As by the definition,
(Absolute-marginal) costing = [( fixed+variable)-variable] overheads = fixed overheads.
Above mathematics suggests deficit on recovery of fixed overheads in marginal costing than the absolute one revealing high stock of uncovered inventories to be adjusted in the next year making credit balance in the balance sheet through adjusted profit & loss a/c.
As a consequence, there might be a deficit in working capital as the time passes on.
(Absolute-marginal) costing = [( fixed+variable)-variable] overheads = fixed overheads.
Above mathematics suggests deficit on recovery of fixed overheads in marginal costing than the absolute one revealing high stock of uncovered inventories to be adjusted in the next year making credit balance in the balance sheet through adjusted profit & loss a/c.
As a consequence, there might be a deficit in working capital as the time passes on.
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