The world of microeconomics and business decision-making hinges upon a key concept: marginal cost. In the simplest terms, marginal cost represents the expense incurred to produce an additional unit of ...

Learn how to calculate the variable cost ratio to balance production costs and revenues. Understand its role in optimizing profit margins and business decision-making.

The high-low method is used in cost accounting to estimate fixed and variable costs based on a business's highest and lowest levels of activity. By focusing on these extremes, the high-low method ...

Understanding the expenses you find on the income statement is key to making smart investments. For the beginning investor, one of the most important keys to learning about a business is understanding ...

A change in demand affects your sales and impacts your variable costs. As your sales grow, your variable costs increase. As your sales fall, your variable costs decrease. If you raise or lower your ...

Incremental cost is an important calculation for understanding numbers at different levels of scale. The calculation is used to display change in cost as production rises. If you manufacture one unit ...

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and ...