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Management accounting Cost Accounting f

By Jacqueline Cooper,2014-05-17 09:24
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Management accounting Cost Accounting f

     1

    MARGINAL COSTING

Statement of profit:-

    Particulars Amount

    Sales ***

    Less:-Variable cost ***

    Contribution ***

    Less:- Fixed cost ***

    Profit ***

1) Sales = Total cost + Profit = Variable cost + Fixed cost + Profit

2) Total Cost = Variable cost + Fixed cost

3) Variable cost = It changes directly in proportion with volume

4) Variable cost Ratio = {Variable cost / Sales} * 100

5) Sales Variable cost = Fixed cost + Profit

6) Contribution = Sales * P/V Ratio

7) Profit Volume Ratio [P/V Ratio]:-

    ? {Contribution / Sales} * 100

    ? {Contribution per unit / Sales per unit} * 100

    ? {Change in profit / Change in sales} * 100

    ? {Change in contribution / Change in sales} * 100

8) Break Even Point [BEP]:-

    ? Fixed cost / Contribution per unit [in units]

    ? Fixed cost / P/V Ratio [in value] (or) Fixed Cost * Sales value per unit

    (Sales Variable cost per unit) 9) Margin of safety [MOP]

    ? Actual sales Break even sales

    ? Net profit / P/V Ratio

    ? Profit / Contribution per unit [In units]

10) Sales unit at Desired profit = {Fixed cost + Desired profit} / Cont. per unit

11) Sales value for Desired Profit = {Fixed cost + Desired profit} / P/V Ratio

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12) At BEP Contribution = Fixed cost

    13) Variable cost Ratio = Change in total cost * 100

     Change in total sales

14) Indifference Point = Point at which two Product sales result in same amount of

     profit

    = Change in fixed cost (in units)

     Change in variable cost per unit

    = Change in fixed cost (in units)

     Change in contribution per unit

    = Change in Fixed cost (in Rs.)

     Change in P/Ratio

     = Change in Fixed cost (in Rs.)

     Change in Variable cost ratio

15) Shut down point = Point at which each of division or product can be closed

     = Maximum (or) Specific (or) Available fixed cost

     P/V Ratio (or) Contribution per unit

     If sales are less than shut down point then that product is to shut down.

Note :-

1) When comparison of profitability of two products if P/V Ratio of one product is

     greater than P/V Ratio of other Product then it is more profitable.

2) In case of Indifference point if

     Sales > Indifference point --- Select option with higher fixed cost (or) select

    option with lower fixed cost.

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