COST ACCOUNTING
INTRODUCTION TO COST ACCOUNTING
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
Variable
|
|
Fixed
|
|
Marginal
|
|
Absorption
|
Detailed explanation-1: -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.
Detailed explanation-2: -Marginal costs are the costs associated with producing an additional unit of output. It is calculated as the change in total production costs divided by the change in the number of units produced. Marginal costs exist when the total cost of production includes variable costs.
Detailed explanation-3: -Marginal cost (MC) is calculated by taking the change in total cost between two levels of output and dividing by the change in output. The marginal cost curve is upward-sloping. Average total cost (sometimes referred to simply as average cost) is total cost divided by the quantity of output.
Detailed explanation-4: -Marginal cost does not depend on fixed cost because it does not change with output, or it remains constant up to a certain level of production whereas variable cost change with the output, so in short marginal cost is due to change in variable cost.
Detailed explanation-5: -Economies of scale happen when an increase in output quantity reduces the per unit total cost of production.