Restrictions of Marginal Costing
Write down the restrictions of Marginal Costing?
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The restrictions of Marginal Costing are illustrated below: - The categorization of total costs in fixed and variable cost is not easy.
- In this procedure fixed costs are completely eliminated for the valuation of inventory of ended and semi-finished goods. This elimination influences the profitability harmfully.
- In marginal costing past data is employed while management decisions are related to prospect events.
- It doesn’t offer any standard for the estimate of performance.
- Selling price fixed on the base of marginal cost will be valuable just for small period of time.
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