This document provides an introduction to marginal costing. It defines marginal costing as an accounting system where only variable costs are charged to cost units and fixed costs are written off for the period. Marginal costing is useful for management decision making. It presents costs in a way that helps management make important decisions. Inventory is valued based on marginal costs. A marginal profit and loss statement is prepared to determine profit. Selling prices are based on marginal cost plus contribution. Contribution is sales price minus variable cost. Break-even analysis is part of the marginal costing system. Contribution from sales is compared to determine profitability of departments or products.

1. Wel-Come

2. GUIDED BY :- PROF. KHUSHBU MALDE

3. NAME ROLL NO
BORICHA JATIN 19
AJUDIYA RAVI 03
JADEJA JAYRAJ 49
JADEJA HARDEV 48
KORAT RINKESH 78

4. 1. Introduction
2. Meaning of marginal cost
3. Meaning of marginal costing
4. Characteristics of marginal costing

5.  It divides the cost
 The costs are Fixed & Variable

6.  Marginal cost distinguishes between fixed costs and variable
costs as convention ally classified

7. Definition of marginal costing
Marginal costing defined as under:
‘the accounting system in which variable costs are charged to cost
units and the fixed costs of the period are written-off in full against
the aggregate contribution. Its special value is in decision making’.

8. 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.

9. 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.