Variable costs change based on the level of production, which means there is also a marginal cost in the total cost of production. The term sunk cost refers to money that has already been spent ...

For instance, if a factory produces 100 widgets at a total ... cost of producing one more unit exactly matches the additional revenue it generates. Marginal cost typically follows a U-shaped curve ...

Below is a chart explaining how those variable expenses would work. While the packaging cost per case remains the same, the total cost of packaging rises when production is higher. It’s critical to ...