Sahas Institute :- 11-12 Comm / FY – SY – TY B.

com /CA & CS Page |1

SUPER REVISION = MANAGEMENT A/c

MARGINAL COSTING [ Notes & Sums ]
11th 12th (Commerce)
F.Y S.Y. T.Y. B.COM
C.A. & C.S ( All levels)
E-110, Vrundavan Township, Harni Road, Near Sangam, Vadodara. M : 92653 52165 , 99989 84152
FF 9 – Sharnam Complex , Opp. Bahurani Restaurant , Near Crystal School , WaghodiaDabhoi Road.

347 348 349IsconJanMahal, Beside MSU , Opp. Railway Station , Sayajigunj – Vadodara.

# Meaning :- “Marginal Cost is Additional Cost of Producing an Additional Unit of Product”

:- It is Total of All Variable Cost. It is Composed of All Direct Cost & Variable Cost.

Click / Scan
# Meaning of MARGINAL COSTING :-
:- Marginal Costing is the Technique of Ascertaining Marginal Cost by Differentiating Between
Fixed Cost & Variable Cost & of the Effect on Profit of Change in Volume of Output.

:- Fix Cost is Called = Period Cost

:- Variable Cost is Called = Product Cost

:- Semi Variable Cost / Semi Fix Cost = Change with Change in Output but Not in Direct Proportion

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# MARGINAL COST STATEMENT :-

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# IMP Theory Question to Read :- { Self Read = Imp for Exam }
Difference Between “Absorption Costing” & “Marginal Costing”

Click / Scan

SAHAS INSTITUTE – OFFLINE CENTERS [ Best Teaching @ Lowest Fees ]

E 110 Vrundavan Township, 347,348,349 Iscon Janmahal, FF 9 Sharnam Complex,
Beside Tasty Restaurant , Opposite Railway Station, Opp. HDFC Bank ,
Near Sangam Cross Roads, Beside MSU – Sayajigunj Waghodia Dabhoi Ring Road
Karelibaug – 92653 47133 M - 92653 43871 M – 92653 52165
SAHAS INSTITUTE :Karelibaug – Sayajigunj – Waghodia Road. + “Sahas Smart Studies” App - 99989 84152
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Click / Scan

SAHAS Institute
SAHAS B.Com
INSTITUTE = OFFLINE
:Karelibaug SMART
– Sayajigunj CLASS Road. ONLINE
– Waghodia + “SahasLIVE CLASS
Smart Studies” App -SAHAS SMART APP
99989 84152
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# Break Even Point :-

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# FORULAS :-

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=======================================================================================
Note :- This Revision Sessions are for Quick Preparation Before Exam. For Best Preparation
Students Are Instructed to Refer Detailed Study Pamphlet & All Study Videos from
=======================================================================================
Sahas Smart Studies Application
Students Note

JOIN SAHAS INSTITUTE FOR B.COM STUDY @ LOWEST FEES

E 110 Vrundavan Township, 347,348,349 Iscon Janmahal, FF 9 Sharnam Complex,

Beside Tasty Restaurant , Opposite Railway Station, Opp. HDFC Bank ,
Near Sangam Cross Roads, Beside MSU – Sayajigunj Waghodia Dabhoi Ring Road
Karelibaug – 92653 47133 M - 92653 43871 M – 92653 52165
SAHAS INSTITUTE :Karelibaug – Sayajigunj – Waghodia Road. + “Sahas Smart Studies” App - 99989 84152
 Sahas Institute :- 11-12 Comm / FY – SY – TY B.com /CA & CS Page |6

MSU – 2023 Paper [ Marginal Costing ]

Que 1 [A] From the following information of Krishna Ltd., calculate Profit Volume Ratio and Variable Cost
Ratio: Break Even Sales Rs. 10,00,000 and Fixed Cost Rs. 4,00,000. { 2.5 Marks }
@ SOLUTION :-
Given :- BES = 10,00,000 & FC = 4,00,000

BEC = Fix Cost VCR = 1 - PVR

PVC

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Que 2 [A]
The following information is made available to you from records of Mantra Ltd., for the year 2021 & 2022:
Particulars 2021 2022
Sales 9,00,000 10,80,000
Variable Expenses 5,40,000 6,48,000
Profit 1,80,000 2,52,000 Click / Scan
Calculate for both the years PVR, BEP, MSS (in Rs. & in %).
Also calculate Sales to earn profit of Rs. 5,20,000.
@ SOLUTION :-

# Income Statement of Both Year :-

Particulars 2021 2022

Sales
Less :- Variable Cost
CONTRIBUTION
Less :- Fix Cost
PROFIT

{1} PVR { Profit Volume Ratio }

2021 2022

PVR = Contribution X 100 PVR = Contribution X 100

Sales Sales

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{2} BEP [ Break Even Point ] = Fix Cost

PVR

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{3} MSS [ Margin of Safety (in Rs.) ] = Profit
PVR

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{4} MSS [ Margin of Safety (in %) ]

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{5} Sales to Earn Desire Profit = Fix Cost + Desire Profit
PVR

==========================================================================

Best Features of - “Sahas Smart Studies App”

[1] Best Study Pamphlets for All Subjects as per MSU Watch Full Solution
Video of All Papers
[2] Topic wise – High Tech & Conceptual Study Videos
[3] Daily Live Offline Lectures Video with unlimited Views
[4] Smart Revision Notes & Super Revision Videos for Exam
[5] Excellent MCQ Material with Discussion + Past MSU Papers
[6] Unlimited Self MCQ Tests & Instant Result
[7] & Many More = ALL @ LOWEST FEES
SAHAS Institute
SAHAS B.Com
INSTITUTE = OFFLINE
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84152
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Que 2 [B] KRISHIV Ltd., is presently selling its product at Rs. 160 per unit. The marginal cost of the same is
Rs. 100 per unit and fixed costs amount to Rs.3,00,000. You are required to calculate PVR and BEP (in Rs.
and units). What will be the selling price per unit if break even sales is brought down to 3,750 units?
@ SOLUTION :-

INCOME STATEMENT :- Click / Scan

Particulars P.U Amount
Sales
Less :- Variable Cost
CONTRIBUTION
Less :- Fix Cost
PROFIT

{1} PVR = Contribution Per Unit X 100

Sales

{2} BEP [ Break Even Point (in Rs.) ] = Fixed Cost____

Contribution Per Unit

# If Break Even Point Brought Down to 3750 Units

# Selling Price = Variable Cost Per Unit + Contribution

@ We have to Increase Selling Price by Rs. 20

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OR QUE 2 { All Theory Que – Students Read from SAHAS Pamphlet & Watch Video }
OR - Que 2 [A] Explain the points of distinction between
“Management Accounting and Financial Accounting” (Any Five Points).

Or – Que 2 [B] What is Marginal Costing? Explain any four features of Marginal Costing.

Or – Que 2 [C] Draw Break Even Chart in your answer book clearly indicating: Click / Scan
(i) Break Even Point
(ii) Angle of Incidence
(iii) Loss
(iv) Variable Costs
(v) Fixed Costs.

NoteSAHAS
:- This is Revision.
INSTITUTE For Best
:Karelibaug & Maximum
– Sayajigunj Result
– Waghodia – Refer
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MSU – 2019 Paper [ Marginal Costing ]

Que1 [a] Answer the followings: (2.5 Marks)
(A) Match the following:
1) Fixed cost in Marginal Costing a) Sales - Variable Cost
2) Variable cost in Marginal Costing b) Period Cost
3) Contribution c) Assist Management in Performing their Functions
4) Financial Accounting d) Product Cost
5) Management Accounting e) General in nature and reporting results of
operations
@ SOLUTION :-
A=d,2=b,3=a,4=e,5=c

[Q-2] Answer the followings: (5 Marks each) [Total 15 Marks]

(A) What is Management Accounting ? Explain any 4 objectives of Management Accounting?

(B) Management Accounting V/s Financial Accounting (Any Five Points)

(C) The following figures are available for the two years of KRISHNA Ltd.,
Particulars 2017 2018
Sales 5,00,000 10,00,000
Profit (Loss) (50,000) 1,50,000
:- Calculate: PVR, Contribution, Fixed Cost, BEP and MSS for the year 2018.
@ SOLUTION
[1] PVR ( in % ) =

[2] PVR ( in Rs. ) =

[3] Contribution = Fix Cost + Profit Click / Scan

SAHAS Institute
SAHAS B.Com
INSTITUTE = OFFLINE
:Karelibaug SMART
– Sayajigunj CLASS Road. ONLINE
– Waghodia + “SahasLIVE CLASS
Smart Studies” App -SAHAS SMART APP
99989 84152
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[4] BEP ( Sales ) = Total Fix Cost X Sales

Contribution

Or BEP = ( Total Fix Cost ) / PVR

Click / Scan
[5] MSS { Sales } = Actual Sales – BEP Sales

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OR
[Q-2] The following information is available from the cost records of Deep Ltd. [15]
Particulars Products
AB AC
Selling Price (Per unit Rs.) 3000 2000
Direct Materials (Per Unit Rs.) 800 600
Direct Wages (Per Unit Rs.) 600 400
Variable overheads (150% of Direct Labour) ? ?
:- Fixed overhead of the compnay is Rs. 1,80,000.
:- Suggested Sales Mixtures are as follows:
(a) 500 units of Product AB and 500 units of Product AC.
(b) 1000 units of Product AC only.
(c) 800 units of Product AB and 200 units of Product AC.
(d) 400 units of Product AB and 600 units of Product AC.
:- You are required to calculate :
(1) Marginal cost and contribution per unit of each product.
(2) The total contribution and profits resulting from each of the above mixtures.
(3) Recommend which of the sales mixtures should be adopted ?
@ SOLUTION :-
(1) Marginal (variable) cost and contribution per unit of each product.

Particulars Products
AB AC
Sales (A)
LESS :- Variable Cost
- Direct Materials
- Direct Wages
- Variable overheads
(150% of Direct Labour)
Total Variable Cost (B)
CONTRIBUTION
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(2) Statement of Contribution & Profit of Various Product Mix :-

Sales Mixture Contribution Product wise Total Fix Cost PROFIT

P.U. Contribution Contribution
(2) (3) (4) (5) (4-5)
{A} AB – 500 Units
AC – 500 Units

{B} AC – 1000 Units

{C} AB – 800 Units

AC – 200 Units

{D} AB – 400 Units

AC – 600 Units

(3) Sales Mixtures Recommendation :-

ANS :- Sales Mixture “C” [ 800 Units of AB & 200 Units of AC] is Recommended
As it Yields Highest Profit & Contribution
[ i.e 4,60,000 & Rs. 6,40,000 Respectively ]

====================================================================================

SAHAS INSTITUTE – OFFLINE CENTERS [ Best Teaching @ Lowest Fees ]

E 110 Vrundavan Township, 347,348,349 Iscon Janmahal, FF 9 Sharnam Complex,

Beside Tasty Restaurant , Opposite Railway Station, Opp. HDFC Bank ,
Near Sangam Cross Roads, Beside MSU – Sayajigunj Waghodia Dabhoi Ring Road
Karelibaug – 92653 47133 M - 92653 43871 M – 92653 52165
=====================================================================================

Best Features of - “Sahas Smart Studies App”

[1] Best Study Pamphlets for All Subjects as per MSU Watch Full Solution
Video of All Papers
[2] Topic wise – High Tech & Conceptual Study Videos
[3] Daily Live Offline Lectures Video with unlimited Views
[4] Smart Revision Notes & Super Revision Videos for Exam
[5] Excellent MCQ Material with Discussion + Past MSU Papers
[6] Unlimited Self MCQ Tests & Instant Result
[7] & Many More = ALL @ LOWEST FEES
SAHAS Institute = 11th 12th Comm [Eng & Guj Med] F.Y – S.Y – T.Y B.Com C.A & C.S
SAHAS Institute = OFFLINE SMART CLASS ONLINE LIVE CLASS SAHAS SMART APP
SAHAS INSTITUTE :Karelibaug – Sayajigunj – Waghodia Road. + “Sahas Smart Studies” App - 99989 84152
 S a h a s I n s t i t u t e : - 1 1 - 1 2 C o m m / F Y – S Y – T Y B . c o m / C A & C S P a g e | 12

MSU – 2018 Paper [ Marginal Costing ]

Que 1 (A) From the following information of AIR Ltd., calculate Sales to earn profit of Rs.1,00,000:
Break Even Sales Rs.5,00,000 and Fixed Costs Rs.2,00,000.
@ SOLUTION :-
Break Even Sales = Total Fix Cost X Sales
Contribution

So, Break Even Sales = Total Fix Cost X Sales

Profit + Fix Cost

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Que 2] Answer the followings: (Any THREE) (05 Marks each)
NOTE :- STUDENTS ARE INSTRUCTED TO REFER THEORY FORM SAHAS APP
(A) What is Management Accounting? Explain its features. (Any Four Points).

(B) Management Accounting V/s Cost Accounting (Any Five Points).

(C) What is Marginal Costing? Explain its features. (Any Four Points).

(D) Draw Break Even Chart in your answer book clearly indicating:
(i) Break Even Point
(ii) Angle of Incidence
(iii) Loss
(iv) Variable Costs
(v) Fixed Costs.
================================================================
OR
Que 2] Answer the followings: (Marks: A.09+ B.06)
(A) The management of a Smart Belt Manufacturing Ltd., is thinking whether it should drop one
item from the product line and replace it with another. Given below are present cost and
output data:
Product % Of Variable Cost % of sales
Q2 80 70
Q3 20 30
:- Total fixed cost per year Rs.5,00,000, Total Variable cost for the year Rs.10,00,000 and
Total Sales for the year Rs. 18,00,000.
:- The change under consideration consists in droping the line of Q3 and adding the line of Q4.
:- If this change will be made the manufacturer forecasts the following cost and output data:
Product % Of Variable Cost % of sales
Q2 65 60 Click / Scan
Q4 35 40
:- Total fixed cost per year Rs.5,00,000, Total Variable cost for the year Rs.11,50,000
and Total Sales for the year Rs.20,00,000.
:- Should this proposal be accepted?

Note :- This
SAHAS is Revision.
INSTITUTE For Best
:Karelibaug & Maximum
– Sayajigunj Result
– Waghodia – Refer
Road. All Sessions
+ “Sahas From “SAHAS
Smart Studies” STUDY
App - 99989 84152 APP”
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@ SOLUTION :-
W.N 1 :- Combination of Q2 & Q3 :-

Product Variable Cost Sales

Q2

Q3

W.N 2 :- Combination of Q2 & Q4 :-

Product Variable Cost Sales

Q2

Q4

# COMPARATIVE STATEMENT :-

Particulars EXISTING SITUATION PROPOSED SITUATION

Q2 Q3 TOTAL Q2 Q4 Total
Sales
(-) V.C
Contri.
(-) F.C
PROFIT

Particulars Amount
Incremental Revenue [20,00,000 – 18,00,000]
LESS :- Additional Cost [VC] { 11,50,000 – 10,00,000 }
ADDITIONAL PROFIT 50,000
# Conclusion :-

JOIN SAHAS INSTITUTE FOR B.COM STUDY @ LOWEST FEES

E 110 Vrundavan Township, 347,348,349 Iscon Janmahal, FF 9 Sharnam Complex,

Beside Tasty Restaurant , Opposite Railway Station, Opp. HDFC Bank ,
Near Sangam Cross Roads, Beside MSU – Sayajigunj Waghodia Dabhoi Ring Road
Karelibaug – 92653 47133 M - 92653 43871 M – 92653 52165
SAHAS INSTITUTE :Karelibaug – Sayajigunj – Waghodia Road. + “Sahas Smart Studies” App - 99989 84152
 S a h a s I n s t i t u t e : - 1 1 - 1 2 C o m m / F Y – S Y – T Y B . c o m / C A & C S P a g e | 14

(B) DARSH Ltd., manufacture one identical product. Click / Scan

:- The following figures are available for the two years:
Particulars 2016 2017
Sales 6,00,000 7,20,000
Variable Expenses 3,00,000 4,32,000
Profit 1,20,000 48,000
:- Calculate for both the years: PVR, BEP and MSS.
@ SOLUTION :-

FORMULAS 2016 2917

CONTRIBUTION =
Sales – Variable Cost

PVR = Contribution X 100

Sales

Fix Cost =
Contribution – Profit

BEP = Fix Cost X Sales

Contribution

Margin of Safety Sales

MSS = Actual Sales – Break
Even Sales

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