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John Moffat.
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zainrajput
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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 ?
John Moffat
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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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