How is marginal cost curve is same as supply curve?
Let’s be clear about what the two curves are.The supply curve is the relationship between the market price and the number of units the firm will sell.The marginal cost curve tells us, for a given level of production, how much it costs the firm to produce the last little bit of production. We assume this curve is upward sloping.Now, suppose we know the market price P. The firm can produce and sell as much as it wants at this price. Suppose we guess the firm chooses quantity Q*. How can we check if our guess is correct? Suppose that when producing Q* total output, the marginal cost MC(Q*) is less than P. Is the firm happy with this choice? No, because if they sell a bit more, the extra bit they sell is profitable, because the extra production cost is less than the price. So choosing Q* where MC(Q*) < P isn’t a good prediction.Similarly, if MC(Q*) > P, the firm isn’t happy, because the last bit of production was a money loser. The only time a prediction makes sense is if MC(Q*) = P. Then, the firm is breaking even on the last bit of production (and making money on all the rest). So they have no reason to either increase production or decrease it.So, we note that for this market price P, the Q the firm chooses happens to correspond with the P,Q relationship given by the marginal cost curve. But, the chosen P wasn’t anything specific, so this argument works for any non-negative P. Therefore the marginal cost curve and the supply curve are the same thing.Oh, and reading your comment, you are correct in your example that the firm can recover their costs when the price is $2 by producing 3 units. Note that the firm breaks even, as their revenue and total cost are both 6. Now, note that producing 2 units costs 1+2 = 3, which sell for a total of 4, and net a profit of $1. Since profiting a dollar is better than no profit at all, the firm would not choose to supply 3 units when the price is $2.
Which is the best video classes for CA final costing?
CA Final AMA is based on theory, practical problems and case study problems.So, to be good at this subject and score everyone need to follow a detailed book. Since this is my favourite subject, I would like to recommend some of the books. Ranking is not based on content. All are good.G.B Gupta book - Taxmann publication. Conceptual clearity and smart contents to score.Paduka publication. Large variety of sums and QnA format.Practice Manual by ICAI. This is good book but only if anyone have concept over the chapters then this would be a lot easier. So, it is recommended to study first the CA AMA text book.Thats it, any book of the above is enough for exemption with an ease.
This table represents some of Jennifer's costs of production. Jennifer operates in a perfectly competitive mar?
This table represents some of Jennifer's costs of production. Jennifer operates in a perfectly competitive market and therefore takes price as given. At a quantity of three units, for example, a variable cost of $54 gives the total variable cost required to make the three units. Total cost of $174 is the sum of variable costs and the $120 fixed cost. Average variable cost ($18) and average total cost ($58) are equal to variable cost and total cost divided by the quantity of three. Marginal cost of $16 is the cost of increasing production from two units to three units, so it represents the cost of producing the third unit. In the short run, Jennifer cannot avoid fixed costs such as her lease payments on her building. In the long run, she can avoid the fixed costs. Quantity Fixed Cost Variable Cost Total Cost Average Variable Cost Average Total Cost Marginal Cost 0 $120 $0 $120 -- -- -- 1 $120 $20 $140 $20.00 $140.00 $20 2 $120 $38 $158 $19.00 $79.00 $18 3 $120 $54 $174 $18.00 $58.00 $16 4 $120 $68 $188 $17.00 $47.00 $14 5 $120 $84 $204 $16.80 $40.80 $16 6 $120 $102 $222 $17.00 $37.00 $18 7 $120 $122 $242 $17.43 $34.57 $20 8 $120 $146 $266 $18.25 $33.25 $24 9 $120 $176 $296 $19.56 $32.89 $30 10 $120 $214 $334 $21.40 $33.40 $38 11 $120 $262 $382 $23.82 $34.73 $48 12 $120 $322 $442 $26.83 $36.83 $60 1. What is the lowest price at which Jennifer would be willing to produce a positive-level output in the short run? 2.What is the lowest price at which Jennifer would be willing not to exit the industry in the long run? Is it 16.80 for 1 and 38.89 for 2??
What is the formula to determine variable cost per unit?
As a formula:VC per unit = TVC / units producedTC = TFC + TVCTC = Total costsTFC = Total Fixed costs (do not change with the level of production)TVC = Total Variable Costs (Total VC changes when the production level changes; costs per unit do not change)General ExplanationIn general the total of the variable cost per unit increases resp. decreases when the number of production units increases or decreases.This is the opposite of so-called constant, fixed or sunk costs that do NOT change when the number of production units change.Particular explanationTo give you an example:When you lease a plant (production site) the monthly lease costs do not change, whether you would produce 10,000 units or 0 units. You would still need to pay the rent.However, when you produce some item you need the material for that item.Let’s say that we have a production site for steel rivets. The level of steel varies with the number of rivets you are going to produce. No rivets, no steel, many rivets much steel.Of course, in the real world the variable costs per unit can change, for example because of a volume discount when you would buy more steel, or due to price fluctuations on the steel market.Finally , if you have the total variable costs AND you know the number of items produced, you can calculate the variable costs per unit: TVC / number of units.There are some different flavours to this formula which have in common that they add a certain level of sophistication but at the end of the day it all boils down to what I described here before.Good luck!
How do I complete CA IPCC cost accounting syllabus within one month?
Hello !Firstly, I went through all the answers written below and they have suggested everything properly. However, I feel one must move on to reference books only when one is confident that syllabus coverage has been done properly.Personally, I don’t feel the need to refer to any other reference books than ICAI’s.Instead of dividing the number of chapters with number of days and hammering yourself for not able to complete a particular chapter in the allotted time , you should prioritize the chapters in a subject. It helps a lot.Keep three main sources of reference. I always referred to the following :My class notesICAI Compilation for CFM (it’s available on the ICAI website). Compilation is highly underrated and people hardly notice it but it’s beneficial for higher order thinking development. It’s basically chapter wise compilation of questions asked in all past ICAI examinations for each topic of costing and FM. However, it is as per your convenience , whether to refer to it or not. Not everyone can complete solving it. So, take time into factoring as well. I used to study for more hours and everyone has different level of concentration so, you know yourself better at the end of the day. Remember that !Practice ManualYours can differ. See, when you refer too many books , towards the end i.e. when your exam period time is at it’s peak , we tend to get confused as what to refer more ? So, avoid that confusion as much as you can.For theory , refer PM and don’t ignore theory in anyway.I will post the picture of how I prioritize chapters and get things done but remember conceptual clarity is highly essential. Superficial solving won’t reap anything. Anyone can see a sum , read it and reproduce the steps in the sum. This is IPCC and if you don’t understand the logic behind the answer, I am afraid, concepts are weak. Work on your concepts. Concepts are strength.Image below : High to low (top to bottom). You can plan on similar basis rearrange the chapters as per your convenience and difficulty level. You may not stick to this. It’s customized as per my studying pattern.Hope this helps, if any other query , kindly DM me.Thanks for A2AAll the best :)
What does a cost accountant do?
A Cost Accountant is a professional who tries to answer questions related to production or operations by undertaking an analysis of various costs that are incurred by a business.The decisions affected through a cost accounting study could be any of the following non-exhaustive list:- What are the variable costs for producing one unit of a product?- What are the fixed costs that a business will have to incur even if it shuts operations?- Which product out of all product offerings of a business is the most profitable and should be produced more?- Are there any products which are required to be manufactured not because they are profitable, but because due to their presence another profitable product sells more?- For how many units of a product sold will the company recover all of its costs and begin making profits?- Would the additional amount spent on incurring a cost translate into higher profits for the business?The costs incurred by a business can be classified into the following types to take such decisions:- Fixed, variable- Short term, long term- Production cost, selling cost- Process cost, batch cost- Per unit cost, cost per batch per monthIn India, a professional degree in Cost & Management Accounting is offered by the Institute of Cost Accountants of India. In the UK, the Chartered Institute of Management Accountants (CIMA) offers various courses in cost accountancy.You can read more about cost accounting and these courses here:CIMACost Accountancy
Can someone provide me a study plan/strategy for IPCC Accounts and Cost FM?
Prepare a schedule. Start with Accounts and FM first. Set target that one chapter will be completed in 2–3 days. Maximum 3 days and if it is bigger one like partnership, accounting standards or amalgamation then in 5 days maximum.In FM, start with small chapters first, like Debtors, Working Capital management, Cash flow and Fund flow statement, then capital structure theory, Ratios, and similar chapters and at the end Capital Budgeting and FM Theory, Don’y forget to do theory part, and daily reading of atleast 3 questions will help you learn the difficult terms of financial management.FM portion should be finished maximum in 15 days and den utilize next 35 days in costing. In costing, solve the practice manual. Start with bigger chapters first like Standard Costing, Marginal and Absorption costing, and similar level chapters and then go on small chapters. So, your accounts and Costing FM can be easily completed in 50 days. Just you need to do consistent practice and have to follow you schedule strictly.Some important tips to have a grip on practical part-Solve questions by writing on paper, don’t just see the solutions from book and think that this is done. I’ll do it in exam. Believe me, without practice you wont be able to write a single solution properly.Concentrate on presentation part especially in Costing part.In costing, do the theory of chapters along with practical only as the theory questions are based on logic and you’ll better understand them while doing practicals and it will also help you in exams as you’ll be able to answer the question with logic instead of mugging up.Solve practice manual of all these three subjects and solve RTP and Exam papers of past 3 attempts and don’t forget to go through the Mock test papers.In accounts, Accounting standards contain a heavy weightage of around 25–30 marks so understand them carefully. So, in the end if you think you don’t have time for some chapters then atleast complete your AS portion.Gud Luck !