Chapter 10R, Problem 4CTQ

To determine

The cost which provides a relevant idea about how much of a good or service to produce.

Explanation of Solution

Marginal cost is the most relevant cost that provides a better idea when deciding how much quantity of goods or services should produce because it helps the organization to optimize its production.

Marginal cost is very beneficial in managerial accounting that helps to identify economies of scale, which will further assist the organization to decide the quantity to optimize or maximize the production or output. This cost provides the idea to the organization that how much it can cost by using an additional unit or manufacturing one additional unit, which is beneficial for the organization to determine which level of production is efficient for their manufacturing process.

Economics Concept Introduction

Introduction: Marginal cost is the expense or cost which is incurred by using an additional unit of a good to increase benefit. It is calculated by dividing the change in the cost by the change in quantity.