MA9902C00 Study Guide - Final Guide: Marginal Cost, Fixed Cost, Variable Cost
Document Summary
The marginal cost formula is nothing but the mathematical representation to capture the incremental cost impact due to the production of additional units of a good or service. It is computed by dividing the change in total cost due to the production of additional goods by the change in the number of goods produced. Although the total cost is comprised of fixed cost and variable costs, the variation in total cost due to a change in the quantity of production is primarily because of variable cost which includes labor and material cost. On the other hand, there might be a few occasions when there is an increase witnessed in fixed costs which include administration, overhead, and selling expenses. Sales = varialble cost + fixed expenses profit&loss. A manufacturing company has a current cost of production of 1000 pens at. ,00,000, and its future output expectation is 2000 pens with the future cost of production of ,25,000.
