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3 cards from this section. Quick, good the night before a test.
What is marginal costing?
Focus on the definition involving costs.
What should you consider in a make or buy decision?
Think about cost comparisons.
What is marginal costing primarily focused on?
Think about the costs that change with production levels.
Make or Buy Decision is concerned with?
Consider whether outsourcing is being evaluated.
A company has fixed costs of ₹60,000, variable costs of ₹300, and sells a product for ₹500. They receive a special order for 300 units at ₹450. Should they accept it? Show your calculations.
Remember to compare the contribution margins.
Evaluate a scenario where a business needs to decide on product C, which has a variable cost of ₹120 and contributes ₹50. Product B has an existing contribution of ₹70 with higher sales. Discuss the implications.
Look at the contributions and how they relate to sales volume.
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