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In marginal costing, fixed costs are treated as:
In marginal costing, fixed costs are treated as:
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Practice Questions
1 question
Q1
In marginal costing, fixed costs are treated as:
Product costs
Period costs
Variable costs
Direct costs
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In marginal costing, fixed costs are treated as period costs and are charged in full to the profit and loss account.
Questions & Step-by-step Solutions
1 item
Q
Q: In marginal costing, fixed costs are treated as:
Solution:
In marginal costing, fixed costs are treated as period costs and are charged in full to the profit and loss account.
Steps: 5
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Step 1: Understand what marginal costing is. It is a costing method that focuses on variable costs and treats fixed costs differently.
Step 2: Know that fixed costs are expenses that do not change with the level of production, like rent or salaries.
Step 3: In marginal costing, fixed costs are not included in the cost of goods sold. Instead, they are treated as period costs.
Step 4: Period costs are expenses that are charged to the profit and loss account for the period they occur, rather than being allocated to products.
Step 5: This means that all fixed costs are fully deducted from revenue in the profit and loss statement for that period.
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