F2-Chapter9-余.pptVIP

Contents in Chapter 9 Marginal cost and marginal costing The principle of marginal costing Marginal costing and absorption costing and the calculation of profit Reconciling profit Marginal costing versus absorption costing 1/5 Marginal Cost And Marginal Costing 1.1 Marginal cost It includes the following items: Direct materials……………………….VC Direct labour……………………….....VC Variable production overheads……….VC So, marginal cost is the cost which would be avoided is that unit were not produced or provided. About direct labour costs 1.2 Marginal Costing In marginal costing, (1)only variable costs are charged to production cost. (2)Closing stocks of WIP or finished goods are valued at marginal production cost. (3)Fixed cost are treated as a period cost. About marginal cost of sale 1.3 Contribution Contribution = sales – marginal cost of sales = fixed overheads + profit AC MC DM DL Variable production overhead Fixed production overhead Variable administration expenses Fixed administration expenses Variable sale expenses Fixed administration expenses Variable distribution expenses Fixed distribution expenses √ √ √ √ √ √ √ ? Generally, treated as Periodic Cost Sometimes,…….… 2/5 The Principles Of Marginal Costing The principles of marginal costing are as follows. Period fixed costs are the same, for any volume of sales and production. If the volume of sales falls by one item, the profit will fall by the amount of contribution earned from the item. Profit measurement should therefore be based on an analysis of total contribution. When a unit of product is made, the extra costs incurred in its manufacture are the variable production costs, and no extra fixed costs are incurred when output is increased. Example: marginal costing principles 某公司生产一种产品，单位变动成本$6，单位售价$10，本月初无期初库存产品，本月完工产品20 000件。期间内固定成