• It is the additional cost of producing an

additional unit. It is the cost of the last unit

produced.
• Eg. if the total cost of producing 100 unit is Rs.
10,000 and cost for 101 is Rs. 10,050, so the MC
of producing an additional unit will be Rs. 50
• So Mc is the cost of one more or one less unit
produced than the existing level of production.
• • Mc is also called as variable cost. Because an
increase in 1 unit of production will increase in
variable cost only.
• • Mc= Direct Material cost+ Direct Labour cost+
Direct Expenses + Variable overheads. • Or mc=
Prime cost plus variable
• ASSUMPTIONS OF MARGINAL COSTING • 1. all
cost are divided in to fixed and variable • 2.
fixed cost remain constant at all levels of
activity • 3. variable cost vary but unit cost will
not vary • 4. selling price remains same •
5.Price of material, rates of labour etc
constant • 6.Volume of production only
influence costs • 7.There is no stock