10

Marginal Costing and Cost–Volume–Profit Analysis

LEARNING OBJECTIVES

On completion of the study of the chapter, you should be able to understand:

  • What is Marginal Cost?
  • What is Marginal Costing?
  • Features, advantages and limitations of Marginal Costing.
  • Concept of Cost–Volume–Profit (CVP) analysis.
  • Features and objectives of CVP Analysis.
  • Classification of cost under Marginal Costing Technique.
  • Elements of CVP Analysis.
  • Marginal Cost equation.
  • Concept of contribution, Break-Even (BE) point and margin of safety.
  • Concept of Profit–volume ratio.
  • Concept of BE Analysis.
  • Concept of BE Chart and Angle of Incidence.
  • Development of different formulae under CVP Analysis.
10.1 CONCEPT OF MARGINAL COST

According to the Chartered Institute of Management ...

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