In this article we will discuss about the marginal cost analysis. Marginal cost analysis requires analysis of cost into fixed and variable elements. Suppose that selling price per unit of a product is Rs.100 and variable cost per unit is Rs.60. Contribution per unit is Rs.40. You may say contribution as gross margin. Profit Volume ratio (P/V ratio): P/V ratio [...]
The upcoming discussion will update you about the difference between relevant costs and irrelevant costs. In order to exercise cost control, managers must be able to make distinction between relevant costs and irrelevant costs. Costs that are affected by the managerial decisions are known as relevant costs and those costs that are not affected are treated as irrelevant costs. Irrelevant [...]
In this article we will discus about the meaning and characteristics of differential cost. Meaning of Differential Cost: Differential cost is the change in the costs which may take place due to increase or decrease in output change in sales volume, alternate method of production, make or buy decisions, change in product mix etc. So, differential cost is the result [...]