Features of Marginal Costing

Features of marginal costing are as follows:

●      Marginal costing is used to know the impact of variable cost on the volume of production or output.

●      Break-even analysis is an integral and important part of marginal costing.

●      Contribution of each product or department is a foundation to know the profitability of the product or department.

●      Addition of variable cost and profit to contribution is equal to selling price.

●      Marginal costing is the base of valuation of stock of finished product and work in progress.

●      Fixed cost is recovered from contribution and variable cost is charged to production.

●      Costs are classified on the basis of fixed and variable costs only. Semi-fixed prices are also converted either as fixed cost or as variable cost.

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