Which of the following is NOT a component of total cost in marginal costing?

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Question: Which of the following is NOT a component of total cost in marginal costing?

Options:

Correct Answer: Fixed manufacturing overhead

Solution:

In marginal costing, fixed manufacturing overhead is not included in the total cost of the product; only variable costs are considered.

Which of the following is NOT a component of total cost in marginal costing?

Which of the following is NOT a component of total cost in marginal costing?

Step 1: Understand what marginal costing is. It is a method of costing that only considers variable costs for decision-making.
Step 2: Identify the types of costs involved in marginal costing. These include variable costs like direct materials, direct labor, and variable manufacturing overhead.
Step 3: Recognize that fixed costs, such as fixed manufacturing overhead, are not included in the total cost of the product in marginal costing.
Step 4: Conclude that the question is asking for a cost that is NOT included in marginal costing, which is fixed manufacturing overhead.

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