review being put into effect. - As fixed costs are mostly overheads, and, under marginal costing these are all treated as period costs and charged into the income statement therefore marginal costing avoids arbitrary allocation of overheads to units of output. - Reporting profit on a marginal costing basis will be more closely relates to changes in sales volume and are less affected by changes in inventory levels. - An understanding of the behavior of costs and the implications of contribution is vital for accountants and managers as the use of marginal costing for decision making is universal.
Where will you apply marginal costing?
Marginal costing is the ascertainment of cost of one extra unit to be prepared or manufactured. Basically thee formula is- (Marginal Cost)n = (Total Cost)n - (Total Cost)n-1 for nth item . Through marginal costing we can ascertain whether our cost of production is rising, falling or constant and thus it helps in formation of a strategic plan for the enterprise.
What is marginal costing techniques?
There are two type of costing are involved in a product or service. ie Direct cost and Indirect cost. In this two head there are two sub type costing are involved. ie Varriable cost and Fixed cost. Here the the total varriable cost are involved in a product of cost is called marginal costing. In another way the totoal cost -fixed cost is called marginal costing By M.Magesh 099948 33079
