Need for Marginal Costing

Let us see why marginal costing is required:

● Variable cost per unit remains constant; any increase or decrease in production changes the total cost of output.

● Total fixed cost remains unchanged up to a certain level of production and does not vary with increase or decrease in production. It means the fixed cost remains constant in terms of total cost.

● Fixed expenses exclude from the total cost in marginal costing technique and provide us the same cost per unit up to a certain level of production.