A PROJECT REPORT

ON

“A STUDY OF MARGINAL COSTING OF

HAIER INDIA PVT. LTD PUNE CITY.”

IN PARTIAL FULLFILLMENT
FOR THE AWARD OF
MASTERS DEGREE IN COMMERCE

SUBMITTED BY

SHAIKH ASIF NAZIR

UNDER THE GUIDANCE OF

Prof. FAUZIA ANSARI

DEPARTMENT OF COMMERCE
(ADVANCED COST ACCOUNTING AND COST SYSYTEM)

ABEDA INAMDAR SENIOR COLLEGE

OF ARTS, SCIENCE& COMMERCE,
CAMP, PUNE

YEAR
2015-2016

[1]
 DECLARATION

I, Shaikh Asif Nazir hereby declare that this work is the result of my own
independent work and investigation except where otherwise stated. I further declare
that this work has been as part my academic curriculum M com II, sem IV.
I also declare that this project report entitled. ‘A Study of Marginal Costing’
practices in Haier India Pvt. LTD is a bonafide work prepared by me and hand
information given in this report is true to my knowledge.

Date: Name: Shaikh Asif Nazir

Place: Pune Sign:

[2]
 ACKNOWLEDGEMENT

This report is an outstanding prospect to convey my gratefulness to those many people

whose timely help and guidance went a long way in finishing this project work from
commencement to achievement.
I would like to express my sincere thanks to Mr. D. K.SAWANT for giving me an
opportunity to explore the practical knowledge practiced by the company.
This project could not been completed without the able guidance and support of Prof.
FAUZIA ANSARI.
I am grateful to costing Department of HAIER INDIA PVT.LTD. for helping me to get the
information and an invaluable experience.
Last but not the least would like to thank my friends, family members and all those
people who helped me for the completion and deeper understanding of the concept of
performance appraisal.
Working on this project has proved to be an enlightening experience
for me.

SHAIKH ASIF NAZIR

[3]
MARGINAL
COSTING

[4]
 INDEX

Serial Chapter Name Page

NO No.
01 INTRODUCTION TO MARGINAL COSTING 06

02 ABOUT THE ORGANIZATION 14

03 REVIEV OF LITERATURE 35

04 RESEARCH METHOLOGY 56

05 DATA ANALYSIS AND INTERPRETATION 59

06 CONCLUSION & SUGGESION 68

07 BIBI LOGRAPHY 73

[5]
CHAPTER 1
 INTRODUCTION TO THE STUDY

 OBJECTIVE OF THE STUDY

 IMPORTANCE

 SCOPE OF THE STUDY

 HYPOTHESIS

 LIMITATION

 CONCLUSION

[6]
1.1 INTRODUCTION TO THE STUDY

Marginal costing is a technique where only the variable costs are considered while
calculating the cost of product. It is not a totally independent area. It depends on related
disciplines & field of study such as economics, accounting, production, marketing
&quantitative method. Marginal costing industries a prerequisite for mobilizing real resources
to organise production & accounting. Marginal costing is the process of identifying the
strengths & weakness of the firm by properly establishing relationship between the items of
fixed & variable cost. Marginal costing can be undertaken by fixed & variable costs are
charged to products while fixed costs are written off to marginal profit & loss Account during
the period in which they incurred as fixed cost. The objective of a company is maximise is
value to its shareholder. Value is represented by the price of the ordinary shares of the
company over the long run. It is reflection of the company’s investment & costing decision.
Decision making in any business organisation is primary function of company required
selected from the quality information, cost of each item, choose the exact cost of the product
is the purpose of decision making. There are various methods or techniques used in marginal
costing such as comparative statement, contribution, p/v ratio, Break even sales & margin of
safety. The marginal costing is one of the most powerful tools of costing analysis. Information
extracted by these tools can be put to the process of analysis. The information arranged in
appropriate manner then informed to the company to take decision. It is with the help of
every exact cost than the costing statement can be analysed more clearly & decision made
from such analysis. Due to its importance in the organization &interest in studying these
tools.
[7]
1.2 OBJECTIVES OF THE STUDY

Following are the fundamental objectives of the study,

1. To study the marginal cost in the organization.

2. To study the importance of behaviour of expenses in marginal costing.
3. To study the marginal costing technique.
4. To study the annual Balance sheet & profit & loss Account.
5. To study & understand the importance & use of marginal costing.
6. To study financial position of the organization.

1.3 IMPORTANCE

Following are the importance of the present project work-

1. Guidelines for the organisation:-

Present project work will be the guideline for the organisation in future for
maintaining the costing records & department. With the help of this project they can
understand the importance of maintaining costing department & records, which will
help to control the expenses & the unexpected losses during the production.

[8]
 2. Great experience for my future:-
The most important thing is that this experience will help me in the future.
Discussions, interview, data collection, preparation of actual project & all other steps
in project have given me great confidence for the future efforts. Besides this I can also
undertake research work in future & make use of research fellowship granted by
U.G.C.

1.4 SCOPE OF THE STUDY

Marginal costing is a technique of ascertaining cost used in any particular method of costing.
According to this technique:

Variable costs are charged to cost unit and the fixed cost attributable to the relevant period is
written-off in full against the contribution for that period. Therefore it has very limited scope
as it distinguishes between the treatment of fixed and variable components as parts of fixed
costs, is difficult to adopt the technique in capital intensive industries where fixed costs are
very large.

The area of study is “HAIER INDIA PVT. LTD”

1. The study involves variable cost, contribution, fixed cost, profit & all items of the
marginal costing.
2. The study is based on marginal costing statement of last 5 years, which were obtained
from the company.

[9]
The study involves calculation of profit variable ratio, contribution, margin of safety & profit & loss
of the Haier India PVT.LTD.

1.5 HYPOTHESIS

A hypothesis is an explanation for a phenomenon which can be tested in some way which
ideally either proves or disproves the hypothesis. For the duration of testing, the hypothesis is
taken to be true, and the goal is to rigorously test the terms of the hypothesis. The concept of the
hypothesis is a very important part of the scientific method, and it also holds true in other
disciplines as well. And therefore after going through the literature study, the following are the
hypotheses of study;

 High cost of production leads to increase in operating loss.

 marginal costing technique will improve cost of production.

1.6 Limitation

Following are some limitations of the project work, facing at the time of
study & preparation of the project.

1. The organisation was reluctant in sharing information pertaining to financial position and
business operations .In short, the management of the firm is very conservative and was found
reluctant of provide of balance sheet information.
2. Limitation in collection of secondary data:-
3. Organisation does not have proper cost records which creates a problem in getting
secondary data for the project. Necessary data is not available with the society.

[10]
4. Generalization: Conclusion & suggestion drawn may be applicable only to a particular area of
the organisation & may not be true the any other organisation.

1.7 Conclusions

1. It has been observed that the organization does not maintain separate departments & it does
not follows marginal costing techniques for decision making.
2. The organization is suffering from operating losses but the profits of the organization are
going on decrease year by year.
3. There is insufficient control over the variable cost & fixed cost. The variable & fixed
overheads are going on increasing year by year. Due to increase in variable & fixed cost,
increase in sales did not give high profit to the organization.
4. It is observed that although there is sufficiency in labour force comprising 733 employees,
the technical qualified staff is inadequate.
5. It is observed that sales & contribution in increasing & simultaneously the fixed cost is also
increased, so profit margin is not increased in the ratio of increased sales & contribution.
6. It has been observed that although classification& codification is done in the accounts
departments there is problem regarding the same in locating the items easily.
7. The organizations fixed overheads are 100% fixed, weather is production or not these fixed
overheads are incurred.
8. It is observed that the variable & fixed overheads are going on increasing year by year. The
increase in fixed cost is due to increase in depreciation & interest & increase in variable cost
is because of increase in sales & production.
9. The increase in sales is due increase in raw materials in the factory area.

[11]
Chapter 2

 ABOUT THE ORGANISATION

 VISION & MISSION
 RESEACH AND DEVELOPMENT
 B.O.D

[12]
 COMPANY PROFILE

HAIER INDIA PVT. LTD

[13]
[14]
Haier India Pvt. LTD began with a vision to support the country’s drive towards

self-sufficiency and import substitution in 1970. What began as a fully indigenous

Haier ref and Haier washing machine plant in Ranjangaon, Pune, has now grown into a globally
proactive company with a presence in over 20 countries ,
Including USA, European Union & East European nations, Japan, ASEAN
countries, South Korea and South America. This has led to a paradigm shift
from low value bulk refrigerator and intermediates to high value fine and
specialty chemicals based on our core expertise as well as lateral and vertical
integration of our existing products, exploring downstream derivatives.
With a strong focus on customer satisfaction, the company has set up Custom Manufacturing
services to meet specific needs of end users. Our capabilities extend to the manufacture of high-
value, specialty products either based on our own end products or developed especially for our users.
Haier has been ranked amongst the top 500 Body corporate by Dun and Bradstreet for the last
three years.

Haier is a leading manufacturer of organic, inorganic, fine and

specialty chemicals and a world leader in 2, 4 and 2, 6 Xylidine. Working with
our partners, customers, we seek to find better ways to meet market demands,
using innovative processes and methods. Our people, our technologies and our
years of expertise unite to deliver superior products and services that improve
life.

[15]
Haier is the preferred business partner of refrigerator majors worldwide
in Pharma, Rubber, Colorants and Imaging. Headquartered at Pune,
we are a multi-division and multi-product company that has manufacturing
facilities at Nandesari, in Gujarat and at Pune, Roha and Taloja in Maharashtra
and Hyderabad in Andhra Pradesh, all of them complying with ISO 9001:2000 standards.
We are poised to take on the opportunities offered by globalization, increasing
shareholder value, improving opportunities for our employees, driving greater
innovation and seeking sustainable solutions for the world. We are a signatory
to the Responsible Care initiative and are committed to ethical business
practices.

[16]
2.2 VISION & MISSION
The purpose of all human activity is to make life better. Haier believes in
improving life through innovative science. Through innovations, we constantly
endeavour to bring better products and processes that bring greater value to
society
Core Purpose
"Improve Life Through Innovative Science"
Vision

 We are a role model enterprise, respected globally for excellence in quality and innovation
 We enhance stakeholder value while adhering to the code of responsible care and ethical values
 We are an employer of choice and preferred business partner worldwide
Corporate Values
Haier believes in honouring its commitment. integrity and transparency are an integral part of our
relationship with customers, employees, society.
Respect for Life: the company believes that life in all its forms must be respected. We respect
and value our people. Our employees are our value creators whose efforts, creativity and bond we
cherish. Our customers, who reward us for our value creation and our stakeholders, who are
committed to us in our endeavour to improve life. We also recognize and respect our environment and
take every effort to preserve it.

[17]
VALUE VALUE STATEMENT

Integrity We are open, ethical, transparent & uncompressing in our work.

Decisiveness Set a goal, analyze the facts and work on alternatives and
conclude them in fixed time frame.
Team Spirit We encourage group interaction and working together. United and
collective drive achieves the desired goal.
Commitment We keep all promises made within and outside the company.

Caring We are concerned for our environment, society and employees

and work for their betterment.

Excellence We are a role model and benchmark company for our products, services
and business processes.
Innovation We nurture creativity and encourage application of knowledge and
ideas in all facets of our business.
Customer Customer is upper most in our mind.

Orientation We work to exceed his expectations.

[18]
 QUALITY AND ENVIORNMENT

At Haier quality is the keyword in every activity and a constant Endeavour to

achieve standards of the highest levels has been an ongoing commitment from
the time of its inception as well as recognition and acknowledgement of this
devotion. This achievement has been set as a benchmark to go forward in
excellence.
For Haier it is an ongoing process to continuously explore new product
applications, competitive technologies and potential markets. Haier has scaled this success
with its trademark of commitment and quality.
The commitment towards this is apparent from the fact that Haier has a total manpower
of 92 persons supporting the Quality and Technical functions at its various manufacturing
facilities.
All its products are manufactured in accordance with the current acceptable
world standards. All its manufacturing facilities have been upgraded
conforming to the current ISO:9001:2000 standard, from the earlier ISO:
9002:1994 standard, and are now certified by KPMG for ISO:9001:2000
standard..
The major environmental issues addressed are:
 Ongoing manufacturing processes are studied in detail with a view to
minimize generation of liquid/gaseous waste streams as a part of
continuous improvement.
 A specially constituted Pollution control Cell at our R&D centre is
actively engaged in developing technologies for environment protection
at our manufacturing plants. Our Pollution Cell in fact also helps out
smaller industrial units that do not have capabilities and infrastructure for
such jobs. The efforts of our team are not aimed at just pollution
minimization but also to conserve energy, improve process yields and
product quality.
The above practices help in achieving strict compliance with statutory standards laid down by
the regional Pollution Control Authorities for plant effluent and emission quality.

[19]
2.3 FACILITIES

Haier India Pvt. LTD has five manufacturing facilities at different locations in the Western
part of India that have a logistic advantage being within six hours from a major port.
The company manufactures Inorganic, Organic and Fine & Specialty chemicals. There
are two units in the state of Gujarat and three units in the state of Maharashtra. The
Inorganic Chemicals are produced at one of the facilities in Gujarat while the Organic and
Fine & Specialty chemicals are produced at the other facilities. One of the facilities is
devoted to the processes Hydrogenation and Reductive Alkylation.
Each of the facilities has DCS controlled operations. The company's main strengths are
Nitration, Chlorination and Hydrogenation.
The company also has the technical capabilities to carry out the following reactions at its
plants.

1. Alkali Fusion - High Temperature Fusion Reactions

2. Alkylation - Hydrogenation
3. Amination - Nitration
4. Chlorination - 0xidative Bromination
5. Diazotisation - Reductive alkylation
6. Etherification - Sulphonation
7. Acylation - High Pressure/ Temperature Oxidations

The manufacturing facilities produce a range of appliances that cater to a spectrum

of industries like Pharmaceuticals, Colorants, Agrochemicals, Cosmetics, Water
Treatment & Corrosion Prevention, Rubber and Refineries. The facilities are equipped to
handle bulk hazardous raw materials like Compressor, condenser coil, panel,
motherboard, motor

Each manufacturing facility has a proper ETP to ensure that the COD and BOD levels of the
discharge are maintained as per the prescribed standards set by the Pollution Control Boards.

[20]
2.4 RESEARCH AND DEVELOPMENT

At Haier, R&D is the key to survival and growth, given that a fast paced global
environment results in ever changing customer needs and new products and processes
drain away competitiveness.
From mere quality issues, Haier India has now moved into the field of customized
chemicals, newer technologies, expanding applications that satisfy customers.
To that end we have a central R&D facility, the Haier India Pvt. LTD&
Development Centre (DRDC) at Pune that has been approved by the
Government of India. Dept. of Science & Technology. DRDC has a sophisticated analytical
laboratory and facilities for testing new technologies and new products.
A team of over 30 persons, including PhDs and Chemical Engineers are supported by
a technical services group of Chemists / Chemical Engineers at the manufacturing divisions.
The Centre works closely with reputed universities and research institutes of India like
the University Institute of Chemical Technology - Mumbai, National Chemical Laboratory
- Pune and the Indian Institute of Chemical Technology - Hyderabad.
Approved by the Government of India., Dept. of Science & Technology, the centre is
primarily engaged in research and process development for new products as well as
optimization of the manufacturing processes for existing products. The pilot plant of the
company ensures solutions for extremely demanding customers.

[21]
2.5 BOARD OF DIRECTORS

Shri. Zhang ruimin, Chairman

He is the founder of the Company and is associated with it since 2nd May 1970, right from the
date of inception of the Company. He is a well known industrialist, having 46 years of
versatile experience in the Chemical Trade and Industry and is also founder of Haier
appliances and Corporation LTD. He is the Chairman of both the Companies.
Shri. Zhang Rumin, Vice Chairman & Managing Director
He is a Science Graduate closely associated with the Company since 23 years. He is a
Managing Director of the Company and successfully looking after day to day affairs of the
Company from 1983.
Shri. Mian Yang, Managing Director
He is a Science Graduate with Honours and Master of Science (Chemical
Engineering) from the University of Texas, USA. He is actively associated with
the Company since 1984 and is a Managing Director of the Company from 1.12.1989.
Shri. Shrenik Kasturbhai
He is a well known Industrialist and a MBA from Harvard University. He is a
financial expert and a person upholding the highest virtues. He provided
exemplary leadership as the Chairman of the Company for a period of 27 years.
He is associated with the Lalbhai group of Companies for past many years.
Shri. M. R. B. Jonathan Zhaoxi
Former Chairman and Managing Director of the Industrial Development Bank of India (IDBI),
a premier financial institution of the Country, he possesses rich experience in the field of
Finance and Management.
Shri. A.K. Das Gupta
He is a Science Graduate along with Bachelor of Chemical Engineering having rich
experience in the field of appliances and is responsible for producing various resins and
chemicals for the first time in India. He has been associated with the Company since 1978.

[22]
Shri. Haukh Shau
He is Ex-Chairman and Managing
Director of Indian Haier appliances
Corporation LTD. He has also held
various important positions like Joint
Secretary to the Prime Minister of India,
Secretary of Post and Telegraph Board,
Chairman of Gujarat Industrial
Investment Corporation, Vice Chairman of
GE
Capital (India), Chairman of Gujarat
Industrial Research & Development
Agency and Gujarat Ecology
Commission. Shri. Shau has made
significant
contribution in social, cultural and rural development activities like leprosy
eradication, water management conservation and management of man-made and
other natural heritage. He has also contributed significantly in the academic and
research areas. He is holding the office of Chairman in National Institute of
Design and Gujarat Institute of Desert Ecology and is an active member on the
Board of several Companies. He has joined the Company i.e. 21/10/2003.

Shri. Niesh Kampani

He is a chartered Accountant. He has built up 25 years strong domestic Franchise for the JM
Financial Group in India. Shri. Kampani who is arguably the oldest investment banker in the
country, has in a career spanning the last three decades, been involved in the development of the
capital markets in India and advised many Corporate on restructuring , merger and acquisitions
and providing complete financial solutions tailor-made for their capital raising needs. He has
served on various committees of Securities and Exchange Board of India (SEBI) and was a
member of the Bhagwati Committee on SEBI regulation for Substantial Acquisition of Shares
and takeovers. He has also served as a Chairman and member of the Financial Services
Committee and National Council of the Confederation of Indian Industry (CII). He has joined the
Company i.e. 21/10/2003.

Shri. Sudhin Choksey

Shri. Sudhin Choksey is a Chartered Accountant having vast experience in the field of
Finance. He is a Managing Director of GRUH Finance LTD and also a Director and member
of Audit Committee of Gujarat State Financial Services LTD. He has joined the Company
i.e. 30/03/2005.
[23]
Shri. Bergis Desai
Shri. Berjis Desai is a Solicitor and a Managing Partner of M/s. J. Sagar
&Associates, a renowned firm of Solicitors & Advocates. He has extensive experience
as an arbitrator and counsel in the field of Corporate Laws and also in international
commercial & domestic arbitration. He has also worked as a journalist with a
leading Indian daily and continues to be a columnist in the Indian newspapers. He
is a member of American Arbitration Association, The Bombay Incorporated Law
Society and an Arbitrator at The London Court of International Arbitration

Dr. Richard H. Rupp

Dr. Rupp is Ph. D. Chemistry (with distinction) from University of Karlsruhe,
Germany and has done his program for Executive Development, IMD at
Lausanne, Switzerland. Dr. Rupp has held various top level positions in leading
multinational companies such as Hoechst AG, Germany, Lonza, Switzerland
and Allessachemie, Germany. His focus has been in the field of pharmaceuticals
and fine chemicals. Dr. Rupp's experience encompasses a mix of scientific,
technical as well as managerial roles. He is well acquainted with the US,
European and Asian markets, especially the Indian sub-continent by virtue of
his earlier tenure as R&D Director, Hoechst India Ltd. (1984 - 1988). Presently,
Dr. Rupp is associated with Acores Research LTD as President.

Shri. Sudhir Mankad

Shri. Sudhir Mankad has done MA in History from Delhi University and Diploma in
Development Studies from Cambridge University. He was in the Indian
Administrative Services (IAS) from 1971 to 2007. He has held various important
positions in Government of India including various top level positions in Government
of Gujarat as Principal Secretary, Finance Department, Principal Secretary, Education
Department, MD Gujarat Alkalis and Chemicals Ltd., Joint MD, Gujarat Industrial
Investment Corporation, and Director of Higher Education. He had also been the
Chairman of Gujarat Industrial Power Company Ltd. and Gujarat Maritime Board (GMB)
in past.
Presently, he is a Chairman of Gujarat Institute of Desert Ecology and a
Member of High Power Expert Committee on Urban Development,
Government of India. He has joined the Company i.e. 13th May, 2009.

[24]
1.6 ACHIEVEMENTS

Haier has many a firsts to its credit and these have been earned through its constant
Endeavour for identification of products that are required by the end user industries.
Haier's R&D centre in Pune aims to provide specialized products that add value and enhance
every aspect of life.

Mentioned here are some of the company's achievements:

 Sir P. C. RAY Award for the Best Chemical Manufacturing Unit in India o Awarded the
"EXPORT HOUSE" status by the Govt. of India in 1998 and is in force till date.

 The Federation of Indian Chambers of Commerce and Industry (FICCI) award was
presented, by the then Prime Minister of India, Mr. I. K.
Gujral, to the then Vice-Chairman of Haier Mr. C. K. Mehta 1997-98.
 The company won the Certificate of Merit, at the "ENVIROTECH '93",
for sustainable development for adopting environment friendly practices
'in house' for the treatment and disposal of the effluent generated at its
various manufacturing facilities, from the CHEMTECH Foundation,
India. The company is one of the first to display the figures of the
pollution emitted at the gate of each of its manufacturing facilities on a
daily basis.

[25]
 MILESTONES
In a short span of 30 years Haier has steadily climbed the steps of excellence and is continuing in
its efforts to reach the top and be the best. Mentioned here are some of its milestones:

Beyond 2000 Diversification and Consolidation in related product areas Acquired

Aryan Pesticides Ltd, DASDA business of Vasant Ltd.

1996 Catalytic Hydrogenation plant commissioned

1993 Merit Certificate from CHEMTECH Foundation
1991 Haier Deefrizer plant commissioned
1984 Haier acquires Dyestuff and Intermediates Unit
1982 Haier Promotes Haier appliances & Petrochem.Ltd.
1974 P.C. Ray award
1972 Refrigerator Plant commissioned
1971 Haier went Public
1970 Haier Promoted

[26]
 2.7 HAIER PRODUCT RANGE

With years of expertise, a track record of innovation and indigenous development, HAIER
produces a spectrum of chemicals. We cater to a wide range of industries including Colorants,
Agrochemicals, Pharmaceuticals, Rubber, Specialty & Fine chemicals and have the world’s largest
chemical companies as our customers.
HAIER APPLIACNES is the world leader in 2, 4 Xylidine and 2, 6 Xylidine and the second largest
producer of DASDA. We also manufacture a wide range of Home appliances for use in industrial
explosives, paints, cosmetics, lubricants, polymers, optical brighteners, photographic chemicals,
petroleum additives, specialty fibres and water treatment chemicals.

Products manufactured are tailor made as per the needs and specific
requirements of the customer.

Refrigerator

[27]
Washing machine

[28]
BALANCE SHEET HAIER INDIA PVT. LTD as on 31st March 2013- Rs in
2014 lakh
31st march
Particular note no 31st march 2014 2013
Amount Amount
Equity and liabilities
Shareholder funds 3
Share capital 4 1,045.38 1,045.38
Reserve and surplus 29,706.84 27,014.36
30,752.22 28,059.74
Non-current liabilities
Long-term borrowing 5 27,125.26 23,933.71
Other long- term liabilities 6 244.39 217.62
Long-term provision 7 418.57 361.85
Deferred tax and liabilities 8 3,477.13 2,335.49
31,265.35 26,848.67
Current liabilities
Long-term borrowing 9 19,071.61 7,073.93
Trade payable 10a 14,616.50 20,420.52
Other current liabilities 10b 8,594.97 5,420.97
Short-term provision 7 1,323.98 1,044.47
43,607.06 33,959.89
TOTAL 105,624.63 88,868.30
ASSETS
Noncurrent assets
Fixed assets
Tangible assets 11 45,601.53 32,428.12
Intangible assets 12a 526.52 113.78
Capital working progress 12b 7,109.72 11,755.20
Noncurrent investment 13 312.22 132.92
Long-term loan and advance 14 2,512.36 2,206.05
Other noncurrent assets 15 _ _
56,062.36 46,636.07
Current Assets
Inventories 16 12,995.06 10,435.84
Trade receivable 17 29,193.10 24,225.17
Cash and cash equivalent 18 644.14 950.05
Short term loan and advance 19 6,597.94 6,343.42
Other current assets 15 132.04 277.75
49,562.28 42,232,23
TOTAL 105,624.63 88,868.30

[29]
[30]
 Chapter No 3
Review of Literature

 INTRODUCTION,
 DEFINATION,
 PRESENTATION,
 FEATURES,
 CONTRIBUTION,
 PV RATIO MARGIN OF SAFETY,
 BREAK EVEN POINT,
 KEY FACTOR APLICATION ADVANTAGES,
 LIMITATIONS

[31]
3.1 INTRODUCTION:-

Marginal Costing is the technique of costing fully oriented towards managerial

decision making and control. This technique can be used in conjunction with any method of
cost ascertainment. It can also be used in combination with technique such as budgeting and
standard costing.

Marginal costing is helpful in determining the profitability of products, departments, process

and cost centres. While analyzing the profitability, marginal costing interprets the cost on the
basis of nature of cost.
The emphasis is on behaviour of the costs and their impact on profitability.

3.2 DEFINATION
1. Marginal cost is defined by I.C.M.A, London as “the amount at any given volume of
output by which aggregate costs are changed if the volume of output is increased or
decreased by one unit. In practice, this is measured by the total variable costs attributable to
one unit.”

2. The ICWA has defined marginal costing as “the amount at any given volume of
output by which aggregate costs are changed if the volume of output is increased or
decreased by one unit” In this, a unit may be a single article, a batch of articles, an order, a
stage of production capacity or a department.

[32]
Objectives Of Marginal Costing

The objective of the marginal costing is to assist managers to develop a better

understanding of costing aspects of business. In today’s times where market is the price
decision maker and threat of competition is higher than ever before, the knowledge of
cost accounting comes to the rescue of modern managers. By achieving breakthrough
innovation in costing techniques, one can make or break the market.

Marginal costing is not restricted to finance and accounts people, but it is open to all
facets of organisation including marketing, planning and strategy divisions. A manager
with a vision for having a radical perspective on marginal costing and total profitability
improvement can change his/her life by using this technique.

A clear objective will help to deliver precise and accurate results; it will also help to
predict the time frame involved the scope of the project and identify the relevance of it in
current situation. Following are fundamental objectives of the study,

1. The main objective is to study the marginal costing in the organization.

2. To study the importance of behaviour of expenses in marginal costing.
3. To study the marginal costing technique.
4. To study the annual Balance sheet & profit & loss Account.
5. To study & understand the importance & use of marginal costing.
6. To study financial position of the organization.

[33]
Scope Of Marginal Costing

Marginal costing is a technique of ascertaining cost used in any particular method of costing.
According to this technique:

Variable costs are charged to cost unit and the fixed cost attributable to the relevant period is
written-off in full against the contribution for that period. Therefore it has very LTD scope –
as it distinguishes between the treatment of fixed and variable components as parts of fixed
costs, is difficult to adopt the technique in capital intensive industries where fixed costs are
very large.

1. The study involves variable cost, contribution, fixed cost, profit & all items of the marginal
costing.

2. The study is based on marginal costing statement of last 5 years, which were obtained from
the company.

The study involves calculation of profit variable ratio, contribution, margin of safety & profit
& loss of the Hailer India PVT. LTD.

[34]
 Importance Of Marginal Costing

Following are the importance of the present project work-

1. Guidelines for the organisation:-

Present project work will be the guideline for the organisation in future for maintaining
the costing records & department. With the help of this project they can understand the
importance of maintaining costing department & records, which will help to control the
expenses & the unexpected losses during the production.

2. Guideline for next year M.com students:-

The project work will be the good guideline for the costing students of the next year for
the project reports.

3. Great experience for my future:-

The most important thing is that this experience will help me in the future. Discussions,
interview, data collection, preparation of actual project & all other steps in project have
given me great confidence for the future efforts. Besides this I can also undertake research
work in future & make use of research fellowship granted by U.G.C.

Marginal cost in other words is variable cost. For a typical manufacturing company the
following elements of costs are variable or marginal costs:

[35]
 Direct material

Direct wages

Direct expenses

Variable overheads

Thus, Marginal Cost = Prime cost + Total variable overheads

Or
Marginal Cost = Total cost - fixed cost

3.3 PRESENTATION OF MARGINAL COSTING

a) Marginal costs may be presented in a statement form or under break-even charts. The usual
statement forms for presentation of marginal costs are as follows:-

[36]
 MARGINALCOSTSTATEMENTOFASINGLEPRODUCT
Particular Product A

Rs Rs

Sales ×××

Less- variable cost ×××

1. ×××

2. ×××

3.

Contribution ×××
Less- fixed cost
×××
Profit ×××

××××

However, for a group of products (say A, B &C) fixed cost should be deducted
from the total contribution of all the products.

For e.g.:- Direct material Rs.20, Direct labour Rs.8, Other variable cost Rs.4

The production is of 40000units & the fixed cost is Rs.100000. Selling price is
Rs.50 per unit. Ascertain marginal cost, contribution and profit

[37]
Marginal cost statement
Particulars Rs Rs

Sales (40000u × Rs.50) 2000000

Less – variable cost

1.Direct material (40000u × Rs.20) 800000

2.Direct labour (40000u × Rs.8) 320000

3.Other variable cost (40000u× Rs.4) 160000 1280000

Contribution 720000

100000
Less – fixed cost
620000
Profit

MARGINAL COST STATEMENT OF A GROUP OF PRODUCT:-

Particular Product A Product B Product C Total

Sales ×× ×× ×× ××

Less- variable cost ×× ×× ×× ××

Contribution ×× ×× ×× ××
Less- fixed cost ××

[38]
 Profit ××

In chart it can be shown as:

Sales Sales Sales

Product A Product Product

B C

Variable Variable Variable

cost cost cost

Product A Product B Product C

Contribution

Minus

Fixed cost

Profit

[39]
3.4 FEATURES OF MARGINAL COSTING:-

1. Total cost is separated into fixed & variable costs.

2. Only variable cost is considered for decision making.
3. Inventory (Raw Materials + Finished Goods) is valued at marginal cost.
4. Product wise profitability & performance can be reported.
5. It is a technique & not a method of cost recording & cost reporting.
6. Contribution is the difference between sales & marginal cost.
7. Price is based on marginal cost plus contribution.
8. Profitability of various products is determined in terms of marginal Contribution.
9. Fixed cost do not find place in the product cost.

1.5 CONTRIBUTION:-

Contribution is the difference between selling price & variable costs of

sales. In marginal costing, contribution is the base in the process of determining
profitability of each product. When two or more products are manufactured, net profit
per product cannot be ascertained as the fixed overheads are charged in total to the
profit & loss account. Hence, contribution per product plays a very importance role in
determining profitability of each product. It is a surplus generated by the product for
recovery of fixed cost.

[40]
Ex.:-

Particulars Product A Product B

Selling price per unit 100 120

Less – variable cost per unit 50 80

50 40
Contribution per unit

Thus, though selling price of product B is higher than the selling price of
product a contribution per unit of product B is less than of product A

Usually selling price includes an element of profit. However, products may be sold at no
profit a loss basis or sometimes may be at a loss. Therefore, the following equations can
be used;

1. Contribution = Fixed cost + Profit

2. Contribution = Selling Price – Variable cost
3. Profit =Contribution – Fixed cost
4. Selling price = (Variable cost + Fixed cost)

The knowledge of contribution margin is a valuable aid to management in making

decision. On the basis of knowledge of ‘Contribution’ the management can decide:-

1. Whether to accept or reject a new order. The new order may be accepted if it
yields the greatest contribution, thereby maximising the profits.

[41]
 2. A product or sells mix. The mix which gives maximum contribution is to be
adopted.
3. A selection of production method from alternative methods available. Here also,
the method which gives the maximum contribution is to be adopted subject to
the consideration for key factor.

Ex: - Find contribution

Particulars Cost per unit

(Rs)

Direct material 10

Direct labour 4

Other variable cost 2

Selling price 25

Ans:-

Particulars Rs Rs

Selling price per unit 25

Less – Variable cost per unit

Direct material
10

[42]
 Direct labour 4

Other variable cost 2 16

9
Contribution

3.6 PROFIT VOLUME RATIO:-

The ratio or percentage of contribution margin to sales is known as Profit

Volume Ratio. Profit volume ratio determines the increase or decrease in contribution
due to increase or decrease in sales volume, provided other factors remain same
unchanged.

*Formula for profit volume ratio:-

1. p/v ratio = sales – variable cost

Sales × 100

2. p/v ratio = contribution

Sales ×100

By transposition it means:-

1. Contribution = sales × p/v ratio

2. Sales = contribution
P/v ratio

[43]
 3. p/v ratio = change in profit/ contribution
Change in sales

This formula is used when figures for two successive years are given in the
problem.
A comparison for profit volume ratio of different products can be
made to find out which product is more profitable. Profit volume ratio can be
improved by:
1. Increasing the selling price per product/ unit.
2. Reducing variable cost per unit.
3. Adopting more profitable product.

E.g.:-

1. If the following data is given:-

Variable cost – Rs.160 per unit
Selling price – Rs.200 per unit
Find p/v ratio.

Ans:-
P /v ratio = sales – variable cost
Sales × 100
= 200 – 160
200 × 100
= 40
200 × 100
= 20%

[44]
2. Use of profit volume ratio in decision making :-
Particulars Product A Product B

Selling price Rs. 100 Rs. 120

Less – variable cost Rs. 40 Rs. 60

Contribution Rs.60 Rs. 60

Thus, if above two profit are compared only on the basis of

contribution then they rank equal. However, profit volume ratio will certainly
help to know the most profitable product of these two. Accordingly profit volume
ratio:-

Particulars Product A Product B

p/v ratio = 60 60
Contribution
Sales × 100 100 × 100 120 × 100

= 60% = 50%

Conclusion:-
As the p/v ratio of product A is higher, and then product B, product A is more
profitable. (Even if the selling price of A is less than the selling price of B).

[45]
3.7 MARGIN OF SAFETY:-

Margin of safety is the difference between actual sales & sales at break-even point. The
margin of safety is nil at break-even point as at this point there is neither profit nor loss.
It represents the strength of the organization. A high margin of safety gives confidence
to the organization as a sudden drop in value will not affect the profit so much. On the
other hand, an undertaking with low margin of safety may wipe off the profit & turn
into a loss with a drop in sales.
Thus;

Margin of safety = Actual sales – Break-even sales

Margin of safety = Profit

Profit volume ratio

The concept of margin of safety can be clarified as follows:-

 B
Sales at given level margin of safety
Of activity *D B.E.F

 A

MARGIN OF SAFETY

Efforts should be made by the management to increase the margin of safety so that more
profit may be earned. The margin can be increased by taking the following steps:-

[46]
 1. Increase the level of production
2. To reduce the both fixed & variable cost
3. Increase the selling price
4. Substitute the existing product by more profitable product.

3.8 BREAK- EVEN POINT:-

Break-even point is the point at which total revenue is equal to

total cost. It is that level of output (or sale) where there is no profit or no loss.
At this stage, contribution is just sufficient to absorb fixed cost. The
organization starts earning profit when the output or sales activity crosses this
point. Output or sales below this point results in a loss. BEP can be calculated
by the following formula:-
In terms of output= Fixed cost

Contribution per unit

In terms of sales value = I) Fixed cost x selling price per

unit

Contribution per unit

ii) Fixed cost x Total sales

Total contribution

iii) Fixed cost

P/V Ratio
[47]
3.9 KEY FACTOR:-

Key factor is that factor, which is the most important one for taking
decisions about profitability of a product. Key factor being the important factor,
contribution in terms of the Key factor is to be considered for ascertaining the
profitability & not simply the maximisation of total contribution. The Key factor may be
sales, raw material, production capacity, labour shortage etc. When a Key factor is
operating, the best position is reached when contribution margin per unit of Key factor
is maximised.

Formula = contribution

Key factor

For e.g.:-

Particulars Product A Product B

Sales 100 80

Variable cost 80 70
20 10
Contribution

[48]
 i. If there is no ‘key factor’ Product A is more profitable as is its contribution is
more than Product A.

ii. If there is a key factor, say machine capacity, profitability must be decided on the
basis of contribution per unit of machine capacity. Suppose, machine capacity is
LTD to 500 hrs& 4 units of product A & 9 units of product can be produced in 1
hr.

Particulars Product A Product B

Contribution per hour 20 x 4 = 80 10 x 9 = 90

Total contribution for 500 hours Rs. 40000 Rs. 4500

In this case, production of product B is more profitable.

3.10 APPLICATION OF MARGINAL COSTING:-

1. Profit planning through increase / decrease in volume of output.

2. Make or buy decision.
3. Key factor decision.
4. Closing down business.

[49]
 5. Alternative method of production.
6. Selection of suitable product mix.
7. Finding out product wise profitability.
8. Export pricing decision.

3.11 ADVANTAGES OF MARGINAL COSTING:-

1. Evaluation of performance:-
By application of marginal costing technique, profitability of each department or
product can be evaluated.
2. It is simple to understand & easy to operate.
3. It is very useful tool of profit planning. It guides the management about the
profitability at various levels of production & sales.
4. It provides the management with useful technique like break even analysis, p/v
ratio etc.
5. It is very valuable technique in decision making. It provides information to the
management in making decision like make or buy, selling price fixation, export
decision.
6. It helps in cost control by concentrating on variable cost as the fixed cost is non-
controllable in the short period.

[50]
 7. By not charging fixed overhead to cost of production the effect of varying charges
per unit is avoided.

3.12 LIMITATIONS OF MARGINAL COSTING:-

1. The separation of expenses into fixed & variable cost presents certain technical
difficulties whereas marginal costing technique assumes that all expenses can be
divided fixed & variable cost. In fact, no variable cost is completely variable & no
fixed cost is completely fixed. Actually most of the expenses are semi-variable & it
is difficulties to segregate them into fixed & variable.
2. Marginal costing does not give complete information. The exact cause is not
disclosed by marginal costing.
3. Marginal costing lays greater emphasis on sales rather than production. In fact,
efficiency of business is to be judged by considering both sales & production.
4. Marginal costing technique is less effective in capital intensive industry where fixed
cost is more.
5. In marginal costing, selling price is fixed on the basis of contribution alone which
is not proper.
6. Marginal costing is not applicable in those concerns where large stocks have to be
carried by way of work in progress.
7. Marginal costing is useful for short term assessment of profitability. However long
term assessment of profit can be correctly determined on full cost basis only.

[51]
 CHAPTER 4
Research Methodology
INTRODUCTION SOURCES OF DETA PRIMARY DETA

[52]
4.1INRODUCTION

“A research design is the arrangement of conditions for collection and analysis of data in
manner that aims to combine relevance to the research purpose with economy in
procedure”.
This study involves only the secondary data covering a period of three years between
2009-2012.
The secondary data was collected from company’s website for profile, magazines,
articles relating to marginal cost and management tools. The annual report and cost
details provided by the company. Statistical tools like, Growth Rate, Correlation, T –
Test were used.
Research methodology is a science of how research is done scientifically. It is a way to
systematically solve the research problem by logically adopting various steps.
Methodology helps to understand not only the products of scientific inquiry but process
itself. Aims to describe and analyze method, throw light on their limitation and
resources, clarify their presupposition and consequences, relating their potentially to the
twilight zone at the “frontiers’ of knowledge”
Research design Researchers organize their research by formulating and defining a
research problem. This helps to focus the research process so that draw conclusions
reflecting the real world in the best possible way.

[53]
 4.2 Sources of data

TheStudy under reference is based on

A) Primary data/information

Data gathered before, which is collected for the first time. It obtained through
personal interview and discussion with the concerned executives of the selected
company. Primary data gathered by:

Communication methods

Interacting with head of account department, human resource manager, finance

manager and other staff member of finance department. Asking for their opinions,
attitudes, motivations, characteristics.

Observation methods

No interaction with respondents. Letting them behave naturally and drawing

conclusions from their actions.

B) Secondary data;

Pre existing data not gathered for purposes of the current research, which have been
used previously for any research and are now being used for a second time. In short, the
data presented in research report when used again for further research are called

[54]
secondary data. It is less expensive and can be obtained faster than primary data. For
example: Annual Reports / Published Accounts.

Secondary data are collected from a) Articles, Books, Internet, Published and
unpublished reports and b) Final reports of the organization i.e. Balance sheet, Profit
and Loss account and ANNUAL Reports of Haier India PVT.LTD

[55]
 Chapter 5
Data analysis &
interpretation
MARGINAL COST
SHEET

[56]
FOR THE YEAR ENDED 31st MARCH, 2012
Particulars Amount (Rs) Amount (Rs)

A) Sales 44,05,67,587

B) Variable Costs

1.Material consumed 20,59,71,925

2.Processing charges 1,45,35,600

3.Stores consumed 76,42,152

4. Loose tools and patterns (70%) 81,12,469

5. Power& Fuel (70%) 59,03,069

6. Repair& maintenance (70%) 12,81,469

7. Salaries, Wages, Bonus &Allowances (70%) 4,17,09,527

8. Telephones (70%) 19,26,140

9. Printing Stationary (70%) 20,26,155

10. Postage& Telegrams (70%) 4,25,360

11. Travelling& Conveyance (70%) 82,35,751

12.Directors Sitting Fees 48,000

13.Bank charges 12,08,478

14.Selling expenses 1,51,02,716

[57]
15.Miscellaneous expenses 1,13,06,899

Total Variable Costs

C) Contribution (A-B)

D) Fixed Costs

1. Loose Tools & Patterns (30%) 5,49,222

2. Power&Fuel (30%) 7,76,773

3. Repairs& Maintenance (30%) 25,29,887

4. Salaries, Wages, Bonus & Allowance (30%) 1,78,75,551

5.Employees Welfare Expenses 39,83,698

6.Rent 7,73,581

7.Rates & Taxes 5,34,991

8.Insurance 6,73,032

9.Auditors Remuneration 1,01,291

10. Telephones (30%) 8,25,489

11. Printing Stationary (30%) 8,68,352

12. Postage& Telegrams (30%) 1,93,869

13. Travelling& Conveyance (30%) 35,29,607

14.Legal & Professional Charges 72,90,409

[58]
15.Service Charges 83,04,000

Total Fixed Cost

Profit (C - D)

Table 5.1: Marginal Cost Sheet

5.2 Contribution

Particulars Amount (Rs)

Sales 44,05,587

Variable Costs 31,91,65,546

Table 5.2: Contribution

*Contribution = Sales – Variable Costs

= 44, 05,67,587-31,91,65,546

*Contribution = Rs.12,14,02,041

*Contribution per unit =44,05,67,587/4,779

*Contribution per unit =92,188

[59]
5.3) Profit Volume Ration (P/V Ratio)

Particular Amount (Rs)

Sales 44,05,67,587
Contribution 12,14,02,041
Table 5.3: profit volume ratio

*P/V Ratio = contribution/Salesx10

12,14,02,041/44,05,67,587X100

*P/V Ratio =27.56%

5.4) Break- even point

Break-even point (units)= Fixed cost/ Contribution

per unit

Particular Amount (Rs)

Fixed cost 4,88,09,712

Contribution per unit 92,188

Table no 5.4 break-even point (units)

[60]
Break-even point (units) =4,88,09,712/92,188

Break-even point (units) =529.46

Break-even point( sale)= Fixed cost/P V Ratio

Particular Amount (Rs)

Fixed cost 4,88,09,712

p/v ratio 27.56%

Table no 5.5 break-even point (sales)

*break-even point (sales) = Fixed cost/P V Ratio

*break-even point (sales) =4, 88,09,712 / 27.56%

*break-even point (sales) =17, 71,03,454

If cross break-even point, there results profit to the business and if the sales are less the
business suffer loss.

5.5 Margin Of Safety

Margin of safety= actual sales- breakeven point (sales)

Particular Amount (Rs)

Sales 44,05,67,587
break-even point(sales) 17,71,03,454

Table no 5.6 Margin

of safety
[61]
 Margin of Safety = Actual Sales – Break Even Point (Sales)

= 44, 05, 67,587-17, 71, 03545

Margin of safety=Rs.26, 34, 64,133

5.6 Break Even Chart

It is a graphical representation of Marginal Costing. Break Even chart is constructed in

three different ways as follows:

a) Simple (or Traditional) Break Even Chart:

Below figure indicates a simple (Traditional) Break Even chart of Haier India PVT.LTD for
the year ended 31st March 2012

Chart5.1: Traditional break even chart

Sales Total Cost Fixed cost

50

45
Profit
40
Cost 35
and
sale 30

reve 25 Angle of incidence

nue Variable Cost

20 Break Even Point
(10la
c Rs) 15

10 Margin of Safety

5
Fixed Expenses
0
0 1000 2000 3000 4000 5000

Production (Units)
[62]
 Break Even Chart (Second Method):

Below figure indicates a Break Even Chart (Second Method) of Haier India PVT.LTD for
the year ended 31st March 2012.

Sales Total Cost Fixed cost

50

45

40 Profit

Cost 35
and
sale 30 Angle of incidence
reve 25
nue Variable Cost
20
(10la Break Even Point
c Rs) 15

10 Margin of Safety

5
Fixed Expenses
0
0 1000 2000 3000 4000 5000

Production (Units)

Chart no.5.2 Break-even chart (2nd method)

Conclusions
This method is more helpful to the management for decision making because it shows
the recovery of fixed costs at various levels of production before profits are realized.
b) Contribution Break Even Chart (Third Method):

Below figure indicates a Contribution Break Even Chart (Third Method) of Haier India
PVT.LTD for the year ended 31st March 2012?

[63]
 Chart5.3
50

45

Cost 40
and
35
sale
Variable Cost
reve 30
nue 25
(10la
20
c Rs)
15

10
Break Even Point Profit
5
Fixed cost
0
0 1000 2000 3000 4000 5000

Production (Units)

Graph 5.3: Break even chart (3rd Method)

Conclusions
Break Even Chart is easy to understand. By observing the chart we get a clear picture of
the company’s situation this is useful for cost control also.

[64]
Chapter No 6

CONCLUSIONS
&
SUGGESTIONS

[65]
6.1 Conclusion

1) It has been observed that the organization does not maintain separate departments &
it does not follows marginal costing techniques for decision making.
2) The organization is not suffering from operating losses but the profits of the
organization are going on decrease year by year.
3) In the HAIER APPLIANCES there is insufficient control over the variable cost & fixed
cost. The variable & fixed overheads are going on increasing year by year. Since due to
increase in variable & fixed cost, increase in sales does not gives high profit to the
organization.
5) It is observed that contribution in the year 2012 is increased but in the year 2012 the
contribution is decreased. Hence, the organization is not doing well.
6) It is observed that sales & contribution in increasing & simultaneously the fixed cost
is also increased, so profit margin is not increased in the ratio of increased sales &
contribution.
7) It has been observed that although classification& codification is done in the accounts
departments there is problem regarding the same in locating the items easily.
8) The organizations fixed overheads are 100% fixed, weather is production or not these
fixed overheads are incurred.
9) It is observed that the variable & fixed overheads are going on increasing year by
year. The increase in fixed cost is due to increase in depreciation & interest & increase
in variable cost is because of increase in sales & production.

[66]
10) The organization is able to give sufficient information about the sales & cost for the
project. They have given their full co-operation for the project report by supplying the
correct information.
11) It has been observed that the management is trying to motivate the employees by
giving various facilities which plays an important role in any organization.
12) The increase in sales is due increase in raw materials in the factory area.

6.2 Suggestions

1) The organization should maintain the separate costing department & should follow
the marginal casting technique for decision making as its plays significant role in
modern days.
2) The organization is not suffering from operating loss but the profit of the organization
is decreasing year by year. The organization should take effective step to increase the
profit by increasing sales volume & reducing variable & fixed expenses.
3) The organization should reduced& have control over the variable & fixed expenses &
this will result in high profits.
4) In order to increase sales & quality of the products the organization appoint
technically qualified staff or should give tanning to the present employees & make them
technically qualified.
5) The organization should try its best to increase the contribution. The contribution can
be increased by increasing sales volume & reducing the variable cost.

[67]
6) The organization should replace the obsolete machinery by modern technique in
order to increase sales volume & quality of the product.
7) By placing the modern machinery instead of obsolete or old machinery, the sales
volume will increase & there by fixed cost & variable cost will reduced, by spreading
fixed cost over large volume of production.
8) The organization should maintain cost records so that they can know increase &
decrease in costs of production.
9) The organization should try to motivate the employees and create the feeling of
attachment towards the organization.

[68]
 Questionnaire

Dear Sir/Madam,

I am a student of Abeda Senior College, Pune and presently doing a project on “A study
of Marginal Costing”. I request you to kindly answer my questions and I assure you that
the data generated shall be kept confidential.

1) What is your working philosophy?

2) What are the tasks you perform in a typical working day?

3) What is Vision, Mission and working philosophy of company?

4) Specific feature of company which makes it different from others?

5) Do you have industry benchmarks for major activities?

6) Do you have a Cost Accounting department?

7) What is your idea about Marginal Costing as a technique of costing?

8) What is your firm’s strategy for better use of Marginal Costing Technique?

9) Explain the technique of Marginal Costing and state its importance in decision making.

10) What changes has your recent Marginal Costing plan bought in the production of the
company?

11) Explain the practical uses of Marginal Costing in your company?

[69]
12) Explain the various managerial problems which are simplified by the use of marginal
costing technique.

13) In what way marginal costing contributes to cost control, performance evaluation and
profit planning?

[70]
 Chapter No 7

 Bibliography
 Webliography

BIBILOGRAPHY
[71]
Books Referred
Management Accounting, Vol-II - PATKAR, MG, Page, 32-33
Advanced cost Accounting Vol-III - JAIN & NARGAN, Page, 45-47
A text Book of cost Accountancy Vol-I - M.A.ARRORA, Page, 5-10
Advanced cost Accounting & cost system, Vol-IV - S.N. MAHESHWARI, Page, 60-62
Cost Accounting method & Problem, Vol-III - B.K. BHAR, Page, 40-42
Costing, Vol-II - TERRY LUCEY, Page, 25-27
Research mythology, Vol-V - C.R. KOTHARI, Page, 50-52

Webliography

Websites Referred
www.haier.com
www.accountingcoach.com
www.learncostaccounting.blogspot.com
www.businessdictionary.com
www.tutorialspoint.com
www.investopedia.com
www.wikipedia.com

[72]