Differential costing and Marginal costing

Differential costing and marginal costing are two closely related costing techniques used in managerial accounting to analyze and make decisions about a company's costs and profitability. While they have similarities, they also have some key differences:

1. Scope:

   • Differential Costing: This approach focuses on the differences in costs between two or more alternative courses of action or decision choices. It helps in making decisions by comparing the incremental (additional) costs and benefits of different options.
   • Marginal Costing: Marginal costing primarily deals with the classification of costs into fixed and variable components. It concentrates on the behavior of costs concerning changes in production or sales levels.
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