Marginal Costing
Marginal costing is used by managers to make decisions in the short-term when costs are fixed and variable. In the long-run, all costs are variable and hence no application of marginal costing. Variable costs are those that change proportionately with change in production. They include costs like electricity, labor and raw materials. Fixed costs are those that remain constant irrespective of the level of production. An example of fixed cost is rental charges. Marginal costing is very useful in managerial decision making process as it is used to ascertain the level of sales, costs and profits in the business. ...