Which of the following is NOT a characteristic of marginal costing?

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Question: Which of the following is NOT a characteristic of marginal costing?

Options:

Correct Answer: Absorption of fixed costs into product costs

Solution:

Marginal costing does not absorb fixed costs into product costs; it treats them as period costs.

Which of the following is NOT a characteristic of marginal costing?

Which of the following is NOT a characteristic of marginal costing?

Step 1: Understand what marginal costing is. It is a costing method that only considers variable costs (like materials and labor) when calculating the cost of a product.
Step 2: Know that fixed costs (like rent and salaries) are not included in the product cost under marginal costing. Instead, they are treated as costs for the entire period.
Step 3: Identify the characteristics of marginal costing. These include focusing on variable costs, treating fixed costs as period costs, and not including fixed costs in product pricing.
Step 4: Determine which option does not fit the characteristics of marginal costing. The correct answer will be the one that suggests fixed costs are included in product costs.

No concepts available.