Comparison between Absorption and Marginal Costing
Marginal Costing like a cost accounting system is considerably different from absorption costing. It is an optionally method of accounting for costs and profit, that refuses the principles of absorbing fixed overhead into unit costs.
In Marginal costing:
Closing stocks are valued on marginal production cost, Fixed costs are charged in full against the profit of the duration whether they are incurred.
In absorption costing occasionally referred to like full costing:
This distinction among absorption costing and marginal costing is very significant and the contrast among the systems should be clearly understood. Works carefully via the following example to ensure about you are familiar along with both methods.