Definition :-Marginal Costing is defined as the amount at anygiven volume of output by which aggregate costscan be changed if the volume of output isincreased or decreased by one unit.Meaning :-Marginal Costing is the technique of controlling bybringing out the relationship betweenprofit &volume.
The concept of Marginal Costing is also known asvariable costing because it is based on the behaviorof costs that vary with the volume of outputHence, Marginal Costing classifies costs into 2 :-1.Fixed Cost2.Variable Cost
Fixed Cost :-The expenditure remains same irrespective of output.This includes costs which a firm has to incur irrespectiveof units of productionEg :- Building rentVariable Cost :-As the name suggests variable cost varies directly withoutput. It is directly proportional to volume of productionEg :- Cost of raw materials
Fixed cost & Variable costOnly variable Costs are considered to calculatethe cost per unit of a productCost ControllingShows the difference between sales and variablecost known as Contribution