Study Principles of Accounts notes on Marginal and Absorption Costing for Secondary. Useful for revision, homework, and exam preparation in Zimbabwe.
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This is the Principles of Accounts notes. It is a free notes for revision.
MARGINAC \& ABSORPTION COSTING
MARSINAL COSTING
* This con be defined as cost of producing one extra/additional unit
* It makes a clear distinction between fixed and variable costs.
* Under marginal casting ofly variable production costs are allocated to the product and inckided in iniventory valuation.
* The Marginal producton cost per unit of an Hem compirizes of the following?
(a) Dired matemals
(b) Dired labour
(c) Vanable Production averneads.
* The manginal cost of sules umally consit of the inarginal cost of Producing adjusted for inventory movements plus doer variable selling overheads.
* Cloing inventories are valued at marginal production cost, i. 6 variable costs.
* Riced cost are period costs
* Cast of sales does not incluide a shore of fixed assets.
HOKI TO CALCULATE CIOSING INVENTORY
$\frac{\text { Closing Units }}{\text { Total units Produced }} \times$ Direct Prodection Cost per unit
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