Marginal costing and marginal cost, Cost Accounting

Assignment Help:

Marginal Costing and Marginal Cost

Marginal Costing is an optionally method of costing to absorption costing , In marginal costing, merely variable costs are charged like a cost of sale and a contribution is calculated that is sales revenue minus the variable cost of sales. Closing stocks of work in progress or finished goods are valued on marginal or variable production cost.  Fixed costs are treated like a period cost, and are charged in complete to the loss and profit account of the accounting period whether they are incurred.

Marginal Cost is the cost of a unit of a service or product that would be avoided if such unit were not provided or produced. The marginal production cost per unit of an item generally consists of the given terms:

a. Direct materials,

b. Variable production overheads.

c. Direct labour,

Contribution is the dissimilarity between marginal cost and the sales value of sales. Contribution is of fundamental in marginal costing, and the term 'contribution' is actually short for 'contribution towards covering fixed overheads and creating a profit'.


Related Discussions:- Marginal costing and marginal cost

Absorption costing, Absorption Costing, Marginal Cost and Marginal Costing ...

Absorption Costing, Marginal Cost and Marginal Costing Absorption costing is most often utilized for routine profit reporting and must be utilized for financial accounting rea

Utility of break even point in managerial decision making, UTILITY OF BREAK...

UTILITY OF BREAK EVEN POINT IN MANAGERIAL DECISION MAKING 1. It assists in determination of sales mix 2. It assists in exploring new markets 3. It assists in deciding abo

Integrated ledger system, Integrated Ledger System An integrated accou...

Integrated Ledger System An integrated account ledger system, which has a number of features that may be viewed as preferable to the interlocking ledger system. In present dec

Use account analysis to determine fixed cost, Reef Office Supplies is inter...

Reef Office Supplies is interested in estimating the cost involved in hiring new employees. The following information is available regarding the costs of operating the Human Resour

Rvu methodology, Assume that a primary care physician practice performs onl...

Assume that a primary care physician practice performs only physical examinations.  However, there are three levels of examinations I, II, III - that vary in depth and complexity.

Depreciation, This is the amount charged due to the usage and passage of ti...

This is the amount charged due to the usage and passage of time. Fixed assets are utilized for earning revenue. Thus, a decrease in their value is considered to be the operational

Contract costing, format of contractee account and an example

format of contractee account and an example

Income received in advance, This is the income received but not earned thro...

This is the income received but not earned throughout the accounting period. Conversely, this is the income for those services are to be rendered in future. Such income is deducted

Market-based transfer price optimal, Under what conditions is a market-base...

Under what conditions is a market-based transfer price optimal?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd