Laura M. Garcia
Marginal Cost Of Production
Marginal Cost Of Production is an economics term that refers to the change in production costs resulting from produciong one more unit.It is most often used among manufacturers as a means of identifyng an optimum production level.
FORMULA FOR MARGINAL COST OF PRODUCTION
The formula of marginal cost of production is:
USE OF MARGINAL COST OF PRODUCTION
Marginal Cost Of Production is best used to determine when a company can reach, can economy of scale to optimize production and overall operations.
DIFFERENCE BETWEEN FIXED VARIABLE COTS
Notice the difference between fixed and variable costs. A company must incur certain fixed costs in order to operate. For instance, it has to purchase machinery for its production line, when the company allocates a machines costs to the production run, the fixed cost spreads thinner as production increases. Variable costs on other hand, tend to rise with increased production, due to increased use of raw materials, labor and utilities.