Marginal Costing and
Cost-Volume-Profit Analysis
, Cost behaviour
Cost behaviour is 'the way in which cost per unit
of output is affected by fluctuations in the level of
activity'.
Fixed cost
Variable cost
Semi-variable cost
In some situations increases in activity (volume)
can affect the cost structure and the relevant
range becomes a factor.
Step cost
, Marginal costing
Marginal costing is an approach where variable costs
are charged to cost units, but the fixed cost for the
relevant period is written off in full against the total
contribution for that period.
The fixed cost is not shared or apportioned to any
cost centre or cost unit.
While marginal costing can be used as part of a
routine cost accounting system, its main use is in
providing relevant information for planning and
decision-making.
Cost-Volume-Profit Analysis
, Cost behaviour
Cost behaviour is 'the way in which cost per unit
of output is affected by fluctuations in the level of
activity'.
Fixed cost
Variable cost
Semi-variable cost
In some situations increases in activity (volume)
can affect the cost structure and the relevant
range becomes a factor.
Step cost
, Marginal costing
Marginal costing is an approach where variable costs
are charged to cost units, but the fixed cost for the
relevant period is written off in full against the total
contribution for that period.
The fixed cost is not shared or apportioned to any
cost centre or cost unit.
While marginal costing can be used as part of a
routine cost accounting system, its main use is in
providing relevant information for planning and
decision-making.
