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Fixed Cost remains fixed irrespective of output. Variable Cost varies with the level of output.
Marginal Cost: The amount at any given volume of output, by which, the aggregate costs are changed , if the volume of output is increased /decreased by one unit. Marginal Cost means the per unit additional Variable cost. Marginal Costing : It is the technique of ascertainment, by differentiating between Fixed and Variable Costs and of the effect on profit of changes in volume and type of output.

SALES: Less: Marginal Cost Direct Material Direct Labour Direct Expenses variable Overheads XXXX CONTRIBUTION: Less: Fixed Costs XXX PROFIT:

XXXXX

XXXX XX

Profit = Sales - Total Costs Profit = Sales - ( Variable Costs & Fixed Costs) Profit + Fixed Costs = Sales Variable Costs.
Contribution is the amount left, after the recovery of Variable Costs , for the recovery of the Fixed Costs. Hence , Sales variable Costs = Contribution.
Hence, Profit + Fixed Costs = CONTRIBUTION = Sales Variable Costs.
Therefore, Contribution Fixed Costs = PROFIT

BEP = Fixed Costs / Contribution per Unit In terms of Amount , BEP = Fixed Costs / PV ratio Margin of Safety means Sales beyond BEP. Margin of Safety = Sales Break even Sales.

Standard Cost is a pre determined cost , based on managements standards of efficient operations and with relevant expenditure. It is the normal cost under the ideal conditions It is a basis for price fixation & for Quotations. Standard Costing is a technique of cost control. Standards are compared with Actual for Cost Controls and for measuring efficiency. Standard Costing techniques are used in industries producing Standard Products on Continuous basis.

VARIANCE ANALYSIS: Material Cost variances Material Price variance Material Usage variance: Mate. Mix & Mate. Yield Labour Cost Variances Labour Rate variance Labour Efficiency variance Idle Time Variance Labour Mix variance Labour Yield Variance Overhead Cost variances Overhead Expenditure variance Overhead Volume Variances: Efficiency, capacity, calendar Variance