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Query related to as 2
Although being a technique for decision making and a technique which shows correct profit why AS 2 does not allow MARGINAL COSTING to be used for accounting purpose?
Replies (1)
As you just said, it shows CORRECT PROFIT and not CORRECT COST! :)
Marginal Costing ignores the Fixed Cost Component, which FORMS part of the cost of inventory, hence, not allowed.
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