ECONOMICS

Detailed explanation-1: -The technique of marginal costing is based on the distinction between product costs and period costs. Only the variables costs are regarded as the costs of the products while the fixed costs are treated as period costs which will be incurred during the period regardless of the volume of output.

Detailed explanation-2: -Marginal costs are a function of the total cost of production, which includes fixed and variable costs.

Detailed explanation-3: -Marginal cost is only variable cost, it does not include fixed cost. Because, marginal cost is additional cost and additional cost cannot be fixed cost.

Detailed explanation-4: -Marginal cost is the cost of one additional unit of output. The concept is used to determine the optimum production quantity for a company, where it costs the least amount to produce additional units. It is calculated by dividing the change in manufacturing costs by the change in the quantity produced.

Detailed explanation-5: -In economics, the marginal cost is the change in total production cost that comes from making or producing one additional unit. To calculate marginal cost, divide the change in production costs by the change in quantity.