costing

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velraj (Querist)
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14 February 2010 i want to know what is the marginal cost and how do i calculate,what is the variable cost & fixed cost and how do i calculate pls explan with example

Rahul Gupta

Rahul Gupta (Expert)
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14 February 2010 Marginal cost is the change in TOTAL COST that arises when the quantity produced changes by one unit. That is, it is the cost of producing one more unit of a good.

Ex. cost of producing 10 Units - Rs. 5000, Cost of Producing 11 Units is 5300.
So marginal Cost is Rs 300.

Variable cost is the cost which changes with the increase in production. For eg. Raw Material Cost.
If Raw material cost of 1 unit is 100 then to produce 1o units ur cost is 1000 and for 11 units it will be 1100.

Fixed Cost is the cost which do not vary with the change in production. For eg. Rent of the building or premises. If rent is Rs.3,000 then it will remain constant if the production is 10 units or 11 units.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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15 February 2010 Variable cost constant to the per unit of production.it will increase each unit of production

Fixed cost constant to the amount, it will decrease per unit of production for every unit of production increase

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