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Advantages of marginal costing.
1. Marginal costing is make it easier for determining and control the cost of production.
2. It is very simple in calculation and easy to understand.
3. Since we consider variable cost only in marginal costing, per unit cost will remaining same.
4. Marginal costing can help in short term profit planning.
5. Marginal costing is using for internal reporting purpose.
Advantages of Absorption costing.
1. Absorption costing is GAAP complaint and it is using for external reporting purpose.
2. Since absorption costing is considered full cost, it can be used for product pricing.
3. It is giving more clear picture about overall profitability.
