Q9. What are Techniques or Types of Costing?
Ans. Various techniques of Costing are as follows:
- Uniform Costing: When a number firms in an industry agree among themselves to follow the same system of Costing in detail, adopting common Technology for various items and processes, they are said to follow of uniform costing.
- Marginal Costing: Marginal costing means the amount at any given volume of output by which aggregate cost are changed if the volume of output is increased by one unit. The ascertainment of marginal cost and of the effect on profit of change in the volume or type of output by differentiating between fixed and variable cost.
- Standard Costing: It is a cost ascertainment and cost control technique. In such costing, cost is predetermined and then actual results are compared with predetermined result to measures variance to take corrective action.
- Historical Costing: In such costing, cost is recorded after it is incurred. Show in such technique, only actual cost is recorded. It has limited use in costing.
- Direct Costing: When all direct expenses are charged only leaving all indirect cost, such method is called direct costing.
- Absorption Costing: When all cost is charged to production and total cost is absorbed on cost unit, it is called absorption costing.