--%>
Assignment Help - homework help

Concept of marginal costing

In what condition the concept of marginal costing basically applied?

E

Expert

Verified

The concept of marginal costing is basically applied in the subsequent condition:

- Estimation of Performance: The Estimation of the performance of different departments or products can be measured with the aid of marginal costing that is depends on contribution generating capacity.

- Profit Planning: This method throughout the computation of P/V Ratio aids the management to plan the activities in such a manner that the profit can be maximized.

- Fixation of Selling Price: The method of marginal costing aids the management to fix the price in such a manner so that prices fixed can cover no less than the variable cost.

- Make or Buy decision: Marginal cost analysis aids the management in buying or making decision.

- Optimizing Product Mix: To maximize profits and raise sales volume it is essential to decide an optimized mix or proportion in that different product of a company can be sold.

- Cost Control: Marginal Costing is a method of cost categorization and cost arrangement that facilitate the management to focus on the controllable costs.

- Flexible Budget preparation: As the marginal costing mainly categorizes costs as fixed and variable costs that provides the preparation of flexible budgets.

   Related Questions in Managerial Economics

  • Q : Imports good in purely competitive

    When this purely competitive labor market is primarily in equilibrium at of D0L, S0L, a shift to equilibrium at D2L, S0L would be probably to follow by increases in: (1) minimum wage laws. (2) imports of this good from forei

    		•
  • Q : Reason of an unexpectedly good

    An unexpectedly good agricultural harvest because of the: (w) profits of most speculators to soar. (x) population growth rate to accelerate. (y) market demand and price to increase. (z) quantity of food demanded to develop. I need

    		•
  • Q : Income effect of a wage increasing When

    When the income effect of a wage increase is more powerful in that case the substitution effect, the: (1) labor supply curve will be “backward bending.” (2) unemployment rate will rise since more people will be available for work. (3) valu

    		•
  • Q : Costs and revenue verses Quality

    Refer to figure as in above. What occurs when the firm produces more than Q4 units: w) Its profit raises. x) this makes a loss. y) Its total revenue is increasing quicker than its whole cost. z) this could make a profit or a loss depending upon what occurs

    		•
  • Q : Process of Signaling Job applicants

    Job applicants make use of polished resumes explaining education, work experience and skills, accompanied from supportive letters of recommendation letters like tools in a process economist’s call: (1) adverse selection. (2) signaling. (3) human

    		•
  • Q : Explain the Cross elasticity of demand

    Explain the Cross elasticity of demand.

    		•
  • Q : What is pricing strategies What is

    What is pricing strategies?

    		•
  • Q : States the Scarcity Definition in

    States the Scarcity Definition in economics?

    		•
  • Q : Decide to produce or to shut down in

    When, for a specified output level, an absolute or perfectly competitive firm's price is less in that case its average variable cost, so the firm: w) is earning a profit. x) must shut down. y) must increase output. z) must increase price.

    Q : Derived Demands for Resources Demands

    Demands for resources are derived since they: (1) depend upon producers supplies of such resources. (2) depend on consumers demands for the goods the resources produce. (3) rely on the availability of suppliers. (4) rely on the industry’s demand

    		•