11 Sep

Marginal costs


SAP Business One Finance Training

Marginal costs are the additional costs incurred when producing an additional unit of a good or service. They only include the variable costs that change directly as a result of the increase in production and are a central concept in business administration. Marginal costing is a key tool for short-term pricing policy and production planning. As long as the price of an additional unit is above its marginal cost, the production of this unit makes economic sense, as it contributes to covering fixed costs. Special valuation requirements can be met by add-ons such as the Versino Financial Suite that enable advanced financial analyses.




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