Author Topic: Cost Analysis  (Read 74 times)

Offline Md. Alamgir Hossan

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Cost Analysis
« on: April 04, 2017, 04:14:21 PM »
What is cost?
                    Cost is the Amount of money spends to produce goods.
Types of cost:           
   Fixed cost
   Variable cost
   Total cost
   Marginal cost
   Average cost
   Average variable cost
   Average fixed cost

Fixed Cost: Costs that don’t change based on production.
 Example: Rent.
 Variable Cost: Costs that change with rate of production.
 Example: Cost of raw materials.
Total cost: Total economic cost of production consisting of fixed and variables costs.
 Total costs= Fixed Costs + Variable Costs. 
 Marginal Costs: Marginal cost is the addition to the total  cost on account of producing one additional unit of product.
    MC=Change in TC/Change in Q.
Average Costs: Average cost is not actual cost. It is  obtained by dividing the total cost by the total output.
   AC=TC/Q.
  Average Variable Costs:  Average Variable Costs is the addition to the total variable cost per unit of production.