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An Insight Into the Two Costing Technique: Absorption Costing and Marginal Costing

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  • Mariam Nawaz

    (Hailey College of Commerce University of the Punjab, Lahore 118-Jehanzeb Block, Allama Iqbal Town, Lahore, Pakistan)

Abstract

This paper will investigate the controversy that is innate between the two costing techniques; Absorption Costing and Marginal Costing and would throw light on which costing technique better serves its purpose in helping management for decision making process and if Marginal Costing technique is concluded as better technique then why it should not be used for external reporting purpose. This paper will only crystallize and highlight the issues descriptively and will not resolve the issues that are inherent between the two costing techniques. The unique thing about this paper is that it is in favor of treating fixed cost as product cost that is it is supporting the advocates of Absorption Costing Technique but it is against to consider profit as a function of production rather it believes that profit should only be considered as function of sales for stock valuation and to help management in decision making process that is, regarding this point it is supporting advocates of Marginal Costing.

Suggested Citation

  • Mariam Nawaz, 2013. "An Insight Into the Two Costing Technique: Absorption Costing and Marginal Costing," BRAND. Broad Research in Accounting, Negotiation, and Distribution, EduSoft Publishing, vol. 4(1), pages 48-61, March.
    • Handle: RePEc:bra:journl:v:3:y:2012:i:3:p:48-61
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    References listed on IDEAS

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    1. Paul L. Posner, 2010. "Mandates: Fiscal Accountability Issues," OECD Journal on Budgeting, OECD Publishing, vol. 10(3), pages 1-22.
    2. Feng, Li & Figlio, David & Sass, Tim, 2018. "School accountability and teacher mobility," Journal of Urban Economics, Elsevier, vol. 103(C), pages 1-17.
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    Cited by:

    1. Maria Isabel Pedro & Joao Cancio Martins & José António Filipe, 2018. "Competing globally with cost accounting: a case study," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 8(2), pages 1412-1412.

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