Assignment on Marginal Costing

Added on - 03 Jun 2020

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P3Marginal costing:this is one of the costing technique which helps to analyse the aspectsof all variable cost and production overheads which remain associated with production andmanufacturing process of marginal context. Marginal costing helps to analyse the cost of over allproduction and manufacturing units. Direct material, direct labour and direct expensed are keyelements which are considered in marginal costing. This helps to analyse the strategic decisionwhich directly remain associated with production process. As per decision making perspectivemarginal costing plays significant role. This costing remain the part of unit costing.Abortion costing:absorption costing remain associated with overall cost of organisation.This is also called as full costing calculation method which helps to analysing and measured thecost of operations in sequential manner. All the direct and indirect parts are also considered inthis context subject to evaluating cost of product and services. This costing technique is remainrelevant for absorption costing subject to higher profit. One drawback of this costing technique isthat absorption costing do not remain the part of decision making process.Calculation of profit by using absorption costingtechniqueParticularsCalculationAmountSales52500Less: cost of goods sold (W/N 1)Cost of opening inventoryDirect labour10000Direct material16000Variable production overheads4000Fixed overheads10000Less: cost of closing inventory-10000-30000Profit before deduction fixed overheads and selling anddistribution expenses22500Less: under/over absorption-500017500Less: selling and distribution expensefixed overheads-10000variable overheads-7875Net profit or loss-375
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