Absorption Costing vs Marginal Costing | Explained with Example

In this lesson, we look at both absorption costing and marginal costing. We explain what absorption costing is, what marginal costing is, and go through a thorough example on how to calculate net profit using both the absorption costing and marginal costing.
In looking at absorption costing, we explain and go through some examples on over and under absorption of fixed production overheads.
We also look at arguments in favor of both absorption costing and marginal costing.
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[@yaseenali5842]

Your work is better then any youtuber, you are better then my class teacher, keep uploading such topics Very grateful to know about about this channel

[@Counttuts]

Thank you for the kind comment Yaseen :).

[@georgephilip1966]

@@Counttuts For over and under absorption, why didn't we consider the variable cost of r 35?

[@boitumelobonginkosikunene3547]

A whole semester struggle cleared in 32 minutes🤯...your videos always blow my mind...and still, I don't expect anything less everytime I come back for more💯👍. Thank you, you've really helped me.

[@kijeannie4317]

This really helped me understand marginal and absorption costing.... I had a mental block for years until now. Wonderfully explained .... such clarity.

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[@ambrosemutai5463]

This is one of the best explanations for costing and has helped me understand absorption and marginal costing so well

[@marcleven8477]

very well explained you are doing a better job than my uni lecturers thanks a lot keep up the good work!

[@maryamadekunle6732]

This is amazing I am a tutor and I can say I understand it way better. Thank you for breaking this in the best possible way.

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[@Counttuts]

Hello Katrina, glad that it helped. Thanks for the kind feedback.

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u've saved lots of students , thanks a lot

[@Counttuts]

You are welcome. Thank you for the kind feedback.

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After searching lots of classes Finally I found ur channel for this topic . Amazing explain all the concepts.tq soo much sir ❤️

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[@daia8404]

Thank you so much!!! I understand this more than I ever did in college

[@tatisammy9169]

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Thank you sir, crisp and clear. Much better than how my teacher in college is doing.

[@Counttuts]

Thank you for the kind feedback.

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[@barbaraedith4111]

You are such a wonderful Teacher/tutor. You are a star. I understand a lot from your video better than reading any book. Excellent. Do you have any other accounting videos? please upload more.

[@Counttuts]

Thank you Barbara, you can visit our channel for all accounting videos, and more to come.

[@hasvinvictor7146]

Best video to watch on absorption and marginal costing!!! Thank you so much @counttuts

[@ShaggyGriff96]

thank you for taking the time to do this, my understanding is now much clearer :)

[@shantelhalley6976]

Always dislike this topic but u made it simple... great job

[@davidgarvin2281]

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lectures give us hard times of learning , i thank god i found you sir 🎉🎊

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[@smartmgbachi9173]

if i dont comment i must be selfish. thank you so much for breaking down this topic. God bless you

[@Counttuts]

Thank you :) Blessings

[@lisanaindjala2278]

Thank you so much sir for teaching me this😭I’m truly grateful and you are a great lecturer!

[@wilkajohannes1003]

You are a life saver sir. Please continue doing this.

[@walterbigblue]

You stated that over absorption of overheads is deducted from the P&L and under absorption is added to the P&L. My understanding is that it should be the other way around. Under absorption of overheads are deducted from the P&L while over absorptions are added thus increasing gross profit.

[@Counttuts]

That would be incorrect actually. Follow our explanation in the lesson again to understand.

[@chiposvubure7150]

Thank you so much 🤝 Your are a good lecturer

[@chiposvubure7150]

I am looking for more videos for MAC2601 i can't find them 😢

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Simple, clear and straight to the point! Thank you!

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Wow... everything makes sense now..Thank you counttut 😁

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[@madalitsombewe9948]

Love your teaching (simply simple and clear )

[@ThomasSheriff21Chindende]

the best ever explanations

[@MrsObiako]

Thank you Sir... I have truly understood this, especially how to treat over/under absorption cost...

[@fredrick_mwaura]

This is very well articulated. Keep up the good job.

[@ronaharnischleinitz6335]

Thanks alot, was much of help.

[@JanetMong]

Thankyou so much! Well explained

[@becomingCA-SA]

you definitely got a subscriber by the wat you explained this 💯

[@biandaful]

Well explained!!!!

[@deepakkrishnakb]

Simple and nice explanation,thanks alot

[@katienelson8163]

thank you so much! this really helped me

[@tiff8831]

This was very helpful. Thanks sir

[@ryan4314]

u saved my life thank you

[@mohamedfaisal4123]

Top notch explanation.

[@MultiSinovuyo]

Thank you for this video, made such a big difference

[@baloonram4959]

That was a very good explanation, now i am ready for exams, thank you sir :D

[@chandajere9586]

This is very clear and concise.Thank you so much

[@praisemutoko3175]

Thank you soo much, that was worthwhile. Now i am confident that i understand

[@Counttuts]

You are welcome :)

[@nonkululekohlatshwayo8164]

Sir. You are simply the best

[@huisinyii4353]

i was wondering why when there is higher closing stock = profit will be higher when using absorption costing, and your example easily let me understand how it works. Thank you!

[@musondamulenga9306]

thanks a lot ,great explanation!

[@Counttuts]

You are welcome, and thank you Musonda.

[@kudsiamow3441]

Thanks a lot for explaining in details! ♥

[@alenigodwin560]

U explained well brother thank you i wish we would get more examples with opening inventory

[@ropafadzochivizhe4561]

Thank u for the presentation it really helped me especially absorption costing

[@lovehurtswhenattached92]

Thanks highly appreciated explanations on point and format easy for anyone to understand 👍 😀

[@Dan-vk7jc]

Thanks so much assisted me so much!

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Keep up the good work watching from Nigeria. Can we also suggest topics for you to teach?

[@patricklikalamu8264]

this is very helpful

[@symplytomi5178]

God bless you,you are a great lecturer!!!!

[@akankshathooti]

Thanks sir grt explanation

[@Counttuts]

Thank you. You are welcome.

[@neonmuzik8979]

thanks sir, I think this made up my preparation of an exam I ama bout have! thx again

[@Ruth-Mocheche]

nice lecture. big ups

[@louisebowa6032]

This was really helpful, thank you very much🙏🏾

[@RealHesk]

Thanks alot for your service. You've helped me

[@lucianakale1132]

Woow…….I don’t know how to thank you, I was wondering how am gonna face my exams next week

[@mulisamulovhedzi262]

Best explanatory video 🥂

[@Anele_Gcabashe]

My uni. Must start paying you please 😹❤️

[@paysonobi6548]

I enjoyed your teaching

[@yerroa.jallow4452]

thank you for the video, its really helpful.

[@danielokere3624]

Please sir how do u know when to apply the absorbed overhead formula I'm a bit confused 😔

[@chaly839]

Good lecture thank you so much. there is no problem with the way you have treated over/under absorption, my issue is on the part where you said when there is an increase in opening or closing inventory then the creation of overe/under absorption, my thinking is instead of increase in opening and closing let it be the difference between the budgeted production and the actual production.

[@mbasalamla7533]

wow 🙌🙌🙌 thank you Mr for you help now I understand clearly

[@danisabaloyi608]

Thank You, your work is amazing

[@ntcuong01ct1]

Dear Friends, I have a question: I want to setup Absorption costing of a product in year 2020. Next, I want to compare actual costing and Absorption costing in this product by month, year. How do I setup?.

[@nokwandanoks1559]

Good day can i ask why you not bringing forward the closing. Inventory to the next production of 7000 units meaning the 41000 must be the opening for the production of 7000 units than closing Inventory will be 41000

[@mikanyay]

Thank you 😊

[@aduratomibabalola9884]

Amazing lecture. cheers.

[@DaiGua]

Sir, could I know why the closing inventory in absorption costing, production of 6000&7000units is zero? It shouldn’t have 1000units? Why

[@adaeze_]

It is not zero Pay attention to the video again

[@0dawisdom478]

Under and over absorbed use to confuse me, now im fine thnx

[@patrickugwuegbu6119]

Very informative

[@sinazopreciousmtana370]

@counttuts, do you use the predetermined / actual fixed overhead cost as a period cost in marginal costing? I love your explanation sir👌

[@boineelomasupe740]

Thank you❤❤❤❤❤

[@sbohmdu2557]

it helps a lot, thanks.

[@aliakim1934]

May you please upload target costing and life cycle costing

[@karenagyeman6847]

Please what will I do if there is a variable selling,distribution and administration costs of about 20% of the sales value

[@EnertMakwale]

I thought under absorption is like an expense so we subtract it from the gross profit and the over absorption is an asset we add it to the gross profit

[@braynotieno9564]

Good work 👏 🙌 👍

[@fahimjalal2703]

Thx for making the vid 😊

[@khalifahmedmohamed7204]

Thanks ☺️☺️☺️

[@user-oe8qi8xy4x]

hey sir, why under/over absorbed overhead only included fixed production cost ,how about the variable production cost

[@bethafek6170]

Hello, what about if you bought plant and machinery, do you add it on the absorption costing?

[@paysonobi6548]

Please I need to ask some questions base on absorption and marginal costing... Been trying to do some calculations on it... But it was difficult...

[@thembekilegwala3465]

Thank you. you are amazing

[@serakwe718]

Haiii chief you are the best iyoooo I need for of ur help boss ,

[@fiifiadu-appiah335]

What if the the fixed prd cost 30000 was not given but you had the FC per unit and the closing stock? How do you find the over/under absorption..