Under marginal costing, fixed cost is treated as:
AProduct cost
BPeriod cost
CDirect cost
DStandard cost
Answer & Solution
Correct answer: B. Period cost
1. Marginal costing values inventory at variable cost only.
2. Fixed costs are not allocated to units; they are written off as a period cost.
3. This contrasts with absorption costing which includes fixed cost in product cost.
4. Hence fixed cost under marginal costing is a period cost.
_Source: ICAI BoS Inter Paper 3, Ch 14 "Marginal Costing", §14.1 ¶6-7_
Related questions
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