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Suppose, you order 2000 chocolate bars from a renowned company. Then, you increase the ordered quantity to 2500 bars. In this case, the company will incur additional costs to produce the extra 500 chocolates. This increased cost is known as marginal cost. According to this cost concept, with every unit increase, the cost also increases. What we have explained is easy to understand, still, most of the students fail to compute the marginal costs in their assignments and do what you are doing, i.e., wander here and there in need of online business economics assignment help. Therefore, our experts unanimously decided to share some easy-breezy steps to do the marginal cost calculations. We are sure you're excited to know them. Well, for that, go through the next segment of this blog with the utmost concentration. Remember, if you lose your focus, then you will lose your grades too.
The Easiest Steps to Calculate Marginal Cost in Business Economics Assignment
You know what, you're playing hide and seek with the deadline. You are hiding from it, but soon it'll find you. Before the submission date seeks and knocks your door, it is important to complete the assignment. And for completing the document, it's crucial to follow the marginal cost calculation steps. Give them a careful reading.
Step # 1 Determine the change level:
There is a level in the production process where fixed cost changes with an increase in the quantity produced. The first step is to determine this change point. Therefore, look at the available information and identify the output level where the addition of units leads to increment in the fixed cost incurred to produce the product.
Step # 2 Deduct the number of units:
After determining the output level at which the fixed cost changes, the second step of the marginal cost calculation is to deduct the number of goods produced before from the ones made after that level. This is done to find out the change in the production quantity. Well, if you are confused, then simply apply the following formula.
Change in quantity = Quantity produced before change level - Quantity produced after change level
Step # 3 Compute the aggregate costs:
Now that you have calculated the change in quantity produced, the next step of marginal cost computation is to calculate the total production costs. Confused how to do this, well do not. Simply, add the aggregate fixed and variable costs of the whole production process.
Step # 4 Determine the average costs:
After computing the aggregate production cost, the fourth step of marginal cost calculation is to determine the average cost incurred. Calculating it is the easiest thing to do on the planet. All you are required to do is implement the following formula.
Average Production Cost = Total Production Cost/Number of units produced
Step # 5 Compute the change in cost:
Now, after computing the average cost in the production process, you are required to calculate the change in cost due to the extra quantity produced. This can be done simply by deducting the cost incurred before the level determined in step 1 from the cost after it. Confused? Well, let's make it simple for you by summarizing this step in the following formula.
Cost Change = Cost before change level - Cost after change level
Step # 6 Celebrate and compute the marginal cost:
Clap for yourself and begin the celebrations. Wondering why? Well, this is so because finally you have successfully reached the last step of marginal cost calculation. Yes, you heard it correct. This is the final step. Now, you are only required to do the computation by dividing the change in cost by change in the number of goods produced. The following formula summarizes what we intend to say. Apply it carefully.
The marginal cost of production = Change in cost/Change in the number of goods produced
Now, if we ask you what is the simplest concept in business economics, then what will be your answer? We hope, it is the marginal cost calculation. After all, the only thing you need to do is, follow the above-mentioned steps. But, before jumping on the assignment's question, first, practice following them through some sample problems. In case you encounter any difficulty in their implementation or require any other help in completing the document, then feel free to contact us for the best assignment writing services. Our experts will be happy to assist you to the best of their capabilities.