Difference Between Marginal Costing and Differential Costing:
1. Marginal cost is a unit concept and applies to output per unit basis. Whereas Differential cost is a total concept and applies to a fixed additional quantity of output.
2. Marginal costing is presented by showing contribution per unit and fixed cost as a total amount. Whereas Differential costs are presented in totals in both formats – i.e. under marginal cost as well as absorption cost techniques.
3. Product cost under differential cost analysis may contain fixed costs, which will not be so under marginal costing.
4. Marginal Cost can be incorporated in the accounting system but Differential cost is determined separately from the analysis of accounting records.
5. In Marginal Costing Managerial Decisions are based mainly on Contribution. But in Differential Costing Differential Costs are compared with incremental or decremental revenues for evaluating managerial decisions.