project on marginal costing

nachikale

New member
The costs that vary with a decision should only be included in decision analysis. For many decisions that involve relatively small variations from existing practice and/or are for relatively limited periods of time, fixed costs are not relevant to the decision. This is because either fixed costs tend to be impossible to alter in the short term or managers are reluctant to alter them in the short term.
 

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Definition of Marginal Costing

In economics, marginal cost is the change in the total cost that arises when the quantity produced has an increment by unit. That is, it is the cost of producing one more unit of a good.

Advantages of Marginal Costing

1) Cost control

2) Simplicity

3) Elimination of cost variance per unit

4) Short-term profit planning

5) Accurate overhead recovery rate

6) Maximum return to the business
 
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