This document provides an introduction to the concept of marginal costing. It defines marginal costing as accounting that distinguishes between fixed and variable costs, charging variable costs to cost units and writing off fixed costs against the total contribution. The document outlines the key features, advantages, and disadvantages of marginal costing. It also provides an example of calculating the break-even point and profit-volume ratio of a company called NHC Foods Ltd. The document concludes that marginal costing supports managerial decision making.

1. BAL BHARTHI’s M J PANCHOLIA COLLEGE OF COMMERECE

2. SUBMITTED TO:- PROF. AARTI CHIKALTOPIC:- MARGINAL COSTING

3. NAME ROLLNOZEEL MATHKIYA 13DHARMIK MEHTA 14SEJAL MEHTA 15HIRNI MEWADA 16VARUN MODI 17SIDDHI NALAWADE 18MEMBERS PRESENTING

4. Introduction Definition Features Advantages Disadvantages Break Even Point Profit Volume Ratio CONTENTS

5. NHC Food Ltd. Practical BEP Example Practical PV Ratio Example Conclusion CONTI….

6. It divides the cost

7. The costs are Fixed & VariableINTRODUCTON

8. Marginal costing distinguishes between fixed costs and variable costs as convention ally classified Marginal costing is formally defined as:‘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’.DEFINITION

9. The term ‘contribution’ mentioned in the formal definition is the term given to the difference between Sales and Marginal cost. Thus MARGINAL COST =VARIABLE COST DIRECT LABOUR+DIRECT MATERIAL+DIRECT EXPENSE+VARIABLE OVERHEADS CONTI…..

10. Cost Classification

11. Stock Valuation

12. Marginal Contribution FEATURES

13. Cost Control

14. Simplicity

15. Short – Term Profit Planning

16. Maximum Return To Business ADVANTAGES

17. Misleading Results

18. Avoids Semi – Variable Costs

19. Distorted Picture Of Profits

20. Ignorance Of Time Factor DISADVANTAGES

21. The break even point for a business firm shows the volume of sales at which the firm just breaks–even, with total revenue equal to total cost. Break even point shows the price at which the firm makes zero profits, with revenues just covering the costs. BREAK EVEN POINT

22. UNITS SALES (-) VARIABLE COST CONTRIBUTION (-) FIXED COST PROFIT OR LOSS FORMULA

23. The Profit Volume (PV) Ratio is the ratio of Contribution over Sales. It measures the Profitability of the firm and is one of the important ratios for computing profitabilty.P V RATIO