NAME ROLL NOBORICHA JATIN 19AJUDIYA RAVI 03JADEJA JAYRAJ 49JADEJA HARDEV 48KORAT RINKESH 78
1. Introduction2. Meaning of marginal cost3. Meaning of marginal costing4. Characteristics of marginal costing
It divides the cost The costs are Fixed & Variable
Marginal cost distinguishes between fixed costs and variable costs as convention ally classified
Definition of marginal costingMarginal costing defined as under:‘the accounting system in which variable costs are charged to costunits and the fixed costs of the period are written-off in full againstthe aggregate contribution. Its special value is in decision making’.
1. The cost is ascertained on the basis of variable cost only.2. The cost is presented in such a manner that it helps the management in taking important decisions.3. The stock of finished goods and work-in –progress are valued on the basis of marginal cost only.
For ascertainment of profit, a sepicial type of profit & loss accouunt is prepared whick is known as “marginal “profit and loss accouunt. Selling price is determined on the basis of marginal cost plus countribution. countribution = Selling price – variable price. Break-even analysis is one of part of the marginal costing system. In order to find out the profitability of various departments or Products, countribution available from sales is compared.