Marginal Costing and Decision-Making

Abstract

Marginal costing is a very valuable decision-making technique. It helps management to set prices, compare alternative production methods, set production activity levels, close production lines and choose which of a range of potential products to manufacture. Moreover, the principles of marginal costing can be easily applied to straightforward problems, and although there are some difficulties and limitations to marginal costing, it is nevertheless a very useful technique.