This document defines and describes six types of costing: uniform costing, marginal costing, standard costing, historical costing, direct costing, and absorption costing. Uniform costing involves using the same costing method across firms in an industry. Marginal costing focuses on variable costs and writes off fixed costs each period. Standard costing substitutes expected costs for actual costs. Historical costing uses actual incurred costs. Direct costing only uses variable costs for decisions. Absorption costing includes all manufacturing costs in the cost of inventory.

1. TYPES OF COSTING

2. Types of
costing
Standard
costing
Historical
costing
Direct
costing
Absorption
costing
Marginal
costing
Uniform
costing

3. UNIFORM COSTING
• It is the use of same method of costing by a number of firms
in the same industry for common control or comparison
costs.
• It is treated as a common system of using agreed principles
and standard accounting practices in the identical firms or
industry.
• This helps in fixation of price of the product and inter firm
comparisons.

4. MARGINAL COSTING
• Marginal costing is an approach where variable costs are
charged to cost units, but the fixed cost for the relevant
period is written off in full against the total contribution for
that period.
• It is used to ascertain the effect of changes in volume or type
of output on profit, its main use is in providing relevant
information for planning and decision making.

5. STANDARD COSTING
• Standard costing is the practice of substituting an expected
cost for an actual cost in the accounting records.
• A comparison is made of the actual cost with a pre
arranged standard and the cost of any deviation is
analyzed by causes.

6. HISTORICAL COSTING
• When costs are determined in terms of actual costs and not
in terms of predetermined standard cost is called historical
costing.
• In this system of cost accounting, costs are determined only
after they have been incurred.

7. DIRECT COSTING
• It only uses variable costs to make decisions.
• It does not consider fixed costs, which are assumed to be
associated with time periods in which they were incurred.
• This concept is extremely useful for short term decisions,
but can lead to harmful results if used for long term
decision making.

8. ABSORPTION COSTING
• It means that all the manufacturing costs are absorbed by
the units produced.
• In other words the cost of a finished unit in inventory
will include direct materials, direct labor, and both
variable and fixed manufacturing overhead.
• The absorption costing method is always used for
preparing financial accounts.

9. Thank you