Marginal Costing BY

1. Marginal CostingBY Prof. V.S Meena

2. Marginal Costing Meaning of Marginal cost – Marginal cost means that increase of total cost witch happens by increased or decreased by one unit in the production volume. Example – Unit Total cost Rs. Marginal cost Rs. 0 500 (Fixed cost) - 1 800 300 2 1100 600 3 1400 900 Marginal costing is a variable cost.

3. Break even point (no Profit no loss) • Cost volume profit (c/s x 100) • Marginal of Safety (S-BEP)

4. Break Even Point - • lefoPNsn fcUnq js[kk fp= ds ek/;e ls fdl lhek rd oLrqvksa dk mRiknu vFkok foØ; djuk gkfuizn gS rFkk fdl fcUnq ds i’pkr ykHk izn gksxkA lkFk gh fdruh oLrqvksa dh fcØh ij fdruk ykHk gkfu jgsxhA ;g ckr lefoPNsn fcUnq ds vkxs & ihNs okyh fLFkfr ls Kkr gks tkrh gSA vr,o ;g js[kk fp= O;kolkf;;ksa ds fy, mi;ksfxrkiw.k gS %&

5. Example –

6. y 10000 Profit 8000 Sales 6000 Variable Cost Total Costs Break Even Point 4000 Marginal of Safety 2000 Sales and costs (Rs.) Fixed Cost o x 2000 4000 6000 8000 10000 Output in Units

7. Break Even Point Graph F x S 2000 x 4000 Break Even Point : - = S - V 4000 - 2000 BEP = 4000 Break Even Point is a No Profit No Loss That is : Fixed Cost = 2000 Variable Cost = 2000 Total Cost = 2000+2000 = 4000 Total Sales = 4000 Profit & Loss = 4000 – 4000 = 0

8. bl izdkj ;fn ge 10000 Units dh fcØh dks vk/kkj ekudj fuEu dh x.kuk djrs gSA fn;k x;k gS & Product in Unit = 10000 Fixed Cost (Rs.) = 2000 Variable Cost = 5000 (50 Paise Pur Units) Sales = 10000 Kkr djuk gS & F x S 2000 x 10000 (1) BEP = = S - V 10000 - 5000 BEP = 4000 (1) Margin of Safety :- Total Sales - BEP 10000 - 4000 = 6000 lqj{kk lhek ftruh vf/kd gksxh mruh gh vPNh gSA

9. (3) Profit Volume Ratio - Profit Volume Ratio or P/V Ratio og nj gS ftlesa ek=k dh c<+ksRrjh ds lkFk ykHk c<+rk gSA ykHk ek=k vuqikr ] ek=k esa ifjorZu gksus ds Qy Lo:i ykHkksa esa tks ifjorZu gksrk gS mls Kkr djus dh dqath gSA S - V Formula :- P/V Ratio = X 100 S 10000 - 5000 P/V Ratio = X 100 = 50 % 10000

10. Example ;fn ges 10000 :- ykHk dekuk gks rks fcØh fdruh djuh gksxhA Fixed Cost = 2000 Profit Desired = 10000 P/V Ratio = 50% Formula - F + Pd Sales in Rs. = P/V Ratio 2000 + 10000 = 24000 Sales in Rs. = 50 % 10]000 :- bfPNr ykHk dekus ds fy, gesa 24000 :- dh fcØh djuk gksxkA

11. Advantage of Marginal Costing :- • Easy To understand. • Helpful in Profit Planning. • Helpful in cost control. • Helpful in Decision Making : - • Make or Buy Decision • Capturing the foreign Markets. • Change of Product Mix

12. (d) Pricing – (I) Sales Price in Normal Condition (II) Determination of Minimum Price (III) Determination of Price below the Total cost. (IV) Temporary closure of production. (V) Permanent closure of the factory

13. THANKS