MBAA-102 Accounting for Managers – Unit 10

MBAA-102 Accounting for Managers – Unit 10

Objectives: to introduce you with the concept of marginal costing; to explain the income statement under marginal costing and how it differs from absorption costing; and to discuss the merits and limitations of marginal costing along with developing a marginal cost equation uses of marginal costing in managerial decisions.

Materials:
The relevant material is available here.

Questions:

1. Under what conditions, the income statement prepared under full costing or absorption costing and marginal costing will give similar results.
2. State the conditions, the income statement prepared with absorption costing and marginal costing will give different results.
3. Explain the application of marginal costing in managerial decision making.
4. How semi-variable costs or mixed costs can be segregated into fixed and variable components.
5. What are the limitations of marginal costing techniques?