What is marginal cost?

Marginal cost refers to the additional cost that an enterprise will incur in producing an extra unit of a product or service. It is only concerned with the alteration in the total cost due to an increase in output. This covers variable costs like raw materials, labor and energy but normally leaves out the fixed costs like rent. Knowledge of marginal cost assists companies in determining whether they will produce more or they can reduce the production since they will not face the additional costs that are not required.

Also read: https://accountingbyte.com/marginal-cost/