IMPORTANCE OF MARGINAL COSTING
Marginal costing is a technique of assigning the cost to the product in which only the variable costs are considered in calculating the cost of the product, while fixed costs are charged against the revenue of the period. The revenue arising from the excess of sales over variable costs is technically known as Contribution under Marginal Costing The following are the importance or usefulness of marginal costing Helps in determining the volume of production Marginal Costing helps in determining the level of output that is most profitable for a running concern. The production capacity, therefore, can be utilized to the maximum possible extent. It helps in determining the most profitable relationship between cost, price and volume in the business which helps the management in fixing the best-selling price for its products. Thus, maximization of profit can be achieved. Helps in selecting production lines The technique of Marginal Costing helps in determining the most profitable p...