MARGINAL COSTING

Marginal costing is a technique of costing fully oriented towards management decision making and control. Marginal costing is not a method of cost assortment like job or process or operating costing. Marginal costing is helpful in determining the profitability of products, departments, processes and cost centres. While analyzing the profitability, marginal costing interprets the cost on the basis of the nature of cost.
Definition of Marginal Cost: Marginal cost is defined as the additional cost of producing an additional unit of a product.
For eg. If the cost of producing 10 units is 1000 rupees and the cost of producing 11 units is 1080 rupees, then the marginal cost of the 11th unit is Rs.80. Marginal cost in other words is variable cost.

Definition of Marginal Costing: It is defined by as the ascertainment of marginal costs and of the effect on profit of changes in volume or type of output by differentiating between fixed costs and variable costs. It is thus, a technique of cost accounting which pays special attention to the behaviour of costs with changes in the volume of output.Marginal costing thus involves,
1.Ascertainment of marginal cost
2.Deriving of cost-volume relationship by differentiating between fixed costs and variable costs.

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