22.14 - Comparison: Marginal Costing vs Absorption Costing
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Practice Questions
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What costs are included in marginal costing?
💡 Hint: Think about what 'marginal' means in this context.
Which costing method is used for external reporting?
💡 Hint: Consider what standards companies must follow.
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Interactive Quizzes
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What costs are assigned to products in marginal costing?
💡 Hint: Remember, marginal means 'additional' or 'small'.
Does absorption costing include fixed costs in product pricing?
💡 Hint: Think about what absorption means.
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Challenge Problems
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A tech company produces a software package at a variable cost of ₹500 per unit and has fixed costs of ₹30,000. If they sell each unit for ₹900, calculate the break-even point in units using both methods, and discuss the advantages or disadvantages of each.
💡 Hint: Focus on how each method treats fixed costs in the break-even calculation.
Evaluate a scenario where a company experiences a sudden increase in production volume. Discuss how both costing methods would represent changes in profit and inventory levels.
💡 Hint: Consider fixed costs' effect on profitability during different production levels.
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