Marginal Costing conclusion - Accounts and Finance for Managers

Conclusion of Marginal Costing

The conclusion of marginal costing are

The capital budgeting is the decision of long term investments, which mainly focuses the acquisition or improvement on fixed assets. The importance of the capital budgeting is only due to the benefits of the long term assets stretched to many number of years in the future. It is a tool of analysis which mainly focuses on the quality of earning pattern of the fixed assets. The methods are the nothing but the instruments of the capital budgeting to study the quality of the investments/fixed assets. The pay back period is the period taken by the firm to get back the investment. The pay back period is nothing but number of years / months / days required by the firm to get back its investment invested in the project. The capital rationing means that selection of investment proposals with reference to capital budget by considering the financial constraints. The selection of the investment proposals should be to the tune of required NPV which the firm wants to earn during the future. Under the capital rationing, there are two stages involved viz

  1. Identification of the investment proposals
  2. Selection of investment proposals

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