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Marginal costing

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Marginal costing

  • This topic has 1 reply, 2 voices, and was last updated 3 months ago by John Moffat.
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  • April 23, 2022 at 10:12 am #654323
    zainrajput
    • Topics: 7
    • Replies: 4
    • ☆

    Which TWO of the following are ADVANTAGES of marginal costing over absorption costing?

    1.The true behaviour of costs is reflected more accurately

    2.It helps ensure that selling prices cover total costs

    3.Product costs are not distorted by arbitrary overhead absorption methods

    4.The accruals concept is applied fully

    I know 3 is an advantage but I’m confused between 1 & 2, does selling prices cover total cost? Or answer is 1 & 3 ?

    April 24, 2022 at 6:35 pm #654361
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 50010
    • ☆☆☆☆☆

    It is 1 and 3. 2 is not an advantage of marginal costing because it not measure the total cost per unit, only the variable cost per unit.

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