10 Questions
What type of costs are excluded from costs and taken as expenses in the Profit and Loss Account?
Fixed costs
In marginal costing, how are products transferred from one process to another valued?
At marginal costs only
What is the basis for determining prices in the context of marginal costing?
Marginal cost and contribution margin
How is the profitability of departments, products, etc., determined in marginal costing?
With reference to their contribution margin
How does the difference in the magnitude of opening stock and closing stock affect unit cost according to the text?
It does not affect unit cost as all product costs are variable costs.
What is the definition of 'marginal cost'?
The amount by which aggregate costs change with a one unit increase or decrease in output volume
In marginal costing, how are variable costs treated?
Charged to cost units and written off against contribution
What is the basis of categorizing costs in marginal costing?
By their behavior with changes in volume of output
Why are fixed costs not included in product cost in marginal costing?
Because fixed costs are considered as period costs
What is another name for marginal costing?
'Variable Costing'
Learn about the concept of marginal cost and how it is applied in costing. Understand how variable costs and fixed costs are treated in marginal costing.
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