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In a marginal costing system, how are fixed costs treated?
In a marginal costing system, how are fixed costs treated?
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Practice Questions
1 question
Q1
In a marginal costing system, how are fixed costs treated?
Included in product costs
Expensed in the period incurred
Allocated to each unit produced
Ignored completely
Show Solution
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In marginal costing, fixed costs are expensed in the period incurred and not included in product costs.
Questions & Step-by-step Solutions
1 item
Q
Q: In a marginal costing system, how are fixed costs treated?
Solution:
In marginal costing, fixed costs are expensed in the period incurred and not included in product costs.
Steps: 5
Show Steps
Step 1: Understand what marginal costing is. It is a method of costing that focuses on variable costs.
Step 2: Identify fixed costs. These are costs that do not change with the level of production, like rent or salaries.
Step 3: Learn how fixed costs are treated in marginal costing. They are not included in the cost of making products.
Step 4: Know that fixed costs are recorded as expenses in the financial records for the period they occur.
Step 5: Remember that this means fixed costs are deducted from revenue to calculate profit for that period.
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