24-12-2012, 06:09 PM
Marginal Costing
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Learning Objectives
01. To understand the fundamental aspects of Cost
Accouting such as objectives, cost concepts, preparation
of cost sheet, methods of costing, etc
02. To familiarize with different categories of costs, cost
concepts and the behaviour-wise classification of costs
including the methods of segregation of semi-variable
costs or semi-variable overhead expenses
03. To acquaint with the meaning of marginal cost and
Marginal Costing
04. To understand the meaning and computational
procedure of marginal cost, contribution and P/V Ratio
05. To gain ability to solve the problems pertaining to the
determination of marginal cost, segregation of semivariable
costs into variable and fixed, and contribution
and P/V Ratio
Introduction
Corporate enterprises are functioning, today, in a highly
competitive environment with high degree of risk and
uncertainty. This is due to a number of reasons including the
opening up of economies world over for foreign players and also
on account of privatization enabling the private companies to
enter into the area hitherto reserved for the government
enterprises. These reform measures have resulted in the increase
in both the number of competitors and also the degree of
competition. Consequently, the enterprises are required to
function more efficiently and effectively, and to offer their goods
and services at competitive prices.
Marginal Costing for Managerial Decisions 5
economies, (b) performance of departments, functions, products,
etc., © factors which influence and which have a bearing on the
managerial decisions, etc. Because, as opined by Blocker and
Weltmer, in spite of new accounting devices, improved
techniques and elaborate subsidiary records, Financial
Accounting is so limited and inaccurate in regard to the
information which can be supplied to management that,
during the past 30 years, businessmen have been eager to
adopt supplementary accounting methods known as Cost
Accounting.