Marginal/absoprtion costing

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
I am abit confuse at times I have come across question where they have asked you to calculate by using both method Honestly sometimes I just not understanding can someone please explain the usage of the difference.<BR><BR>Thanks

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Marginal/absoprtion costing

    The difference is in the way that overheads are treated<BR>absorption costing will look at (a SSAP9 approach to) costing a product by including the normal overhead attributed.<BR>Eg if the product takes 3 hours to make and the OAR is £5 per hour then the product cost will include £15 absorbed overhead<BR><BR>Marginal costing treats fixed costs are period (not product) costs<BR>So the cost of a product is just the value of the variable costs needed to produce it<BR><BR>I will look at this on 13 June at Oxford, as I see this as a likely section 2 question on the PCR/PAR exam. (see the revision course forum)<BR><BR>sandy.hood@chichester.ac.uk
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Marginal/absoprtion costing

    thanks much sandy

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