The advantages of marginal costing are as follows:

●      Easy to operate and simple to understand.

●      Marginal costing is useful in profit planning; it is helpful to determine profitability at different level of production and sale.

●      It is useful in decision making about fixation of selling price, export decision and make or buy decision.

●      Break even analysis and P/V ratio are useful techniques of marginal costing.

●      Evaluation of different departments is possible through marginal costing.

●      By avoiding arbitrary allocation of fixed cost, it provides control over variable cost.

●      Fixed overhead recovery rate is easy.

●      Under marginal costing, valuation of inventory done at marginal cost. Therefore, it is not possible to carry forward illogical fixed overheads from one accounting period to the next period.

●      Since fixed cost is not controllable in short period, it helps to concentrate in control over variable cost.