Hello everyone! I’m an Indian student in the commerce stream, and I’m currently studying cost accounting. I’m facing some difficulties understanding the concept of marginal costing. Can someone explain it to me in a simple way? Thank you!
Marginal costing is a technique where only variable costs are considered for decision-making purposes. It helps in determining the contribution margin of a product by deducting its variable costs from the selling price. This technique assists managers in making informed decisions about pricing, product mix, and resource allocation. Hope this helps!
Hey there! In simpler terms, marginal costing focuses on the incremental or additional cost incurred while producing one additional unit of a product. It is helpful in determining the break-even point and making decisions related to accepting or rejecting special orders. Let me know if you need any further clarification!
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