- April 9, 2015 at 12:55 pm #240653ajaved5Member
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I was practising exam questions with get through guides and they used the term standard costing. The questions where about calculate standard costing with ABC costing from the data given.
In one of the answer they used marginal costing vs. ABC and in the second the used absorption vs. ABC, is standard costing marginal costing or absorption costing or both?
I come to the conclusion it is both and it depends on the information which is provided in the question eg selling price use marginal costing
AJApril 10, 2015 at 6:13 pm #240792John MoffatKeymaster
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If I understand you correctly then you are right.
Standard costing is simply arriving at a budgeted cost per unit. It may be a standard marginal cost or a standard absorption cost – that is up to the business and in the exam you would be told whether it is marginal or absorption.
ABC is effectively absorption costing, but the overheads are absorbed in a more sensible way than with traditional absorption costing.
The free lecture on ABC should be of help to you (it covers traditional absorption costing at the same time).
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