Unit 6 - Absorption v Marginal Costing

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GemmaLouise
GemmaLouise Registered Posts: 56 Regular contributor ⭐
in AAT Level 3 (Level 6 in Scotland)
Just wondering if anyone can help,

When it comes to this topic i dont seem to have many notes on it, merely the differences between the two and what they look like on a profit and loss... is there anything more technical that i need to know for this or is it that basic!?

Thanyou

Gemma

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  • visha
    visha Registered Posts: 218 Dedicated contributor 🦉
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    You need to have an understanding that the valuation of closing stock will differ at the full absorption cost then at marginal cost. The difference will be the fixed cost per unit times the number of units in stock
  • geetu
    geetu Registered Posts: 5 New contributor 🐸
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    it may help...........

    the main thing that u must know in this chapter is that
    in marginal costing , the stock are valued at the amount of variable cost required to produce each unit (i.e material, labour, overhead and any other variable overhead ) no fixed cost are absorbed in marginal costing .

    but in absorption costing both variable and fixed cost are absorbed.

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