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Marginal Costing Part 2 Ques
What is the formula for contribution in marginal costing?
Contribution = Sales – Variable Cost (or Marginal Cost). It represents the amount available to cover fixed costs and generate profit.
What is the formula for calculating total contribution in marginal costing?
Total Contribution = Total Sales minus Total Variable Costs
How is the Profit/Volume (P/V) ratio calculated?
P/V Ratio = Contribution / Sales × 100. It indicates the proportion of each sales rupee that contributes towards fixed costs and profit.
What does the term 'marginal cost' refer to in cost accounting?
Cost of producing one additional unit, i.e., variable cost per unit
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