In this article we will discuss about:- 1. Meaning of Marginal Costing 2. Contribution of Marginal Costing 3. Features of Marginal Costing 4. Arguments in Favour of Marginal Costing 5. Criticism against Marginal Costing 6. Absorption Costing and Marginal Costing: Impact on Profit. Meaning of Marginal Costing: Marginal costing is a principle whereby variable costs are charged to cost units [...]
Contribution is the difference between sales and variable cost or marginal cost of sales. It may also be defined as the excess of selling price over variable cost per unit. Contribution is also known as Contribution Margin or Gross Margin. Contribution being the excess of sales over variable cost is the amount that is contributed towards fixed expenses and profit. [...]
This article throws light upon the ten major managerial problems in application of marginal costing. The problems are: 1. Pricing Decisions 2. Profit Planning and Maintaining a Desired Level of Profit 3. Make or Buy Decisions 4. Problem of Key 5. Selection of a Suitable or Profitable Sales Mix 6. Effect of Changes in Sales Price 7. Alternative Methods of [...]