Tag Archives | Marginal Costing

Managerial Problems and Marginal Costing

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 […]

Profit Volume Ratio (With Formula and Calculation)

After reading this article you will learn about Profit-Volume Ratio. The Profit/volume ratio, which is also called the ‘contribution ratio’ or ‘marginal ratio’, expresses the relation of contribution to sales and can be expressed as under: P/V Ratio = Contribution/Sales Since Contribution = Sales – Variable Cost = Fixed Cost + Profit, P/V ratio can […]

Marginal Costing: Meaning, Characteristics and Assumptions

After reading this article you will learn about Marginal Costing:- 1. Meaning of Marginal Costing 2. Basic Characteristics of Marginal Costing 3. Assumptions 4. Advantages 5. Limitations. Concept: Meaning of Marginal Costing Basic Characteristics of Marginal Costing Assumptions of Marginal Costing Advantages of Marginal Costing Limitations of Marginal Costing 1. Meaning of Marginal Costing: The […]

Calculating Contribution and Marginal Costing

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 […]

Marginal Costing: Meaning, Need and Advantages

In this article we will discuss about Marginal Costing:- 1. Meaning of Marginal Costing 2. Need for Marginal Costing 3. Ascertainment of Profit 4. Features 5. Advantages 6. Limitations. Contents: Meaning of Marginal Costing Need for Marginal Costing Ascertainment of Profit under Marginal Costing Features of Marginal Costing Advantages of Marginal Costing Limitations of Marginal […]

Top 4 Applications of Marginal Costing | Cost Accounting

The following points highlight the top four applications of marginal costing. The applications are: 1. Cost Control 2. Profit Planning 3. Evaluation of Performance 4. Decision Making. Marginal Costing: Application # 1. Cost Control: Marginal costing divides the total cost into fixed and variable cost. Fixed cost can be controlled by the top management and […]

11 Main Areas of Marginal Costing | Cost Accounting

The following points highlight the eleven main areas of marginal costing. The areas are: 1. Fixation of Selling Prices 2. Key Factor 3. Make or Buy Decision 4. Selection of a Suitable Product Mix 5. Effect of Change in Sales Price 6. Maintaining a Desired Level of Profits 7. Alternative Methods of Production 8. Cost […]

Break-Even Analysis | Cost Accountancy

In this article we will discuss about:- 1. Introduction to Break-Even Analysis 2. Margin of Safety 3. Chart 4. Concept of Contribution. Introduction to Break-Even Analysis: The study of cost-volume-profit relationship is often referred to as ‘break-even analysis’. The term ‘break-even analysis’ is interpreted in narrow as well as broad sense. In its narrow sense, […]

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