In what scenarios would a company prefer marginal costing over absorption costing?

Marginal Costing vs. Absorption Costing:

Marginal costing focuses on variable costs associated with producing additional units, while fixed overhead costs are treated as period costs and are not allocated to products. In contrast, absorption costing assigns both variable and fixed manufacturing costs to products, resulting in a higher cost per unit compared to marginal costing when inventory levels increase. Marginal costing is preferred for short-term decision-making, such as pricing and product mix decisions, as it provides a clearer picture of contribution margin and profitability at different activity levels.