Review:
Marginal Costing
overall review score: 4.5
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score is between 0 and 5
Marginal costing is a costing technique where only variable costs are considered while calculating the cost of a product or service.
Key Features
- Focuses on variable costs only
- Helps in decision-making by showing contribution margin
- Simple and easy to understand
Pros
- Helps in making strategic business decisions
- Provides clarity on cost behavior
- Useful in setting selling prices
Cons
- Does not consider fixed costs which are also important in determining overall profitability
- May not be suitable for long-term planning as it ignores fixed costs