Marginal Cost Of Production


Marginal Cost Of Production
The change in total cost that comes from making or producing one additional item. The purpose of analyzing marginal cost is to determine at what point an organization can achieve economies of scale. The calculation is most often used among manufacturers as a means of isolating an optimum production level.

Manufacturing concerns often examine the cost of adding one more unit to their production schedules. This is because at some point, the benefit of producing one additional unit and generating revenue from that item will bring the overall cost of producing the product line down. The key to optimizing manufacturing costs is to find that point or level as quickly as possible.


Investment dictionary. . 2012.

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  • marginal cost of production — marginal cost marginal cost, marginal cost of production marginal cost of production . (Economics) The increase in total cost of production as a result of producing one more unit of output; since certain ovrhead costs are fixed, the marginal cost …   The Collaborative International Dictionary of English

  • marginal cost — marginal cost, marginal cost of production marginal cost of production . (Economics) The increase in total cost of production as a result of producing one more unit of output; since certain ovrhead costs are fixed, the marginal cost is almost… …   The Collaborative International Dictionary of English

  • Marginal cost of capital schedule — Marginal Cost of Capital (MCC) Schedule is a graph that relates the firm’s weighted average cost of each dollar of capital to the total amount of new capital raised. The WACC is the minimum rate of return allowable, and still meeting financial… …   Wikipedia

  • Marginal cost — A typical marginal cost curve with marginal revenue overlaid In economics and finance, 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… …   Wikipedia

  • Cost-of-production theory of value — In economics, the cost of production theory of value is the theory that the price of an object or condition is determined by the sum of the cost of the resources that went into making it. The cost can compose any of the factors of production… …   Wikipedia

  • marginal cost — The increase or decrease in a firm s total cost of production as a result of changing production by one unit. Bloomberg Financial Dictionary * * * marginal cost marginal cost ➔ cost1 * * *    The additional cost of one extra unit of production, e …   Financial and business terms

  • marginal-cost pricing — In economics, the practice of setting a product s price equal to the additional (marginal) cost of producing one more unit of output. The producer charges an amount equal to the cost of the additional economic resources. The policy is used to… …   Universalium

  • marginal cost — Econ the amount by which the costs of a firm will be increased if its output is increased by one more unit, of if one more customer is served. EXAMPLE If the price charged is greater than the marginal cost, then the revenue gain will be greater… …   The ultimate business dictionary

  • marginal cost — The additional cost incurred as a result of the production of one additional unit of production. In accounting, it usually equates to the variable costs per unit of production. The variable costs are usually regarded as the direct costs plus the… …   Big dictionary of business and management

  • marginal cost — The additional cost incurred as a result of the production of one additional unit of production. It usually equates to the direct costs plus the variable overhead costs …   Accounting dictionary


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