Features of marginal costing are as follows:
● Marginal costing is used to know the impact of variable cost on the volume of production or output.
● Break-even analysis is an integral and important part of marginal costing.
● Contribution of each product or department is a foundation to know the profitability of the product or department.
● Addition of variable cost and profit to contribution is equal to selling price.
● Marginal costing is the base of valuation of stock of finished product and work in progress.
● Fixed cost is recovered from contribution and variable cost is charged to production.
● Costs are classified on the basis of fixed and variable costs only. Semi-fixed prices are also converted either as fixed cost or as variable cost.
