Marginal Costing – I am looking for an explanation of the concept of marginal costing and how it is used in economics and accounting.
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Marginal costing is a method that looks at the change in total production cost that occurs when one additional unit is produced. It is calculated by dividing the change in production costs by the change in quantity. This analysis helps organizations determine their production levels and profitability.
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In accounting, marginal costing helps differentiate between fixed costs and variable costs. It allows managers to make informed decisions about production levels, pricing, and resource allocation. By understanding the impact of changes in output on costs and profits, organizations can optimize their operations and maximize their profitability.
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