Marginal Costing for B Com students

1. MARGINAL COSTING
for t.y.b.com students

2. COST
VARIABLE COST SEMI VARIABLE COST Fixed cost
DEPENDS ON PRODUCTION DOES NOT DEDEPENDS ON production
PARTLY FIXED And partly variable
 Direct material
 Direct Labour
 Direct expenses
 Electric bill
 Telephone bill
 Rent

3. “Marginal costing is technique to estimate
incremental cost for incremental
production”

4. INCOME STATEMENT
Particulars Amount
Sales Xx
(-) Variable cost (x)
Contribution Xx
(-) Fixed cost (x)
Net Profit Xx

5.  Profit/Volume Ratio = Contribution
(P/V) Sales
 Break even Point (UNITS) = fixed cost .
Contribution Per unit
 Break even Point (Rs.) = fixed cost
P/V Ratio
 Estimated Sales (Units) = fixed cost + Expected Profit
Contribution Per unit

6. Estimated Sales (Rs.) = fixed cost + Expected Profit
P/V Ratio
 Marginal of safety (Units) = Es (units) – B.E.P (Units)
Marginal of safety (Rs.) = Es (Rs.) – B.E.P (Rs.)
Marginal of safety (Rs.) = Net Profit
P/V Ratio
 P/V Ratio = Different in profit
Different in sales