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Marginal costing, as one of the tools of management accounting helps management in making certain decisions. It provides management with information regarding the behavior of costs and the incidence of such costs on the profitability of an undertaking. Marginal costing is defined as “the ascertainment of marginal costs and of the effect on profit of changes in volume or type of output by differentiating between fixed costs and variable costs”. Marginal costing is not a separate costing. It is only a technique used by accountants to aid management decision. It is also called as “Direct Costing” in U.S.A. This term of “Marginal Costing” is widely used in U.K and Europe. This technique of costing is also known as “Variable Costing”, “Differential Costing” or “Out-of-pocket” costing.
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Some of the topics covered under Marginal Costing are:
1.Meaning and features of Marginal Costing
2.Marginal costing equation and Cost statement
3.Absorption costing Vs Marginal Costing
4.Various uses of Marginal Costing and its Limitations
5.Pricing under various special circumstances
6.Make or Buy Decision
8.Planning the volume of Production
9.Various types of Costs and Costing
10.Break Even Point and Break-Even Chart
11.Margin of Safety
12.Angle of Incidence
13.Profit-Volume Ratio (P/V Ratio)
14.Profit-Volume Chart and its uses
Marginal Costing is being applied in any manufacturing unit as it gives the “incremental cost” or the “differential cost” for producing one additional unit. Under various level of output or sales or selling price or variable cost, it is possible to find out the Break-Even point. Calculation of BEP becomes very essential as it is that point at which Sales = Fixed Costs + Variable Costs. Such being its significance don’t think twice to learn it very well from our tutors at Marginal Costing Assignment Help at www.theglobaltutors.com.
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