Name: M.

Asif
Roll No: MME-15-34
Semester: 8th
Incremental Cost
Incremental means= extra or additional
And extra cost can be either variable cost or fixed cost.
Incremental cost means increase in the cost of production as
a result of an increase in action/activity. For example
If we used to made 1000 units so we had the variable cost at
$10,000 and fixed cost was at $15,000 and total cost was
$25000 and we decided to increase the factory’s
production, make a 1500 units and we know that a variable
cost proportionality will rise $15,000 and in general fixed
cost should not be increase, but due to any extra
installation it has increased $16000 and total cost arrived
$31,000 And this change extra total cost $6000 .this is only
the incremental cost.
Example

units Variable Fixed cost Total cost

cost
1000 $10,000 $15,000 $25,000

1500 $15,000 $16,000 $31,000

(increased
any extra
installation) Change total
cost =$6000
incremental
cost