# MARGINAL COSTING

Document Sample

```					   MARGINAL COSTING
Cost & Profit Statement
PARTICULARS         UNITS      PER UNIT

Sales                    XXX          XX
Less : VARIABLE COST     XXX          XX

CONTRIBUTION             XXX          XX
Less : FIXED COST        XXX

PROFIT                   XXX
1) CONTRIBUTION :
Contributes towards recovering fixed
t   d then    t ib t to           fit
cost and th contributes t earn profit.

a) CONTRIBUTION =
Sales – Variable Cost.
Cost

) CONTRIBUTION =
b) CO            O
Fixed Cost + Profit.
2)   P/V RATIO
Rate at which profit is earned on
A)                   pu
Contribution p.u
X    100
p.u
Sales p u
Or
B)        Contribution
X    100
Sales
Or
C)        Diff. In profit
X 100
Diff. In sales
TOTAL SALES

BEP SALES               MOS SALES
[Recovers Fixed Cost.   [Earns Profit]
No Profit No Loss]
]
3) BREAK EVEN POINT SALES :-
Neither profit is earned nor loss is incurred. Cost
and revenue are equal .
a)    BEP SALES (Units) =
Fixed Cost
pu
Contribution p.u
b) BEP SALES (Value) =
Fixed Cost                           Fixed Cost
X Sales p.u. Or                  X Sales
Contribution p.u                     Contribution
Or
Fixed Cost
P/V Ratio
4)    MARGIN OF SAFETY SALES :
Sales beyond break even point sales.
Profit is earned only due to MOS Sales.
Profit
)           (Units) =
a) MOS SALES (     )
Contribution Per Unit
Profit
(V l )
b) MOS SALES (Value) =                            × S l p.u. OR
Sales
Contribution Per Unit
Profit
2.                           ×   Sales    OR
Contribution
Profit
3.
P/V RATIO
c) MOS SALES (U/V) = Actual Sales            BEP Sales
(units/value)        (units/value)
5) DESIRED SALES :-
Sales whereby desired profit is earned
a) DESIRED SALES (Units) =
(Fixed Cost + Desired Profit)
Contribution Per Unit
b) DESIRED SALES (Value) =
(Fixed Cost + Desired Profit)             p.u.
Sales p u
1.                                    ×
Contribution Per Unit                    Or

2.
(Fixed C t D i d P fit)
(Fi d Cost + Desired Profit)        Sales
Contribution            ×
Or
3.
(Fixed Cost + Desired Profit)
P/V Ratio
TYPES OF PROBLEMS :
1. Formula based problems
1F        l b d        bl
2. Problems based on Best sales mix.
Whichever sales mix gives maximum
mix.
contribution is the best sales mix
3. Problems based on MERGER of
Plants / Factories
Merge the plants / factories
bringing them to a common
capacity level.
4. Problems with 2 sales & 2 Profit figures.
a)    First find out P/V ratio as
Diff.
Diff In profit
X    100
Diff. In sales
b)    Using P/V ratio =
Contribution
X 100
Sales
Find out Contribution.
C)    Using Contribution find out fixed cost as
Contribution = Fixed Cost + Profit.
Important Questions
Q.2, 4 8 9 11 14 16
Q 2 4, 8, 9, 11, 14, 16, 17

```
DOCUMENT INFO
Shared By:
Categories:
Stats:
 views: 365 posted: 5/29/2010 language: English pages: 10