Technique of Costing

 Costing is an important function of Manager.The process in which we  ascertain the exprnditure to produce prodict or service this process is called Costing.

In other woeds we can say that Costing is the process of classifying recording,analysing the xpenditure to produce any product oe service.

There are many technique of Costing.These are Marginal Costing,Absorption costing,Standard costing and so on.Every technique is used in particular condition.

Marginal Costing-The process in which we determine the changing amount of expenditure after increasing or decreasing one extra unit of product or service this process is called Marginal Costing.

In other words we can say that the expenditure at any given volume of output by which aggregate costs are changed if the number of output is increased or decreased by one extra unit.

In other words we can say that Marginal Costing is the technique of costing that is used to find out the relationship between profit and volume.

Feature of Marginal Costing-

There are many features of Marginal Costing. These features are as below-

1.It is an internal used method.

2.It only focus variable cost.

3,It classify total cost into two catogery.One is fixed and second is variable.

4.It considers fixed cost charged against profit.

5.It considers variable cost charged to product.

6.It calculates stock of finished product.

7.It also calculates work in progress.

Advantage-

There are many advantages of Marginal Costing. These advantages are as below-

1.It helps in profit plannig.

2.It helps in cost control.

3.It helps in cost reduction.

4.It helps in proper pricing.

5.It helps in production planning.

6.It supports small and fast growing organization to achieve goal.

7.It saves administration cost.

8.It helps in decision making.

8.It treatments overheads by proper way.

10.It also helps in Budgetary control.

Disadvantages-

1.It is difficult to classify fixed cost and variable cost because there are many more cost of production process.

2.It does not care all types of cost so it is not beneficial for Manager.

3.It is not beneficial for internal reporting.

4.It does not follow the principle of accounting standard in stock valuation.

5.It is not applicable all types of industry.

6.It does not care semi variable or semi fixed cost.

7.It does not give reason to tncrease or decrease cost.

8.It ignores time factor.

9.It is less effective in cost control.

10.It has a limited scope.