In marginal costing all fixed costs are

In marginal costing all fixed costs are

• A. Product costs
• B. Period costs
• C. Variable costs
• D. Direct costs

Answer: (B)

In marginal costing, costs are split by behavior: variable costs change with the level of output, while fixed costs stay the same regardless of how much is produced. Because fixed costs do not vary with production, they are not attached to individual units. Instead, they are treated as period costs and charged to the income statement for the period in which they are incurred. This is why all fixed costs are period costs in marginal costing. Product costs, by contrast, include only variable manufacturing costs; fixed manufacturing overhead is not included in the per-unit cost under this method.

In marginal costing, costs are split by behavior: variable costs change with the level of output, while fixed costs stay the same regardless of how much is produced. Because fixed costs do not vary with production, they are not attached to individual units. Instead, they are treated as period costs and charged to the income statement for the period in which they are incurred. This is why all fixed costs are period costs in marginal costing. Product costs, by contrast, include only variable manufacturing costs; fixed manufacturing overhead is not included in the per-unit cost under this method.