Which TWO of the following statements concerning marginal costing systems are true? Such systems value finished goods at the variable cost of production. Such systems write off fixed overheads to the income statement in the period in which they were incurred. Such systems incorporate fixed overheads into the value of closing inventory. Such systems necessitate the calculation of under and over-absorbed overheads

Question

Which TWO of the following statements concerning marginal costing systems are true? Such systems value finished goods at the variable cost of production. Such systems write off fixed overheads to the income statement in the period in which they were incurred. Such systems incorporate fixed overheads into the value of closing inventory. Such systems necessitate the calculation of under and over-absorbed overheads

Answer 1

The correct statements are:* **Such systems value finished goods at the variable cost of production.** Marginal costing only includes variable costs in the valuation of inventory. Fixed costs are treated as period costs.* **Such systems write off fixed overheads to the income statement in the period in which they were incurred.** Fixed overheads are considered period costs in marginal costing and are expensed in the period they are incurred, not allocated to products.

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