For the cost you add up all the costs of doing the job. For the selling price, it depends what rule is given in the question – usually you are told to add a % on to the cost.
The ‘/’ here does not represent ‘divide’ – it is just the way it is written. It was written like this before computer keyboards started using ‘/’ to represent ‘divide’ !!
If it is purely marginal costing, then by definition we only consider variable costs.
However (again depends on the question) if comparing two jobs then we would more likely look at incremental (i.e. extra) costs, which would automatically include variable costs but also any increase in fixed costs.
If you need to ask more then please ask in the Ask the Tutor Forum and not as a comment on a lecture.
Sir, if we are asked to use marginal costing for a special job and if there are direct costs which are not variable but directly related to that particular job apart from fixed overheads of the company, do we still have to ignore these non variable costs when using marginal costing for this particular job. For example; a party event organizer’s direct labour cost of $500 for organizing the party which doesn’t vary with the number of invitees attending the party. But $500 of labour cost is not the same for a different party held by the event organizing team.
How do calculate selling price and cost per unit of job?
For the cost you add up all the costs of doing the job. For the selling price, it depends what rule is given in the question – usually you are told to add a % on to the cost.
This has been a great video. I understand more clearly now these concepts and I am more confident about into the exam. Thank you.
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Hello, if we multiply 150 000 and 6 000? don’t we have kg*km? while to take kg/km don’t we have to divide 150 000 to 6 000?
The ‘/’ here does not represent ‘divide’ – it is just the way it is written. It was written like this before computer keyboards started using ‘/’ to represent ‘divide’ !!
Dear Sir,
Could we just have divided by mass and then by distance?
But why?
because the units are /kg/m which means the cost divided by kgs- mass and then distance m
It really depends on the wording of the question.
If it is purely marginal costing, then by definition we only consider variable costs.
However (again depends on the question) if comparing two jobs then we would more likely look at incremental (i.e. extra) costs, which would automatically include variable costs but also any increase in fixed costs.
If you need to ask more then please ask in the Ask the Tutor Forum and not as a comment on a lecture.
Sir, if we are asked to use marginal costing for a special job and if there are direct costs which are not variable but directly related to that particular job apart from fixed overheads of the company, do we still have to ignore these non variable costs when using marginal costing for this particular job. For example; a party event organizer’s direct labour cost of $500 for organizing the party which doesn’t vary with the number of invitees attending the party. But $500 of labour cost is not the same for a different party held by the event organizing team.