MBAA-102 Accounting for Managers – Unit 6
Objectives: to familiarise you with the techniques of Absorption Costing and Marginal Costing; to explain the basic features and in that process bring out explicitly the differences between the two techniques; and to develop an appreciation that Marginal Costing has an edge over Absorption Costing as far as managerial decision making is concerned.
Materials:
The relevant material is available here.
Questions:
- Explain the technique of Marginal Costing briefly. In what ways you consider this technique useful in Management Accounting?
- Explain and bring out the means of income determination in a comparative form under marginal and traditional costing systems.
- Explain the different methods for segregating semi-variable overheads.
- What benefits are gained from Marginal Costing? Are there any pitfalls in its application?
- If Profit-Volume Ratio is 40% and sales value Rs. 10,000, what will be the variable costs?