Comparison between absorption and marginal costing, Cost Accounting

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:

  1. Closing stocks are valued at full production cost, and involving a share of fixed production and involve a share of fixed production costs.
  2. Because of the cost of sales in a period will involve some fixed overhead incurred in a previous duration in opening stock values and will eliminate some fixed overhead incurred in the recent period however carried forward in closing stock values like a charge to a subsequent accounting duration.

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.

Posted Date: 2/6/2013 12:25:29 AM | Location : United States







Related Discussions:- Comparison between absorption and marginal costing, Assignment Help, Ask Question on Comparison between absorption and marginal costing, Get Answer, Expert's Help, Comparison between absorption and marginal costing Discussions

Write discussion on Comparison between absorption and marginal costing
Your posts are moderated
Related Questions
Comparison between Marginal Costing and Absorption Costing There are accountants who favour all costing method. Arguments in favour about absorption costing are specified a

Cost Accountant and Cost Analysis Cost Accountant Is a member of chief accounting officers department? And he is responsible for collecting product costs and preparing ex

The activity driver for the shipping activity is the number of orders shipped. Product A uses 20 orders and Product B uses 60 orders. Calculate the consumption ratios for each prod

from the following particulars calculate the earning of worker . rate per hours $0.50 standard time 200 hours time taken 140 hours

REPORT ON SATYAM


The following information is available for the automotive division of Ford Motor Company for 2009.  The company uses the LIFO inventory method.

Define the concept of opportunity cost in your own words. Given an example from your own life of the opportunity cost of a decision (do NOT use classroom examples). Explain why o

Discuss how SD can use standard costing and variance analysis to prepare meaningful reports when using Kaizen Costing. By the use of standard costing and variance analysis, fr

Fixed Budgeting The master budget discussed before is a fixed budget. A fixed budget is defined via as: 1. Just one level of activity 2. Not adjusted to re