O'Reilly logo

Accounting for Non-Accountants, 9th Edition by David Horner

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

08

Marginal costing and decision making

Introduction

In the previous chapter on absorption costing we saw that the cost of a unit of output would be assumed to include not only the physical costs associated with the production of the unit – the direct or variable costs of production – but also the costs that were either only indirectly connected with the unit or which are fixed in relation to the level of output produced. The principle of absorption costing can be useful in that it attempts to ensure that all costs are covered so that the firm can hopefully generate an overall profit. However, there are problems in using this approach to costing.

We know that the methods chosen to apportion and absorb fixed and indirect costs into cost centres ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required