Marginal costing is the technique which shows the differentiation between fixed cost and variable cost which eventually shows the effect on the profit of changes in volume. Marginal costing is also known as direct costing and it deals with direct costs only. Marginal costing is very important in decision making activities of the company because it gives a short term survival costing technique particularly in very competitive environment. In this way the company can determine the minimum costs which can reduce the losses of the company. Companies can make important decisions of the company about cost, price and volume on the basis of the analysis of marginal costing. Moreover, marginal costing focuses on the controllable aspects of the business and it helps in lowering the fixed and variable costs of the company.
