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Marginal Costing Definition:

Marginal Costing is a costing method that includes only variable manufacturing costs–direct materials, direct labor, and variable manufacturing overhead–in unit product cost. Marginal costing is also called variable costing and direct costing.

Marginal cost of the product = Direct materials cost + Direct labor cost + Variable manufacturing overhead cost

Learn More About Marginal Or Variable Costing System:

  • What is marginal/variable/direct costing?
  • What is the purpose of using marginal costing system?
  • What are its advantages and disadvantages?
  • How does marginal costing system differs from absorption costing system?

Click here to read  articles about marginal costing system

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