How to calculate marginal cost?

Marginal cost is also referred to as the cost of the last unit. Marginal cost is the cost your business will incur if you produce additional units of product or service.

Marginal cost can be calculated asMarginal cost = the change in cost/ the change in quantity

Here are tips that will guide you through calculating the marginal cost

1. First, you have to divide the change in cost by the change in quantity.

2. Repeat the calculation for additional intervals because M.C can increase or decrease as you continue to add additional units of production.

3. Enter your data on your spreadsheets to create a curve. This helps you to create your graphs and a marginal curve is mostly U- shape.

If in case you are feeling a bit confused with what marginal cost is, this will represent the costs that the company may have incurred because of the additional units of goods and services that have been chosen.

• You should first know the formula of marginal cost, which is taking the total change in the cost of producing more goods.

• The formula is marginal cost= (Change in costs) / (Change in quantity)

• You can now change the numbers that are placed in the equation.

• You can double-check the answer that you will get.

You just need to choose the online calculator that you can use. It will make a lot of difference.

• Find the output level at which the fixed cost would start undergoing a change.

• Determine the interval you would like to evaluate in our calculation of marginal cost.

• Subtract the number of items in the first run of your production from the number of items in the second run of your production.

• Determine the total cost of producing the items. The total cost of production is the sum of the total fixed cost and the total variable cost. The fixed cost includes the cost of capital expenditure, which does not change over time while the variable cost changes with respect to time.

• Determine the average cost per item. The average cost is the total cost of production divided by the quantity of items produced.

• Calculate the change in cost by taking away the old cost rim the new cost.

• Divide the change in cost gotten from the step above by the change in quantity.