Marginal Costing

Absorption Costing
Absorption costing, also known as full absorption costing or total absorption costing, is a cost accounting method where all overheads of an organization are charged to production by means of absorption.
Contribution Income Statement
A financial statement that presents income using the marginal costing layout, emphasizing the distinction between variable and fixed costs, and aids in understanding the profitability of products based on contribution margins.
Contribution Margin
The contribution margin is a key metric in marginal-costing systems, helping organizations determine the additional profit earned when production surpasses the breakeven point.
Cost Assignment (Cost Attribution)
Cost Assignment or Cost Attribution refers to the procedures by which direct or indirect costs are charged to or made the responsibility of particular cost centers, and ultimately charged to the products manufactured or services provided by the organization.
Costing Methods
Techniques and procedures in cost accounting and management accounting to obtain the costs of services, products, processes, and cost centers for decision making, planning, and control.
Decision Making in Accounting
The act of deciding between alternative courses of action. In the running of a business, accounting information and techniques are used to facilitate decision making, employing models like discounted cash flow, critical-path analysis, marginal costing, and breakeven analysis.
Direct Costing
Direct costing, also known as marginal costing, is a crucial accounting technique that outlines the variable costs incurred in the production process. This method focuses on the costs directly tied to the production of goods and services.
Full Costing Method
The Full Costing Method is an extensive approach in accounting that includes all the costs associated with producing a product or service, encompassing both direct costs and overheads allocated to the cost unit.
Marginal Costing
A costing and decision-making technique that charges only the marginal costs to the cost units and treats the fixed costs as a lump sum, deducting from the total contribution to obtain the profit or loss for the period.
Standard Marginal Costing
Standard Marginal Costing involves the determination and control of predetermined standards for marginal costs and income that are used for products and operations, with periodic comparisons to actual outcomes to identify and analyze variances.
Variable Costing
Variable costing, also known as direct or marginal costing, is a managerial accounting method where only variable costs are included in the cost of a product.

Accounting Terms Lexicon

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