Marginal Costing Flashcards
(5 cards)
1
Q
What is marginal costing?
A
Focuses on variable costs only. Does not include fixed costs.
2
Q
Advantage of marginal costing
A
It tells us our minimum price to make a positive contribution.
3
Q
What about fixed costs if doing a mark up?
A
Would need a much higher mark up to factor in that there will be fixed costs to cover.
4
Q
Is it difficult for Halfpenny to switch to marginal costing?
A
No, as they already use absorption costing so the variable and fixed costs are already split.
5
Q
Is a mark up difficult to work out under marginal costing?
A
Yes it can be, as with absorption costing an attempt to work out the fixed cost per unit has already been done.
