applications of marginal costing

applications of marginal costing

1. APPLICATIONS OF MARGINAL COSTING BY, JABNA M.J

2. MARGINAL COSTING -INTRODUCTION Variable costing or direct costing Marginal costing is defined by CIMA London as ‘the accounting system in which variable cost are charged to cost units and fixed costs of the period are written off in full, against the aggregate contribution. Its special value in decision making’. Marginal cost is the additional cost of producing additional unit.

3. APPLICATIONS Marginal costing technique used for providing assistance to the management in vital decision making, especially in short term decisions where fixed costs are excluded. There are mainly four applications of marginal costing:- Cost control Profit planning Performance evaluation Decision making:

4. Marginal cost helps in short term decisions like: Fixation of selling price Make or buy decisions Selection of good product mix Effect of changes in sales price

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