1) Marginal Costing a) It  values each unit of inventory at the variable production cost require to make each unit. b) It  does not value each unit of inventory at the variable production cost require to make each unit. c) It measures the difference between the sales price of a unit and the variable costs of makingand selling that unit. d) It  does not value each unit of inventory at the variable production cost require to make each unit. 2) Contribution a) It measures the difference between the sales price of a unit and the variable costs of making and selling that unit. b) It  values each unit of inventory at the variable production cost require to make each unit. c) The costing that does not value units at variable cost plus fixed production overheads absorbed using apre-determined absorption rate. d) It   does not value each unit of inventory at the variable production cost require to make each unit. 3) Absoprtion Costing a) It  values each unit of inventory at the variable production cost require to make each unit. b) It measures the difference between the sales price of a unit and the variable costs of making and selling that unit. c) It  does not value each unit of inventory at the variable production cost require to make each unit. d) The costing that values units at variable cost plus fixed production overheads absorbed using apre-determined absorption rate. 4) What are the ADVANTAGES OF MARGINAL COSTING? a) Marginal costing avoids needing to allocate, apportion, re-apportion and absorb fixed overheads. b) Fixed costs logically relate to time and so are charged as period costs. c) Profit figures are more consistent with fluctuating sales. d) Used for short term decision-making e) Used for long term decision-making f) Profit figures are not more consistent with fluctuating sales.

Marginal Costing vs. Absorption Costing - Management Accounting - Elements of Costing - AAT 2 & 3

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