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Which of the following is not a feature of marginal costing?
- a)Separation of costs into fixed and variable elements
- b)Inclusion of fixed costs in the value of finished goods and work-in-progress
- c)Computation of unit cost based on average variable cost
- d)Determination of profitability in terms of marginal contribution
Correct answer is option 'B'. Can you explain this answer?
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Which of the following is not a feature of marginal costing?a)Separati...
One of the features of marginal costing is the separation of costs into fixed and variable elements. It computes the unit cost based on the average variable cost of manufacturing a product. It also determines profitability based on marginal contribution. However, fixed costs are not included in the value of finished goods and work-in-progress under marginal costing. They are written off against profits in the period in which they arise.
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Which of the following is not a feature of marginal costing?a)Separati...
Explanation:
Separation of costs into fixed and variable elements:
- Marginal costing involves segregating costs into fixed and variable components to analyze the impact of production levels on costs. Fixed costs remain constant regardless of production volumes, while variable costs fluctuate based on the level of activity.
Inclusion of fixed costs in the value of finished goods and work-in-progress:
- Marginal costing does not include fixed costs in the valuation of finished goods or work-in-progress. Fixed costs are treated as period costs and are deducted as expenses in the period incurred. Only variable costs are considered in the cost of goods sold calculation.
Computation of unit cost based on average variable cost:
- Marginal costing calculates unit costs based on the variable costs incurred in producing each unit. By focusing on variable costs, managers can make more informed decisions about pricing and production levels.
Determination of profitability in terms of marginal contribution:
- Marginal costing evaluates profitability by analyzing the contribution margin, which is the difference between sales revenue and variable costs. This approach helps in assessing the incremental profitability of each unit sold.
Conclusion:
In conclusion, inclusion of fixed costs in the value of finished goods and work-in-progress is not a feature of marginal costing. Instead, fixed costs are treated as period expenses and are not included in product costs under this costing methodology.
Separation of costs into fixed and variable elements:
- Marginal costing involves segregating costs into fixed and variable components to analyze the impact of production levels on costs. Fixed costs remain constant regardless of production volumes, while variable costs fluctuate based on the level of activity.
Inclusion of fixed costs in the value of finished goods and work-in-progress:
- Marginal costing does not include fixed costs in the valuation of finished goods or work-in-progress. Fixed costs are treated as period costs and are deducted as expenses in the period incurred. Only variable costs are considered in the cost of goods sold calculation.
Computation of unit cost based on average variable cost:
- Marginal costing calculates unit costs based on the variable costs incurred in producing each unit. By focusing on variable costs, managers can make more informed decisions about pricing and production levels.
Determination of profitability in terms of marginal contribution:
- Marginal costing evaluates profitability by analyzing the contribution margin, which is the difference between sales revenue and variable costs. This approach helps in assessing the incremental profitability of each unit sold.
Conclusion:
In conclusion, inclusion of fixed costs in the value of finished goods and work-in-progress is not a feature of marginal costing. Instead, fixed costs are treated as period expenses and are not included in product costs under this costing methodology.
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Which of the following is not a feature of marginal costing?a)Separation of costs into fixed and variable elementsb)Inclusion of fixed costs in the value of finished goods and work-in-progressc)Computation of unit cost based on average variable costd)Determination of profitability in terms of marginal contributionCorrect answer is option 'B'. Can you explain this answer?
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Which of the following is not a feature of marginal costing?a)Separation of costs into fixed and variable elementsb)Inclusion of fixed costs in the value of finished goods and work-in-progressc)Computation of unit cost based on average variable costd)Determination of profitability in terms of marginal contributionCorrect answer is option 'B'. Can you explain this answer? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about Which of the following is not a feature of marginal costing?a)Separation of costs into fixed and variable elementsb)Inclusion of fixed costs in the value of finished goods and work-in-progressc)Computation of unit cost based on average variable costd)Determination of profitability in terms of marginal contributionCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following is not a feature of marginal costing?a)Separation of costs into fixed and variable elementsb)Inclusion of fixed costs in the value of finished goods and work-in-progressc)Computation of unit cost based on average variable costd)Determination of profitability in terms of marginal contributionCorrect answer is option 'B'. Can you explain this answer?.
Which of the following is not a feature of marginal costing?a)Separation of costs into fixed and variable elementsb)Inclusion of fixed costs in the value of finished goods and work-in-progressc)Computation of unit cost based on average variable costd)Determination of profitability in terms of marginal contributionCorrect answer is option 'B'. Can you explain this answer? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about Which of the following is not a feature of marginal costing?a)Separation of costs into fixed and variable elementsb)Inclusion of fixed costs in the value of finished goods and work-in-progressc)Computation of unit cost based on average variable costd)Determination of profitability in terms of marginal contributionCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following is not a feature of marginal costing?a)Separation of costs into fixed and variable elementsb)Inclusion of fixed costs in the value of finished goods and work-in-progressc)Computation of unit cost based on average variable costd)Determination of profitability in terms of marginal contributionCorrect answer is option 'B'. Can you explain this answer?.
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