Describe the Relative Advantages and Disadvantages of Variable (Marginal) Costing

question 34

Essay

Describe the relative advantages and disadvantages of variable (marginal) costing and absorption costing

---

Definitions:

Incremental Cash Flow

The additional cash flow an organization receives from taking on a new project, defined as the difference between the project's cash inflows and outflows.

Lease Payments

Regular payments made by a lessee to a lessor for the use of an asset, typically over the duration of a lease agreement.

CCA Class

Categories under the Capital Cost Allowance system in Canada, used to determine the depreciation rate for tax purposes on assets.

Net Advantage to Leasing

The net benefit that results from leasing an asset versus purchasing it outright, considering all financial aspects.