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MARGINAL COSTING
As per the Chartered Institute of Management Accountants, London, the phrase 'Marginal cost' means - 'the amount at every given volume of output through which aggregate costs are altered if the volume of output is decreased or increased by one unit'. Marginal costing is a method where only the variable costs are considered whereas computing the cost of a product. The fixed costs are met in opposition to the total fund arising out of the excess of selling price over entire variable cost. This fund is known as 'CONTRIBUTION' in marginal costing. As per the Chartered Insitute of Management Accountants, London, 'Marginal costing' is a method where 'only the variable costs are charged to cost units, the fixed costs attributable being written off in completely against the contribution for that period'.
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