In marginal costing, which costs are treated as period costs?

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Question: In marginal costing, which costs are treated as period costs?

Options:

Correct Answer: Fixed manufacturing costs

Solution:

In marginal costing, fixed manufacturing costs are treated as period costs and not included in product costs.

In marginal costing, which costs are treated as period costs?

In marginal costing, which costs are treated as period costs?

Step 1: Understand what marginal costing is. It is a method of costing that only considers variable costs for product costing.
Step 2: Identify the types of costs involved in production. These include variable costs (like materials and labor) and fixed costs (like rent and salaries).
Step 3: Recognize that in marginal costing, only variable costs are included in the cost of products.
Step 4: Learn that fixed manufacturing costs are not included in product costs. Instead, they are treated as period costs.
Step 5: Understand that period costs are expenses that are charged in the period they are incurred, rather than being tied to specific products.

Marginal Costing – A costing method that only considers variable costs for product costing, treating fixed costs as period costs.
Period Costs – Costs that are expensed in the period they are incurred, rather than being included in product costs.
Fixed Manufacturing Costs – Costs that do not change with the level of production and are treated as period costs in marginal costing.