Youth Involvement in an Innovative Coconut Value Chain by Mwalimu Menza
Marginal costing Accountancy
1. MARGINAL COSTING
Cost & Profit Statement
PARTICULARS UNITS PER UNIT
Sales XXX XX
Less : VARIABLE COST XXX XX
CONTRIBUTION XXX XX
Less : FIXED COST XXX
PROFIT XXX
2. 1) CONTRIBUTION :
Contributes towards recovering fixed
cost and th contributes t earn profit.
t d then t ib t to fit
a) CONTRIBUTION =
Sales – Variable Cost.
Cost
b) CO
) CONTRIBUTION =O
Fixed Cost + Profit.
3. 2) P/V RATIO
Rate at which profit is earned on
additional units.
A) Contribution p.u
pu
X 100
Sales p u
p.u
Or
B) Contribution
X 100
Sales
Or
C) Diff. In profit
X 100
Diff. In sales
4. TOTAL SALES
BEP SALES MOS SALES
[Recovers Fixed Cost. [Earns Profit]
No Profit No Loss]
]
5. 3) BREAK EVEN POINT SALES :-
Neither profit is earned nor loss is incurred. Cost
and revenue are equal .
a) BEP SALES (Units) =
Fixed Cost
Contribution p.u
pu
b) BEP SALES (Value) =
Fixed Cost Fixed Cost
X Sales p.u. Or X Sales
Contribution p.u Contribution
Or
Fixed Cost
P/V Ratio
6. 4) MARGIN OF SAFETY SALES :
Sales beyond break even point sales.
Profit is earned only due to MOS Sales.
Profit
a) MOS SALES (
) (Units) =
)
Contribution Per Unit
Profit
b) MOS SALES (Value) =
(V l ) × S l p.u. OR
Sales
Contribution Per Unit
Profit
2. × Sales OR
Contribution
Profit
3.
P/V RATIO
c) MOS SALES (U/V) = Actual Sales BEP Sales
(units/value) (units/value)
7. 5) DESIRED SALES :-
Sales whereby desired profit is earned
a) DESIRED SALES (Units) =
(Fixed Cost + Desired Profit)
Contribution Per Unit
b) DESIRED SALES (Value) =
(Fixed Cost + Desired Profit) Sales p u
p.u.
1. ×
Contribution Per Unit Or
2.
(Fixed C t D i d P fit)
(Fi d Cost + Desired Profit) Sales
Contribution ×
Or
3.
(Fixed Cost + Desired Profit)
P/V Ratio
8. TYPES OF PROBLEMS :
1. Formula based problems
1F l b d bl
2. Problems based on Best sales mix.
Whichever sales mix gives maximum
contribution is the best sales mix
mix.
3. Problems based on MERGER of
Plants / Factories
Merge the plants / factories
bringing them to a common
capacity level.
9. 4. Problems with 2 sales & 2 Profit figures.
a) First find out P/V ratio as
Diff.
Diff In profit
X 100
Diff. In sales
b) Using P/V ratio =
Contribution
X 100
Sales
Find out Contribution.
C) Using Contribution find out fixed cost as
Contribution = Fixed Cost + Profit.