Marginal Costing Formulas And Problems Notes

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Marginal Costing Formulas With Problems Notes

Presenting Marginal Costing Notes With Problems And Formulas which can be used by CA And CS Students. These Notes are Made in just 8 Pages, and these notes can be used as revision notes too.

What is Marginal Costing?

Marginal Costing is a useful technique which guides management in pricing, decision making and assessment of profitability.

It classifies all costs into Fixed cost and variable cost (semi-variable costs should also be resolved into variable and fixed

Components).

 As fixed costs remain static and are largely uncontrollable, variable expenses should be taken into account for management

decision making. Marginal costs is synonymous with variable costs i.e., Prime cost + variable overheads.

 The excess of Sales over Variable costs represents Contribution or Gross Margin. Contribution may be considered as some

sort of fund from out of which all fixed costs are met. It is also represented as Profit in Marginal Costing.

 The excess of contribution over fixed costs represents net profit.

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