#marginalcosting #variablecost #directcost #costing #costaccounting #managementaccounting

Added: 2026-06-03

[00:00:00]Hi. Marginal costing is also known as variable costing or direct costing.

[00:00:07]This method is used for the calculating the cost of the product. Under this method of calculation, only variable manufacturing costs are included in the cost of the product. It means direct material cost, direct labor cost, and variable manufacturing overhead costs are only included. In this method, fixed manufacturing overhead costs are not included because they are treated as a periodic cost and charged directly to the profit and loss account.

[00:00:36]This method is very much useful in decision making, profit planning, and break-even analysis.

[00:00:44]And coming to the international accounting standards and IFRS and US GAAP, this method is not allowed to use for the inventory valuation and financial reporting.

[00:00:55]Thank you.