Question

difference between marginal costing and absorption costing

Answer 1

Marginal cost refers to the movement in the total cost, due to the production of an additional unit of output. In marginal costing, all the variable costs are regarded as product related costs while fixed costs are assumed as period costs. Therefore, fixed cost of production is posted to the Profit & Loss Account.

Answer 2

Marginal Costing applies only thosecosts to inventory that were incurred when each individual unit was produced, while Absorption costing applies all production costs to all units produced.