Marginal costing and marginal cost, Cost Accounting

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'.

Posted Date: 2/6/2013 12:21:04 AM | Location : United States







Related Discussions:- Marginal costing and marginal cost, Assignment Help, Ask Question on Marginal costing and marginal cost, Get Answer, Expert's Help, Marginal costing and marginal cost Discussions

Write discussion on Marginal costing and marginal cost
Your posts are moderated
Related Questions
The enhancing qualitative characteristic of understandability means that information should be understood by a those who are experts int eh interpretation of financial informat

You are considering starting a walk-in-clinic.  Your financial projections for the first year of operations are as follows: Revenues (10,000 visits) $400

Rosco Company purchased 35,000 shares of common stock of Paxton Corporation as a long-term investment for $900,000. During the year, Paxton Corporation reported net income of $300,

What are the key reasons for product cost differences among traditional costing system and ABC systems? Explain four decisions for which ABC information is useful?

#question techniques of payment under group bonus plan .

When assets are replaced during the anticipated life of the project, or at the end of the anticipated life of the project, they are sold at their pre-determined scrap values. Incom

Smith Corporation purchased an intangible asset for $110,000. Compute the second year's tax amortization. The second year would be a full year's amortization. The company estimates

Administration Costs Budget This represents the costs of all administration expenses. Every department or budget centre will be responsible for the preparation of its own bud

The principle that (1) requires revenue to be recognized at the time it is earned, (2) allows the inflow of assets associated with revenue to be in a form other than cash and (3) m