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Presented by

AnandSingh Roll No.03

Presented to

Dr.RamachandranNadarVANCED COST ACCONT!N"

CO#. PART $ ! % SE#ESTER !!

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#EAN!N"

Marginal costing means the ascertainment ofmarginal costs and of

the eect on prot of changes in volume of output bydierentiating between xed and variable costs.

Not a method of costingTechniue of controlling

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&eat'res

!lements of cost are dierentiated

"nly the variable or marginal cost is consideredwhile calculating

product cost.

#toc$ of nished products and wor$%in%progress arevalued at variable cost.

&rices are based on marginal cost plus contribution.

't is a techniue of cost recording and cost reporting.

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ADVANTA"ES

(onstant in nature

#implied overhead treatment

)acilitates control

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(!#!TA!ONS

*reater emphasis on sales

+ess eective in capital intensiveindustry

,seful only for short%term assessment

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CONCEPT O&

PRO&!T&rot is $nown as -Net Margin. Net Margin is

calculated after deducting xed cost from totalcontribution. &rot is an excess of contribution overxed cost.

&rot / (ontribution 0

)ixed (ost

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CONTR!)T!ON

( / # 0 1"2

( / ) 3 & or 4%+5

(ontribution is the excess of selling priceover variable costs. 't is $nown as contributionbecause it contributes towards recovery of the xedcosts and prots.

(ontribution is not prot. 't covers xed costand the balance left out is prot.

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T*AN+ ,O-