Page 21 - P1 Integrated Workbook STUDENT 2018 - Copy
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Traditional costing
6.2 Using marginal costing
Add a mark up to the variable production cost:
Selling price = Marginal cost per unit × (1 + mark-up percentage)
Key advantages:
useful for incremental orders
avoids arbitrary overhead allocations.
Key disadvantages:
ignores customers and competitors
doesn’t cover all costs in the long run.
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