Hi guys 👋  in this blog let's see about the marginal costing is not a distinct method of Costing like job costing process costing extra it uses as special technique for managerial decision making it is used to provide a basis for interpretation of cost data to measure the Profit ability here cost has been Classified on the basis of behaviour or nature in relationship cost this is because of within limit the aggregate can certain items of cost will tend to remain fixed decision making indicators in marginal costing profit volume ratio break even point marginal of safety in different point shut down point sales value less variable cost with contribution profit absorption costing it is a procedure of cost recognition wear in cost or Classified on the basis of function London defines absorption cost as the practice of charging all both variable and process or product all cost of production both sides and variable or included in inventory valuation difference between absorption costing and managerial costing and option both and fixed cost of considered of product costing and the inventory valuation expenses or class based on function that is production administrative selling and distribution value less direct material labour fat to overhead will give gross profit with less administration expenses rent expenses will get you net profit it is the ratio of contribution of sale this ratios usually Express in percentage higher the PV ratio it is better it indicates the effect on Profit given change in the sale it's measure indicates the effect on profit for a given change in the sale it measures the Profit ability of each product process operation etc it facilitate managerial decision making PV ratios equal to contribution divided by sale into 100 change in profit by changing sale into 100 PB ratio is equal to 100 - variable cost ratio by way of releasing variable cost for increasing the selling price or improving salesman it is the point at which there is neither profit not a lock situation it is the volume of operation at which total sales revenues just equal to total cost in profit Nil contribution margin of safety of sale over the break even says that is it is the difference between the actual sales and the break even it may be expressed as a percentage of total sale or in value or in item of quantity firm will earn grantered profit contribution is equal to profit fixed each product fixed cost and does the Profit ability of a product or influenced by an opportunity.
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