Marginal Cost Calculator

Marginal Cost Calculator:

Use the above calculator to calculate the cost invested in the production of additional units.

How to Calculate the Marginal Cost?

Steps to calculate the marginal cost:

1. Determine the change in the total production cost between two levels of output
2. Now count the difference of units produced between the same levels
3. Divide the change in total cost by the change in quantity produced

Marginal Cost Formula:

Marginal Cost = [Change In Total Cost]/[Change In Quantity]

Example (Marginal Cost):

Company ABC manufactures 10000 T-shirts for which the investment was $15,000. The client asked the company to manufacture 1000 extra T-shirts, for which the cost of investment is $2,500.

Solution:

Data Given:

• Initial Units = 10000
• Initial Investment = $15,000
• Additional Units = 1000
• Additional Investment = $2,500

Calculations:

Using the marginal cost formula:

Marginal Cost = [Change In Total Cost]/[Change In Quantity]

Marginal Cost = [17,500 - 15,000]/[11,000 - 10,000]

Marginal Cost = [2500]/[1000]

Marginal Cost = 2.5