Content

• Steps
• What you need

Marginal cost is an economic calculation and manufacturing represents the additional cost of producing the product. You have to know some production variable, such as fixed and variable costs, to find it. You can learn to find marginal cost with a formula.

Steps

Part 1 of 3: Prepare recipe

1. 

   Find or create a table showing cost of production and production. Make sure that your table includes the following:
   • Quantity. You need to reserve the first column for the total product produced. Output can be increased by unit one by one, such as 1, 2, 3, 4,… or increased by greater distance, such as 1,000, 2,000, 3,000,…
   • Fixed and variable costs. During the production process, certain costs, such as factory rental costs, are fixed. Other costs, such as raw material costs, vary with output. Create a column next to the output column for each of the expenses listed above and fill in the information.

2. 

   
   
   Get a pen, paper and calculator. You can also choose to work on the spreadsheet. In the beginning, however, writing a formula will help you understand how marginal cost is calculated. advertisement

Part 2 of 3: Find the total cost

1. 

   Place another column with the "Total Cost" heading to the right of the "Fixed Costs" and "Variable Costs" columns.

2. 

   
   
   Add your fixed and variable costs for each value of output.

3. 

   Enter the total cost in the column until the total cost of each incremental unit is calculated.
   • If you are using a spreadsheet program, you can enter the formulas for adding fixed and variable costs to get total costs in this column.
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Part 3 of 3: Marginal cost formula

1. 

   
   
   Write down the formula "Marginal Cost = Change of Total Cost / Change of Total Output".

2. 

   Create a column to the right of the total cost column with the heading "Marginal Cost". The first line in plus will be left blank because you cannot find marginal cost without production.

3. 

   Find the total cost change by subtracting the total cost in line 3 by the total cost in line 2. 40 dong minus 30 dong.

4. 

   Find the total yield change by subtracting the total output in line 3 from the total production in line 2. Example: 2 minus 1.

5. 

   Fill in the number in the formula. Example: Marginal Cost = 10 VND / 1. In this case, the marginal cost is 10 VND.

6. 

   Write the marginal cost obtained in the column, on the second row. Continue to subtract the parameters in the line above to find marginal costs for the rest of the product units. advertisement

What you need

• Computer
• Table of production costs
• Pencil / ballpoint pen
• Paper
• The formula for marginal cost
• Spreadsheet program (optional)