Marginal Costing Interview Question:

Explain Features of Marginal costing?

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Features of Marginal costing:

- It is a method of recoding costs and reporting profits.

- It involves ascertaining marginal costs which is the difference of fixed cost and variable cost.

- The operating costs are differentiated into fixed costs and variable costs. Semi variable costs are also divided in the individual components of fixed cost and variable cost.

- Fixed costs which remain constant regardless of the volume of production do not find place in the product cost determination and inventory valuation.

- Fixed costs are treated as period charge and are written off to the profit and loss account in the period incurred.

- Only variable costs are taken into consideration while computing the product cost.

- Prices of products are based on variable cost only.

- Marginal contribution decides the profitability of the products.
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