Marginal Costing
MARGINAL
COSTING
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SUBMITTED TO: SUBMITTED BY: Dr. Shashi Srivastav ABHISHEK KUMAR RAI Roll No. - 1 M.B.A. (2nd Semester) F.M.S., B.H.U.
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Example of Marginal cost:- • The of production of 1000 units of radio is Rs. 2,00,000 and that of 1001 units is Rs. 2,00,150 the Marginal cost is Rs. 150 i.e., 2,00,150-2,00,000 Definition of Marginal costing/ Variable costing:- • The Institute of Cost and Management Accountants, London, has defined Marginal costing as “the ascertainment of Marginal costs and of the effect on the profit of changes in volume or type of output by differentiating between fixed costs and variable costs” • Thus Marginal costing is a technique which is concerned with the change in the concerned with the changes in the costs and profits resulting from changes in the volume of outputs.
Characteristics of Marginal costing:- • It is a technique of analysis and presentation of costs which help management in taking many managerial decisions and is not independent system of costing such as process costing or job costing. • All the element of cost – production, administration, and selling and distribution are classified in to variable and fixed components. Even semi-variable costs are classified in to fixed and variable. • The variable costs (marginal costs) are regarded as the costs of the products. • Fixed costs are treated as
COSTING
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SUBMITTED TO: SUBMITTED BY: Dr. Shashi Srivastav ABHISHEK KUMAR RAI Roll No. - 1 M.B.A. (2nd Semester) F.M.S., B.H.U.
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Example of Marginal cost:- • The of production of 1000 units of radio is Rs. 2,00,000 and that of 1001 units is Rs. 2,00,150 the Marginal cost is Rs. 150 i.e., 2,00,150-2,00,000 Definition of Marginal costing/ Variable costing:- • The Institute of Cost and Management Accountants, London, has defined Marginal costing as “the ascertainment of Marginal costs and of the effect on the profit of changes in volume or type of output by differentiating between fixed costs and variable costs” • Thus Marginal costing is a technique which is concerned with the change in the concerned with the changes in the costs and profits resulting from changes in the volume of outputs.
Characteristics of Marginal costing:- • It is a technique of analysis and presentation of costs which help management in taking many managerial decisions and is not independent system of costing such as process costing or job costing. • All the element of cost – production, administration, and selling and distribution are classified in to variable and fixed components. Even semi-variable costs are classified in to fixed and variable. • The variable costs (marginal costs) are regarded as the costs of the products. • Fixed costs are treated as