A retail co. plans to work on a margin of 44% of retail price & to incur other Variable Cost of 4%. If is expected Fixed cost of Br.. 20,000. what is marginal cost of book last printed?
To calculate the marginal cost of the last book printed, we need to consider the margin and other variable costs.
Margin = 44% of the retail price
Other Variable Cost = 4% of the retail price
Fixed Cost = $20,000
Let's assume the retail price of the book is represented by 'x'.
The margin is 44% of the retail price, so it can be calculated by multiplying 44% (0.44) with x:
Margin = 0.44 * x
The other variable cost is 4% of the retail price, so it can be calculated by multiplying 4% (0.04) with x:
Other Variable Cost = 0.04 * x
The sum of the margin and other variable cost represents the total variable cost:
Total Variable Cost = Margin + Other Variable Cost
= 0.44x + 0.04x
= 0.48x
The marginal cost represents the additional cost incurred to produce one more unit. In this case, it would be the total variable cost per book. Therefore, the marginal cost of the last book printed will be:
Marginal Cost = Total Variable Cost
= 0.48x
However, the fixed cost of $20,000 is not considered a part of the marginal cost calculation. Fixed costs remain the same regardless of the number of books produced.
So, the marginal cost of the last book printed is 0.48x.