Features of Marginal costing

Question

Write down the features of Marginal costing?

Answer 1

Features of Marginal costing :

i) It is a way of reporting profits and recoding costs.

ii) It comprises ascertaining marginal costs that is the difference of variable cost and fixed cost.

iii) The operating costs are differentiated in costs variable and fixed costs. Semi variable costs are as well separated in the individual components of fixed cost and variable cost.

iv) Fixed costs that remain steady regardless of the quantity of production don’t find place in the product cost determination and inventory estimation.

v) Fixed costs are treated as period charge and are written off to the profit and loss account in the period incurred.

vi) Only variable costs are taken in consideration while calculating the product cost.

vii) Prices of products are depends on variable cost only.

viii) Marginal contribution decides the productivity of the products.