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 Introduction
@ Marginal costing involves ascertaining marginal
costs. Since marginal costs are direct cost, this
costing technique is also known as direct costing
@ In marginal costing, fixed costs are never charged to
production. They are treated as period charge and is
written off to the profit and loss account in the
period incurred.
@ Once marginal cost is ascertained contribution can
be computed. Contribution is the excess of revenue
over marginal costs.
 Salient Features
@ Cost Classification

@ Stock/ Inventory Valuation

@ Marginal Contribution
Marginal costing is a valuable technique to the management
 hdvantages of Marginal Costing
@ Decision Making
@ Break even analysis
@ No under or over heads
@ Constant product cost
@ Control of Costs
 Disadvantages
@ Segregation into fixed and variable cost
@ Ignores fixed overheads
@ Not appropriate for job/contract costing
@ hpportionment of fixed cost