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Marginal costing

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Marginal costing

  • This topic has 2 replies, 2 voices, and was last updated 12 years ago by nomantufail.
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  • November 14, 2012 at 1:32 pm #55282
    nomantufail
    Member
    • Topics: 17
    • Replies: 13
    • ☆

    Variable admn and variable selling costs doesn’t form a part of cost of production under absorption costing.
    1. Does these variable costs form part of cost of production under marginal costing system?

    2. Do These costs are part of contribution ?

    3. What’s the difference between cost of production under marginal costing and contribution ?
    Thanks and regards
    Noman Tufail

    November 14, 2012 at 9:28 pm #107310
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54710
    • ☆☆☆☆☆

    The cost of production only includes production costs, whether you are using marginal or absorption costing (the only difference is that absorption costing includes fixed production costs whereas marginal costing does not).
    The cost of production is used for valuing inventories.

    Contribution is sales less all variable costs (both production and non-production costs).

    November 14, 2012 at 9:39 pm #107311
    nomantufail
    Member
    • Topics: 17
    • Replies: 13
    • ☆

    Thankyou very much sir

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