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
Important Points Regarding to the Variance Analysis Variance reporting concentrates on both with favourable and unfavourable variances. Normally unfavourable variances are pun

High Bhd acquired shares in two other companies as follows: Additional information: i) Goodwill on acquisition of Swift was impaired by RM80,000 as

These balances for a company x Raw materials $40,000 Work in process $30,000 Finished goods $60,000 for the current year the company estimated that it would work 150.000 m

Farmer Dorr figures that her fixed costs are $2,000, and the relevant portion of her total cost curve is:                                           Thousands of

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

Describe the manner in which a materials usage variance is divided into mix and yield component variances.

COST CONCEPTS / CLASSIFICATION OF COSTS 1. According to functions Administration cost / office cost Selling cost Production cost / factory cost / manufacturing c

Weighted Average Method This way is a perpetual weighted average system whereas the issue price is recalculated after one of receipt of stocks taking into accounts both money

Cost Behaviour "Profitability is only around the corner." This is a general expression in the business world; you might have heard or said this yourself only. But, the reality

British Columbia Lumber has a Raw Lumber Division and a Finished Lumber Division. The  variable costs are: 1.Raw Lumber Division: Rs. 100 per 100 board-feet of raw lumber 2.F