marginal costing basics

Views:
 
Category: Education
     
 

Presentation Description

marginal costing basics

Comments

Presentation Transcript

MARGINALCOSTING : 

MARGINALCOSTING BY: ASHISH AGGARWAL FAYOL HOUSE 10101028HARYANA SCHOOL OF BUSINESSGJUS&T, HISSAR

Marginal Costing : 

Marginal Costing Meaning of Marginal cost – Marginal cost means that increase of total cost witch happens by increased or decreased by one unit in the production volume. Example – Unit Total cost Rs. Marginal cost Rs. 0 500 (Fixed cost) - 1 800 300 2 1100 600 3 1400 900 Marginal costing is a variable cost.

CONCEPT : 

CONCEPT Prime cost Fixed Cost Variable Cost Contribution Profit Loss Break even point concept

Basic Equation:Variable Cost = Direct Materials + Direct Labor + Direct ExpensesVariable cost per unit = Difference in cost / Difference in Activity levelVariable Cost is also called as Marginal Cost. : 

Basic Equation:Variable Cost = Direct Materials + Direct Labor + Direct ExpensesVariable cost per unit = Difference in cost / Difference in Activity levelVariable Cost is also called as Marginal Cost.

Marginal Cost Equation:Sales (S) = Variable Cost (V) + Fixed Expenses (F) + or – Profit (P) / Loss (L)S = SalesV = Variable CostF = Fixed Expenses+P = Profit-P = LossSales - Variable Cost = Fixed Expenses + or – Profit / LossS - V = F + or – P : 

Marginal Cost Equation:Sales (S) = Variable Cost (V) + Fixed Expenses (F) + or – Profit (P) / Loss (L)S = SalesV = Variable CostF = Fixed Expenses+P = Profit-P = LossSales - Variable Cost = Fixed Expenses + or – Profit / LossS - V = F + or – P

Slide 6: 

Contribution: Sales – Variable Cost = Contribution = S - V Fixed Expenses + or – Profit / Loss = Contribution = F + or – P In simple form, S – V = F + or – P

Slide 7: 

Break Even Point: A business is said to break even when its total sales are equal to its total costs. It is a point where There is no profit or no loss. Contribution is equal to Fixed Expenses.

Assumptions : 

Assumptions Fixed cost remains unchanged. Per unit SP remains constant. Per unit variable cost of a product remains constant.

How To Calculate? : 

How To Calculate? Equation Method High and low points Method Least square Analytical method

Use in Business decision making : 

Use in Business decision making Make OR Buy decision Change in product Mix Pricing decision

Slide 11: 


authorStream Live Help