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
At the break-even point,A higher contribution to sales ratio implies thatIf the margin of safety is 21.875 per cent of sales, break-even sales are what share of saMargin of safety isFixed cost is 1,50,000 and contribution per unit is 15. Units needed to earn a profit of 2Fixed cost is 1,50,000 and contribution per unit is 15. The break-even point in units isSelling price is 30 per unit and variable cost is 15 per unit. The P/V ratio isContribution is defined as