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Costing

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(Querist)
27 April 2009 What is pupose of using Marginal costing?
What we try to find out in this topic?
It is said that break even point is the point find out level where no profit or loss exist & formula is Fixed cost/Contribution per unit, But I want to why we divide FC by contibution/unit as contribution include profit?
Whether we take assumption that profit is zero.
can any body explan it to me.Please......
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CA CS CIMA Prakash Somani

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CA CS CIMA Prakash Somani (Expert)
27 April 2009 This concept based on cost of producing additional units.

It basically distribute exp into
1 Variable &
2 Fixed

The basic logic of this theory is that fix expenses are gonna incurr in any case though there are nil production. So we should not charge fixed expenses to additional units.
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