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 Smiths have two children who live with them: Sandy and Judy. Both are full-time students. Sandy is an accomplished singer and made $4,200 during the year performing at special

The following is a summary of a cash book for the year ended 31 April 2012 Payments                              $              Receipts                                    $

Behavioural Aspects of Standards Budgets and Standards rely heavily on the people who have to work to meet them. Since the detailed nature of standard costing and its involvem

Q. What are the advantages and disadvantages of free float? Advantages: It is one of the most suitable ER regimes for transitional countries that experience external shocks l

A retailer knows the annual demand for one of its product is 100,000 units, the ordering costs are £25 per order and the average carrying cost per unit is 35 pence. You are require

distinguish between bin card and store ledgre

Bakeson Bearings Ltd is preparing to submit a bid for a bearings order.  Janet Lake,  CEO of the Manufacturing Division, has asked Jason Docker, the management accountant, to prepa

You are assisting the accountant on the preparation of the final accounts of a business with a year-end of 31 December. A trial balance has been drawn up and a suspense account ope

Purchase of office supplies.

ADVANTAGES OF COST ACCOUNTING 1.         It helps in efficient decision making. 2.         It assists in cost drop. 3.         It is useful in obsession of selling price