costing

[Mosham Maru]

Relevance of standard and marginal costing in cost reduction and profit maximisation.

[Nikhil Nair]

Marginal Costing is a decision-making technique. The decisions can be routine & non-routine. With the help of behavioral classification of costs, it enables us to understand the cost composition of our product and calculate various metrics.

These metrics provide an idea about the break-even point, quantity to be produced to earn certain level of profits, margin of safety, etc. thus providing a basis to plan production activity and set targets.

Standard costing is a technique of long-term financial planning & cost control. It consists of setting up standards, measurement of actual, variance analysis, etc. With the help of variance analysis, a company can identify the areas were costs are above the standards and identify the reasons thereof. This identification shall accordingly help in taking suitable measures to control costs and thus maximise profits.

Hope this information suffices your need. For more details feel free to get back.

Team More Classes.

[mosam maru]

Thanks sir but need some more details if possible.