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What is cost behavior oriented approach.

06 December 2013

Hello,
Which of the following is a cost behavior oriented approach to production costing?
(a) Absorption costing
(b) Marginal costing
(c) Process costing
(d) Job order costing
which option is right and why? ? Please explain also......Regards and Thanks.

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2 Replies

Ashok (Industry) (416 Points)
Replied 06 December 2013

a. absorption costing

cost behaviour refers to the analysis of total costs as variable and fixed costs. Variable cost remain constant per unit while fixed costs remain constant in total. In absorption costing, variable and fixed manufacturing costs are added to the cost of inventory. The fixed manufacturing costs may be estimated (budgeted as fixed overhead per unit). Marginal costing refers only to the incremental costs, process and job costing apply to different industries.

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