Answer :
Marginal costing or variable costing refers to increase in the production cost which is generated by the production of additional product units.
Marginal cost is also referred to as variable costing as it is based on variable costs and it excludes fixed costs. It is dependent on production output level of goods and services.The total cost of any business is composed of fixed and variable costs. Both affect the marginal cost of production. It determines the production cost for one more unit of the commodity. It is important for any business for achieving economies of sale. It is calculated as follows:
marginal/variable cost = change in total cost/ change in quantity
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