Marginal Costing vs Marginal Decision:
Marginal Costing or CVP analysis useful for managers in taking decisions related to various aspects of production, pricing capacity utilization evaluation of proposals etc. Following are some of the areas where Marginal cost is consider for decision-making.
Fixing the selling price: In order to fix the selling price of a product the organization has to consider the total cost in normal circumstances but in few cases only the marginal cost is taken in to consideration and any price above the marginal cost is acceptable. Following are the specific cases
a) Exploring the foreign market;
b) Product newly introduced in to the market..
c) At the time of depression
d) to eliminate competitions in the market.
e) When surplus raw material is available etc.
