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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 TufailThe 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).
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