Marginal costing

2.  Marginal Costing
 Advantages
 Limitations

3.  Also known as variable costing or direct costing.
 Technique through which variable costs are taken into
account for purposes of product costing, inventory valuation
and other important management decisions.
 Marginal cost means the cost which arises from the
production of additional increment of output.
 Expense incurred by the taking of a particular decision.
 Fixed costs are not taken into consideration.

4.  Realistic Valuation
 Constant in nature
 Facilitating cost control
 Treatment of overheads simplified
 Key factors high lightened
 Facilitating profit planning
 Management reporting facilitated
 Basis for fixing Sales Prices and Quoting Tenders

5.  Difficulty in classification
 Difficulty in application
 Shift in emphasis
 Wrong basis for pricing
 Limited scope