Question

Marginal cost is equal to ___________________.

• A. Direct Material cost $+$ Direct labour cost $+$ Other variable cost
• B. Total cost $-$ Fixed costs
• C. Either (A) or (B)
• D. Total cost $+$ fixed cost

Answer 1

The correct option is C Either (A) or (B)

Fixed costs include various indirect costs and fixed manufacturing overhead costs.

Variable costs include direct labor, direct materials, and variable overhead.

MC = Total cost - Fixed cost , can be explained as,

TC-TFC =VC, which represents the change in TC due to additional unit of output produced.

Hence ,Marginal cost represents the incremental costs incurred when producing additional units of a good or service. It is calculated by taking the total change in the costs of producing more goods and dividing that by the change in the quantity of good produced.